The Internal Revenue Commission has announced a clampdown on companies who knowingly evade paying Salary & Wages Taxes.
This includes a directive from IRC Acting Commissioner General, Sam Koim, to disallow companies from using GST credits to offset the payment of Salary & Wage Taxes for employees.
According to the IRC boss, the practice of using GST payments to offset employee tax payments has been abused over time, with companies, including State-Owned-Entities, using this practice to avoid paying tax – an action which by law is a criminal offense.
“Especially employers, group employers, companies, government organizations, state-owned-enterprises, who are withholding taxes on behalf of their employees, who are individual taxpayers….”
“But they are withholding them and supposed to remit those at the end of every month, to IRC…We’ve been witnessing that a lot of companies are diverting those funds and are using those funds for other operational needs.”
Whilst unable to reveal an estimated number of companies or estimates of lost revenue from this practice, Mr Koim confirmed that many companies, including State-Owned-Entities, were continuing to evade paying their fair share of salary & wage taxes, even after deducting these taxes from employee pay packets each fortnight.
“We have considered this as outright theft..”
“It’s the evasion that is the criminal conduct, people who deliberately scheme to deprive the IRC of taxes.”
Given the current circumstances, the IRC has now been instructed to hold company directors, and management accountable, with company heads now put on notice to ensure that all tax payments owed from salary and wage taxes are remitted to the IRC immediately; failure to do so, according to the Acting Commissioner General, would leave them open to court action.
“Under the new change of law and the regime that we have now, directors, managers and those people who are responsible for diverting funds will be held accountable and we would like to pursue them under the criminal tract as well.”
The Acting Commissioner General has also added that employees who may want to report anonymously, whether their employer is paying taxes from salaries, can provide details in confidentiality to the IRC via the email on taxcomplaints@irc.gov.pg
By Meriba Tulo – EMTV News, Port Moresby
