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May 15, 2021
Business Finance News Papua New Guinea

Innovative Goods and Services Tax Collection

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The Department of Finance will now help the Internal Revenue Commission in withholding tax owed to government from private businesses.

This is per a new initiative which aims to maximize revenue collection that ultimately contributes to service delivery.

In a simple launch that aims to achieve big results, the government tax collector, announced its collaboration with the Finance Department to collect goods and services tax or GST.

IRC Commissioner General, Sam Koim.

Commissioner General for IRC, Sam Koim said, Section 65A, gives the commissioner general the authority to give notice to a particular entity to withhold the GST component and wire it directly to IRC on account of the supplier.

“It is a product available by law.” He said.

Finance Minister, Sir John Pundari echoed the relevance of GST in biblical terms.

“We give to Caesar, what belongs to Caesar. We give to God what belongs to God. In this nation we only have a few corporate citizens who are honest and sincere to the Government,” said Pundari.

Under the new arrangement, the required 10 percent of tax paid as part of the overall payments from government and statutory organizations to private companies for services will be withheld and given back to IRC.

Finance Secretary, Dr Ken Ngangan.

“Finance is in-charge of the IFMS, so the 10% GST withholding will be done by the departments that are already on IFMS. When they pay, they hold back. When they hold back, Finance will collect all that and the remit to IRC,” explained Dr Ngangan.

The tax transaction will be captured using the government’s Integrated Financial Management System (IFMS) with the compliance aspect still managed by the IRC.

“I am encouraged by the fact that the two departments led by the commissioner and team at IRC are harnessing technology to make our lives easier, concerning the collection of taxes,” said Finance Minister, John Pundari.

Finance Minister, Sir John Pundari, speaking at the launch.

According to statistics, Personal Income Tax from atleast 20 percent of the population still makes up for much of the government tax revenue.

This revenue is used to deliver the much needed services needed in the country.

GST collection from business and the general public is still not up to where it should be.

The new arrangement, in its six month trial in 15 agencies, has seen atleast 21 million Kina withheld from GST collections and was given to IRC.

An indication that if rolled out, it can maximize GST collection.

This will possibly give government some leverage to relieve the burden placed on pay packets of the working population.

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