The Kumul Petroleum Holdings Limited (KPHL) will now be working alongside the Ihu Special Economic Zone (SEZ) Development Company to conduct a feasibility study on power generation solution for the SEZ in the Gulf province. This was made possible through a Memorandum of Understanding (MoU) signed between KPHL and Ihu SEZ in Port Moresby on Tuesday, 27th June. KPHL Managing Director Mr. Wapo Sonk said they will look at the most appropriate power solution for the Ihu SEZ, which could include renewable energy source like hydro. The Managing Director for the Ihu SEZ Development Company, Mr. Peter Kengemar, said the Ihu SEZ was established in 2020 and is geographically and strategically located close to the well- heads and pipeline of the Papua LNG project in the Gulf province. “The SEZ has been designed for industrial downstream processing and will not be viable unless they have access to a source of affordable electricity,” said Mr. Kengemar. Mr. Sonk later explained that KPHL will carry out full feasibility studies on potential source for the generation of electricity and make recommendations on those that are commercially viable. “As the national petroleum and energy company, KPHL stands ready to provide appropriate power solutions for the country’s Special Economic Zones,” said Mr. Sonk. The MoU signing is a follow up from the agreement that was signed between the Minister of International Trade and Investment Richard Maru and KPHL earlier this year, as part of the progress of development of the Ihu SEZ.

The youths in the Sumkar district in Madang province now have a District Youth Development Council to run programs that will help the youths in their development and contribution to their community. The establishment of the Sumkar District Youth Development Council on the 23rd of June at the Sumgilbar Local Level Government (LLG) Chambers in Gibrin, was the direct result of the partnership between the National Youth Development Authority (NYDA) and the Sumkar District Development Authority (DDA). The establishment brought together a total of 128 Youth representatives from the 33 wards of Karkar and 31 wards of Sumgilbar to convene a Youth Forum in which the two Local Youth Development Councils were established before the formation of the District Youth Development Council. With this launching, Sumkar districts now sets the pace for other districts in Madang province to follow suit in establishing this youth voice mechanism so that the concerns and aspirations of their youths can be accommodated in the decision-making processes. For too long, youths have been regarded as bystanders and observers only but it is high time this perception is changes and involve youths as active participants in the community through the District Youth Council mechanism, which is deemed the ideal platform that allows for youth participation in the mainstream development process. It bestows a sense of responsibility and authority upon youths themselves to manage their affairs with respect to the societal norms and values. Being recognized as a youth leader restores their dignity and gives them a standing in the society, which in turn will contribute positively to containing law & order issues within the communities they live in. Meanwhile, there was an election of the executives as well for the newly established Youth Development Council that took place. The mobilization and election of executives, as the formal youth voice, was consistent with NYDA Act 2014. The swearing in of the District Youth Development Council executives was conducted by Madang District Court Senior Magistrate George Epor, witnessed by District Administrator, Mr. Charles Katu, Sumgilbar LLG Chief Executive Officer (CEO), Mr. Joe Bess, Karkar LLG CEO Mr. Ian Beb, the Mayor of Madang Town Peter Yalsi, and officiated by the Deputy Director General-Policy of the NYDA, Mr. Roby Duri. The Member of Sumkar, Alexander Orme is also supportive of the youth program in the district. “The DDA plans to use the platform and network to dispatch youth programs. Youth Partners and stakeholders are welcome to join hands to empower our youths of Sumkar,” said the local MP.

