2017 IRC GOODWILL TOUR PRESENTATION ON TAX COMPLIANCE 24 May 2017, - - PowerPoint PPT Presentation

2017 IRC GOODWILL TOUR PRESENTATION ON TAX COMPLIANCE

24 May 2017, PNG Institute of Public Administration, Waigani

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 How Government Earns Money  Compliance  Challenges  Strategies

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 Taxation  Tax is an amount of money levied by a government on

its citizens and used to run the government, country, province, town council, or local level government

 IRC tax alone accounts for over 70% of government

revenue

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 Loans and grants from Financiers and International donors

like:-

• World bank
• International Monetary Fund
• Australian Department of Foreign Affairs & Trade

(DFAT)

• Asian Development Bank (ADB)
• Japan International Cooperation Agency (JICA)
• Commercial banks

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 Dividends from shareholding in:-

Mineral Resources Development Company Kumul Consolidated Holdings Ltd (KCHL) managed companies.

 Domestic Financing - The government sells debt in the form

• f Treasury Bills & Inscribed Stocks to investors including

commercial banks, BPNG and other private domestic investors.

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80% 14% 6% Tax Revenue Grants Other Revenue

Source: Treasury Final Budget Outcomes

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Tax payments can be made by:-

• Cash
• Cheque
• Electronic means

 All cash and cheque payments are made to IRC offices in Port

Moresby, Lae and Kokopo

 Electronic payments can be made from any bank branch and

receipted in Port Moresby only

 Payments are banked and transferred to WPA

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 Waigani Public Account (WPA) holds all tax money

for government to pay its commitments Funds are transferred to WPA on a daily basis.

 Funds transferred to WPA are net of:-

• GST refunds
• Monthly GST distribution to provinces
• Distribution of bookmakers tax

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 Public Servants’ salaries  Debt servicing (Loans and interest)  Goods and services including infrastructure  How are commitments paid?  Budget process  Treasury Department issues Warrants  Finance Department makes payments

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 Government needs money to pay for goods and

services to its citizens. It is done through tax contributions by residents and citizens. Tax revenue is used to pay for:-

 Education  Health  Law and order  Infrastructure

 Social and economic programs

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K75.6 K555.3 K1,064.3 K1,282.7 K3,516.3 K4,301.3 Community & Culture Education Health Law & Justice Provinces Others

Source: Treasury 2016 Budget Outcomes

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 Taxpayers fulfilling their tax obligations which fall

under the Four Pillars of Compliance.

 Registration  Lodgement  Payment  Reporting

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 Any individual, business or corporate entity currently

in business and earning income that is not taxed must register

 New businesses starting up must register  Allocation of a Taxpayer Identification Number – TIN

 TIN links all tax accounts

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 Timely submission of remittances, returns and

documents which include:-

 monthly salary & wages tax remittances  monthly business payments tax remittances  monthly GST returns  annual income tax returns

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 Timely payment of tax liability on account of all

taxes.

 Salary & wages tax – 7th day of following month  BPT – 14th day of following month  GST – 21st day of following month  Income tax – 30 days from issue date of assessment

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 Making full and true disclosure of information

through remittances, returns, documents, interviews and all forms of communication

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 Where there is voluntary compliance, there are no

penalties

 Penalty is a tool of compliance  What are taxpayer expectations from the Tax

Administration?

 IRC must therefore create an environment for

voluntary compliance by ensuring there is efficiency, effectiveness and timely delivery of its taxpayer services

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 Compliance obligations  Service turn around times  Legislation  Staff skills  Resources

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 Taxpayers are not aware of their obligations under the

four pillars of compliance

 Access to IRC information and website  Taxpayers are turned away because of IRC

inefficiencies

 Others see loopholes in the legislation and take

advantage of them

 There are those who do not want to pay tax

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 IRC staff are not attending to taxpayer issues on a

timely basis

 Staff are not aware of the reasons for their

employment and the objectives of the organisation

 Staff show lack of urgency to their core duties

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 Legislation is complicated  All taxpayers are subject to the same rules

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 Insufficient training and skills upgrade

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 Budget appropriation is not sufficient  Staff numbers are low  Office space  Staff accommodation

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 Modernisation  Review legislation  Widen the tax base  Tax Agents Complaints Unit  Initiating culture change  Implementing Tax Review Recommendation

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 Tax compliance is a key player in the growth of the

economy

 It will take both the taxpayer and the tax administrator

to deal effectively with their respective challenges

 It is in the interest of our government to ensure we

administer and collect all taxes which are due. Failure will result in low revenue and less services to our people

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