PNG Government Super Tax on BSP a Tax on the Shareholders
The Papua New Guinea Bank South Pacific Financial Group (BSP) chief executive officer Robin Fleming says the “additional company tax” (Super Tax) imposed by Government is a tax on the bank’s shareholders.
The BSP Group chief executive officer Robin Fleming was reacting to Treasurer Ian Ling-Stuckey’s statement in Parliament on Thursday that the payment of K190 million in tax would be due in September.
“BSP’s view remains that the tax is a tax on BSP’s shareholders and that it is a tax that discriminates against the only PNG-owned bank in the region,” Fleming told The National.
“The BSP shareholders include Kumul Consolidated Holdings, Motor Vehicle Insurance Ltd , PRK, Nambawan Super Ltd and Nasfund will receive K190 milion less in dividends as a consequence of this tax.
“As dividends reduce there will be an impact on the share price of BSP with investors doing their analysis on the impact of lower dividends to their investments.
“Overseas investors will be far more reluctant to invest in BSP as the overall tax rate of 45 per cent is higher than any other bank in the region and will be one of the highest rates globally.
“Whilst the tax is not payable until September from an accounting perspective, the tax has to be taken up in full by BSP which will be reflected in BSP’s unaudited quarter one results which we anticipate being released to the market by end of April,” he added.
Fleming said one of the largest accounting firms in Papua New Guinea, which is a global entity offered their independent advice last week stated: “While the levy remains an impost on only two taxpayers in the country, the legislative mechanisms applied to create these additional taxation obligations remain at odds with the aims of tax reforms over recent years and does not appear to meet taxation best practice in terms of equity of application, and a key goal of tax being non-distortive in its application.”
“The tax establishes a precedent that any business which outperforms its peers may be subject to an arbitrary tax, outside of the accepted tax regimes, which can be introduced against any business by any government of the day
“This results in a high degree of uncertainty for businesses when they make decisions on investments and capital expenditure.
“There is also no certainty in relation to what tax will be in future years as a Government may decide to increase the tax beyond the legislated amount should they decide they want to generate more tax revenue.”
Source: The National/One PNG News
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