The Internal Revenue Commission (IRC) initiated transfer pricing audit into taxpayers in the country has seen its first case of tax evasion identified in the logging sector, committed by a prominent logging operator. The IRC announced that it has imposed a substantial K140 million tax assessment against a logging operator (identity withheld) in Papua New Guinea (PNG) for engaging in illicit tax evasion, specifically through transfer pricing. This amended assessment (tax bill) is a direct outcome of an extensive transfer pricing audit conducted on the taxpayer. This was revealed today by the Commissioner General Sam Koim when announcing the outcome of the first of more than twenty audits initiated since he took office. The Commissioner General, in announcing this development, expressed, "The logging sector in PNG has long been suspected of involvement in tax evasion. Instead of turning a blind eye, we have initiated over twenty audits since I took office. Cross-border transfer pricing audits are intricate and time-consuming; hence it has taken some time. I am pleased to report that this is the first outcome of those audits. " Transfer pricing tax evasion, in simple terms, refers to the act of manipulating the prices at which goods or services are transferred between related parties or companies within a multinational group. The purpose of this manipulation is to reduce the taxable income of one party, typically in a high-tax jurisdiction, by artificially inflating expenses or lowering revenues. By doing so, the company aims to shift profits to lower-tax jurisdictions, thereby evading or minimizing its tax liabilities. This practice can result in significant loss of tax revenue for governments and is considered illegal. Based on a risk assessment on the taxpayer, the taxpayer had significant volumes of transactions with related parties, did not file Schedule Seven (International Dealing Schedule), was disclosing annual and historical losses in its income tax returns, and had not paid any corporate taxes in PNG for several years. The main transfer pricing issue uncovered by the audit is that the taxpayer sold log species to related parties at prices lower than international market prices and thus reported a lower income than if its logs would have been sold at arm’s length. This means an underpricing of log species sold by the taxpayer to related parties with significant pricing differences compared to market prices prior to and during the audit period, therefore not generating the fair amount of revenue and consequently not paying any corporate income tax. PNG is deeply and negatively affected by forgone tax revenues because of base erosion and profit shifting done by taxpayers. The negative impact affects PNG citizens because the much-needed infrastructure, health and education coverage, security, and other public goods and services will not be available to guarantee economic growth and social welfare. The IRC finds it unfair and is working to tackle these behaviors for the benefit of the country. To address this situation, the IRC performed a financial analysis of the taxpayer, considering liquidity, solvency, operational efficiency, net profitability, and working capital indicators, among others. The IRC concluded that the taxpayer’s financial performance shows a business that is not sustainable as its liabilities exceed its assets, it is at risk of bankruptcy, its revenues are not enough to cover its costs, it is not in a financial position to commit capital to growth and expansion, and it is financially unable to operate on a day-to-day basis. From a transfer pricing perspective, arguments such as these imply a non-arm’s length behaviour as it is difficult to understand that an independent business can maintain itself operating in the market with such a poor performance and such negative financial results. During the audit, the taxpayer was not cooperative and provided limited information, which made the IRC’s audit, verification, and enforcement tasks more difficult and burdensome. The taxpayer even denied the existence of any association with the overseas parties and disclosed their residence to be in certain jurisdictions. However, thanks to the IRC’s progress in international tax cooperation in recent years, powerful tools like the exchange of information standard (which allows for the IRC to obtain information on foreign taxpayers from tax administrations in other jurisdictions) allowed the IRC to confirm the existence of association, as stipulated under Section 4(1) of the Income Tax Act 1959, strengthening its position, as well as confirming that the information provided by the taxpayer regarding the residency of its log buyer was false. The taxpayer’s failure to disclose the truth about the actual corporate residency of its log buyer was an indication that it intended to hide something. The IRC concluded that the taxpayer was related to the overseas parties based i) on management (same directors managing different entities), ii) on shareholding and common interests (same people holding shares in same entities), and iii) on arrangements that would never take place between independent persons. In addition, the taxpayer’s Notes to the Financial Statements listed both companies as related parties. However, the taxpayer denied this relationship, arguing that there had been a wrong classification of related parties. This means that during the audit period (and even before that), directors, shareholders, and the accounting firm did not recognize or correct the gross misstatement in the taxpayer’s audited financial statements. To determine the arm’s length price of the exported logs, the IRC performed a comparable search of log prices for the various species sold by the taxpayer, using a public source of tropical timber prices. Based on it, the IRC calculated the deemed revenues the taxpayer should have realized to reflect market conditions. In summary, for the years under audit, the taxpayer should have recorded additional revenues of K181 million and offset losses of K31 million. This implies that it must pay K46 million in corporate income taxes to the PNG Treasury, instead of claiming losses. After applying a 200% penalty (accounting for K95 million), the taxpayer is liable to pay K140 million. The IRC continues to strengthen the capacity of its officials and the tools available to tackle tax fraud, evasion, and avoidance. Robust international instruments are about to change the way audits are performed and will allow for an increase in the exchange of information requests and joint audits. Penalties will also be tightened to ensure voluntary compliance. Making false and misleading declarations to the IRC is a serious offense with a jail term of not more than four years. The IRC will prosecute not only the taxpayers but also those who are responsible for hiding information and making false declarations to the IRC to reduce their tax liabilities. In accordance with the taxpayer's right to the protection of the law and the appellate process to review the audit findings, the Commissioner General is unable to disclose the identity of the taxpayer at this time. However, the Commissioner General assured that the tax office has heard the clarion call for action and is taking action.

