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

 How Government Earns Money  Compliance  Challenges  Strategies Your Partner in Nation Building

 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 Your Partner in Nation Building

 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 Your Partner in Nation Building

 Dividends from shareholding in:- Mineral Resources Development Company Kumul Consolidated Holdings Ltd (KCHL) managed companies.  Domestic Financing - The government sells debt in the form of Treasury Bills & Inscribed Stocks to investors including commercial banks, BPNG and other private domestic investors. Your Partner in Nation Building

6% 14% Tax Revenue Grants Other Revenue 80% Source: Treasury Final Budget Outcomes Your Partner in Nation Building

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 Your Partner in Nation Building

 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 Your Partner in Nation Building

 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 Your Partner in Nation Building

 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 Your Partner in Nation Building

K75.6 K555.3 K1,064.3 K4,301.3 K1,282.7 Community & Culture Education Health Law & Justice Provinces K3,516.3 Others Source: Treasury 2016 Budget Outcomes Your Partner in Nation Building

 Taxpayers fulfilling their tax obligations which fall under the Four Pillars of Compliance.  Registration  Lodgement  Payment  Reporting Your Partner in Nation Building

 Any individual, busines s 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 Your Partner in Nation Building

 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 Your Partner in Nation Building

 Timely payment of tax liability on account of all taxes.  Salary & wages tax – 7 th day of following month  BPT – 14 th day of following month  GST – 21 st day of following month  Income tax – 30 days from issue date of assessment Your Partner in Nation Building

 Making full and true disclosure of information through remittances, returns, documents, interviews and all forms of communication Your Partner in Nation Building

 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 Your Partner in Nation Building

 Compliance obligations  Service turn around times  Legislation  Staff skills  Resources Your Partner in Nation Building

 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 Your Partner in Nation Building

 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 Your Partner in Nation Building

 Legislation is complicated  All taxpayers are subject to the same rules Your Partner in Nation Building

 Insufficient training and skills upgrade Your Partner in Nation Building

 Budget appropriation is not sufficient  Staff numbers are low  Office space  Staff accommodation Your Partner in Nation Building

 Modernisation  Review legislation  Widen the tax base  Tax Agents Complaints Unit  Initiating culture change  Implementing Tax Review Recommendation Your Partner in Nation Building

 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 Your Partner in Nation Building

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