BSP customers experiencing challenges with the recently implemented Flexcube by the BSP Financial Group Limited, can now raise their complaints with the Central Bank or the Bank of Papua New Guinea (BPNG). According to the BPNG, there have been reports of some BSP customers experiencing challenges with the recently implemented core banking system by BSP. The Flexcube was designed to provide a greater range of digitally enabled services, provide enhanced benefit to its customers and reduce business risk. In view of this, the Central Bank has set up a Customer Complaints Help Desk to help resolve any issues relating to the implementation. The Bank said this help desk will receive complaints that have either not been addressed by BSP or where the customer considers BSP’s response to be inadequate; however, the complaints must be first reported to BSP. “If you are not satisfied with BSP’s response, or if you do not receive any response within 14 days, you can escalate your complaint to the customer complaints help desk at Central Bank.” To lodge a complaint, affected customers can send an email to complaints@bankpng.gov.pg or write to Customer Complaints Help Desk, P. O Box 121, Port Moresby, NCD, PNG. The Central Bank will review the complaint and contact the customer for further information if needed. The Bank will then work with BSP for an amicable resolution of the complaints. If the public would like to know more about the complaints desk, they can also contact the Central Bank on telephone 322 7200. The Central Bank’s Customer Complains Help Desk is a free service for customers who have exhausted BSP’s complaints process. However, the Bank stated that this is not a legal process and therefore doesn’t stop customers from seeking other remedies.

Dataco Chief Executive Officer (CEO), Paul Komboi has advised that the network outage to most parts of the Momase region and some parts of the Highlands region, is due to a current exercise being conducted by PNG Power Limited (PPL), which will see transmission lines moved to a new pole between Ramu, Lae and Madang. Mr. Komboi told PNG HAUSBUNG that due to PNG Dataco’s reliance on PPL for the of usage of power for their Fiber optic cables, it is a must that the relocation to the new proposed site includes temporary shutting down of services to facilitate this move. “We use PNG Power for our Fiber optic cable. We have to switch it (Network service) off and relocate with PNG Power.” He stated that it should not be a surprise to consumers as, there was enough awareness done prior to the move scheduled by PPL. He stated that a notice was given out to the general public earlier this month and it should not be surprising to the people and has assured that services will return to normal once the exercise is completed. “It’s a planned outage, it is not sabotage or an incident or failure of the network.” He added that PNG Power is moving and because there are transmission links to the new sub-station, they are temporarily shutting off services to cater for this move.

The Internal Revenue Commission (IRC) Tax Mapping Exercise continues in the city of Port Moresby and remains steadfast in its commitment to a comprehensive and inclusive approach. According to the IRC, the mapping exercise aims to encompass all taxpayers within the National Capital District (NCD) without discrimination based on sector, nationality, or business size. The teams updating the taxpayer register know that the significant number of Tax Identification Number (TIN) holders in NCD, remain unidentified for tax compliance purposes; hence, the importance of this taxpayer mapping exercise. During day 8 of the Taxpayer Mapping Exercise on Friday 23rd June, the IRC teams moved into various areas at Hohola, Tokarara, Waigani and Gerehu suburbs. As expected, these locations revealed the presence of thriving businesses. Meanwhile, the IRC Commissioner Mr. Sam Koim, had to come out clear last week on the purpose of this Taxpayer Mapping Exercise, to put to end confusion and false assumptions of the exercise. Mr. Koim said this exercise aims to ensure tax compliance is maintained. “We would like to clarify that the Taxpayer Mapping Exercise is not intended to single out any particular sector, nationality, or business size. It is solely an exercise in compliance enforcement.”

The Goilala community residing at the Kasia settlement just outside Bomana in Port Moresby, are taking matters into their own hands by going to the legal process to get justice for the destruction of their homes, allegedly by police and Correctional Service (CS) Officers earlier this year. It been almost three months and those innocent people whose lives have been affected are now seeking justice in the court. It was alleged that more than 40 homes were burnt down to ashes and the community is now living in makeshift shelters since April. A community leader, who requested anonymity, said they are now taking the matter to court to seek justice, since it has taken too long to address the issue. The community leader said the matter stemmed off from a fight involving a CS officer and youths from the settlement over marijuana, which he alleged that the officers was looking to purchase the drug. “When the boys replied that they had no drug, that’s when the fight started and he went back to get reinforcement and that’s when police personnel came in and destroyed our homes,’’ he said. “Our livelihoods have been ransacked without compassion and mercy from our law enforcement units. Our lives have been destroyed. When they came in, they burnt down 40 houses and even went to the extent of killing our livestock including pigs, chicken and ducks.“ I will address the matter in court to question the integrity of the police force which has failed to comply with the law to settle the issue. He also added that since the attack, their movements have been restricted. School children and mothers cannot access markets to sell garden produce to earn an income for their families. He said their only hope is through the courts that they can find justice.

A new water catchment project that was recently launched at the Kokonda village in the North Fly district of Western province, comes as a great relief for the people who have had to travel far to fetch water. Kokonda village, celebrated the successful completion of their community water catchment project on 6th June. This was made possible through their Village Development Funds (VDF) under the Wai Tri CMCA Trust. The project was supported by Ok Tedi Development Foundation (OTDF), and the villagers expressed their gratitude for the efforts and logistical support provided. Mr. Adam Soke, a dedicated community representative, conveyed his appreciation on behalf of the villagers. He acknowledged the challenges they faced in initiating the project, stating that it was not an easy task. "I am representing the community not as an elected leader or councilor, but as a youth who has witnessed the dire needs of our people in our village," he explained. Currently, only six families reside in Kokonda village, and Mr. Soke expressed his hopes that the water catchment project would serve as an incentive for others to come back. Mr. Johanis Saferius, the CMCA Trust Administrator, echoed Mr. Soke's sentiments and affirmed the Trust Administration's commitment to delivering all pending projects. He assured the Kokonda village community that more projects were in the pipeline, not only for the North Fly CMCA region but also for the Middle and South Fly communities. Mr. Saferius praised his dedicated team for their unwavering efforts and acknowledged the contractor responsible for constructing the building and installing the tanks. Mr. Havini Vira, the CEO of OTDF, emphasized the significance of such legacy projects. He pointed out that the progress of such projects was often hindered by the limitations of community funds, which could secure materials but not cover the costs of transportation. Mr. Vira stressed the importance of community ownership and urged the villagers to take care of the facility. The presence of the minority, who attended the program, was as a positive sign of change and patience within the Kokonda community. The completion of the community water catchment project in Kokonda village has brought newfound hope and enthusiasm to the residents. It stands as a testament to the collaborative efforts of the community, OTDF, and the Trust Administration, with the ultimate goal of improving the lives of the villagers. The success of this project is the basis for future endeavours aimed at improving communities throughout the region through the compensation benefits from OTML operations.

The recently settled disputes and issues relating to the old Porgera tax matters between the Internal Revenue Commission (IRC) and Barrick Niugini Limited (BNL), has got the thumbs up from the Papua New Guinea (PNG) Chamber of Mines and Petroleum because of the final stage this has brought about before the reopening of the New Porgera Mine. This followed the announcement of a Deed of Settlement earlier this week, signed by IRC Commissioner General, Sam Koim, and Barrick Chief Operations Officer (COO) Latin America and Asia Pacific, Mark Hill. The Chamber President Anthony Smaré said this development brings the imminent reopening of Porgera one step closer to fruition. “Tax contributions are an important aspect of social licence for the operation of a project, thus the Chamber is pleased that both IRC and BNL have come to an understanding regarding the old Porgera tax disputes and related issues,” said the Chamber President. “Through constant dialogue, these issues have been resolved, thus allowing the parties involved in New Porgera to focus on other regulatory requirements for Porgera.” He said the Chamber looks forward to more favourable progress towards the reopening of this strategic resource project for the benefit of all stakeholders. “Porgera remains an important project for the nation, and in particular Enga Province and Highlands region. Efforts towards reopening Porgera are welcomed, as all stakeholders can now also prepare to take advantage of the opportunities that will be on offer once the project is up and running.”

The Ambunti- Dreikikir District in the East Sepik province is setting the pace for the province with the establishment of the first District Youth Development Council along with four Local Youth Councils. National Youth Development Authority (NYDA) Director General, Mr. Joe Itaki officially launched the youth councils on Tuesday 20th June. Mr. Itaki emphasized the importance of having the youth network structure in place so that youth programs can easily be channeled and implemented through the structure by NYDA and youth service providers. Also present was the East Sepik Provincial Legal Officer, Vitus Jim, who commissioned the youth executives and encouraged the youth leaders to uphold the office they hold with loyalty to service for their young people. The District Administrator, Ricky Wobar, pledged the district's support to the youth programs to particularly ease law and order problems and provide second chance to the unfortunate to participate in the development of the district. Also present for the occasion were LLG Managers, Presidents and Councilors, District Administration staff and community leaders. On behalf of the Ministry, Board and Management, NYDA acknowledged the support for youth by Member for Ambunti-Dreikikir, Johnson Wapunai MP and his District Development Authority (DDA) Board, the District Administrator and his administration and the East Sepik Provincial Administration.

The United States Embassy has expressed thanks to the Government of Papua New Guinea for its support regarding an unscheduled diversion of four aircraft to Port Moresby’s Jacksons International Airport. On June 21, four American military jets were traveling through international airspace when they were forced to make an unscheduled diversion to their planned flight path. “ With permission from Papua New Guinea’s Department of Transport, the aircraft landed at Jacksons International Airport for about one hour and were able to continue their flight. Thanks to the quick work of the Department of Transport and Jacksons Airport staff, the American aircraft were able to continue safely to their intended destination and will fondly remember Papua New Guinea’s hospitality. U.S. Embassy Chargé d’Affaires Joseph Zadrozny said, “This is a great example of the partnership between the United States and Papua New Guinea.” “We know that when we ask for help as a friend, Papua New Guinea will be there to assist. Thank you to all those who aided our pilots in getting safely on their way.” A flight diversion happens when an aircraft is unable to arrive directly at its final destination due to unforeseen circumstances, such as mechanical issues or bad weather. Unscheduled diversions are a frequent occurrence worldwide in the aviation industry, including military and commercial flights.

U.S. Agency for International Development (USAID) supported over 115 women from mining impacted communities in Ramu District Madang Province, Papua New Guinea, to access financial literacy training. From February to April 2023, Erusta Bill, a certified local trainer under the USAID’s partnership with the Center for Excellence in Financial Inclusion (CEFI), conducted training mostly for women in the basics of financial literacy. Participants now have a better understanding on savings and budgeting; foundational skills for creating new enterprises and increasing household and personal financial security, particularly for women. The training will also promote a savings culture and help improve management of household finances to sustain livelihoods both during and after the life of the mining project. One of the greatest challenges for many communities in PNG, especially those based in rural and remote areas, is the poor access to services such as banking. Banking provides an option to save money in a secure place for future use or to access financial credit to grow small-scale businesses and expand livelihood option. On June 2, 2023 participants for the training were awarded with certificates. The certificates will enable participants to meet banking requirements, to opening new bank accounts and to apply for SME loans. The participants will now utilize their certificates to obtain loans under the Mineral Resources Authority Credit Scheme for mining impacted communities with emphases on women participation. Doras Paul, a graduate of the financial literacy training thanked USAID stating, “I can now open a bank account with Mibank and access my credit scheme.” Erusta Bill, the Chairlady of Maigari Women’s Association, reiterated this sentiment saying, “Our mothers have been spending their royalty payments without saving any for their children and family.” “Now, thanks to USAID PNG LGP, they understand the importance of saving and budgeting their money.” The training is part of USAID’s commitment through the PNG Lukautim Graun Program (LGP) to deliver financial literacy for Papua New Guineans and focuses on the economic empowerment of people from areas of high biodiversity or resource rich areas, particularly women. USAID’s PNG LGP works in partnership with the PNG Government, local communities, and a range of implementing partners from the private sector, faith-based organizations and civil society organizations to empower traditional landowners to sustainably manage their resources and empower women to be full participants in PNG’s economy. Improving people’s livelihood prospects helps communities to reduce pressure on forest resources and contribute to protecting PNG’s rich biodiversity for future generations.