OVERARCHING PLAN IN PLACE TO ADDRESS RECOMMENDATIONS FROM THE EXCHANGE OF INFORMATION ON REQUEST PEER REVIEW

Papua New Guinea (PNG) now has a plan in place to continue to address the recommendations that were made by the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) in our Exchange of Information on Request (EOIR) Peer Review Report. This plan is the Exchange of Information on Request Country Action Plan 2019-2024 (EOIR CAP).

The Internal Revenue Commission (IRC), Financial Analysis and Supervision Unit (FASU) of the Bank of PNG, and the Investment Promotion Authority (IPA) launched the EOIR CAP on the 13th of March 2024 at the IRC Headquarters, Port Moresby. The occasion was officiated by the Commissioner General of IRC, Mr. Sam Koim; the Acting Director of FASU, Mr. Wilson Onea; and the Managing Director of IPA, Mr. Clarence Hoot. Effective collaboration among these three agencies has been instrumental in enabling the completion of the EOIR CAP.

The EOIR CAP was developed to guide PNG to address the recommendations emanating from the Peer Review. The document contains all the recommendations that were made by the Global Forum. Beside each recommendation, the EOIR CAP sets out the action(s) to be taken to address each recommendation, and the responsible agency. Having a plan such as the EOIR CAP in place will assist the three (3) organizations to take meaningful steps to address and remove those recommendations before the next peer review.

PNG joined the Global Forum in 2015. The Global Forum administers the international tax transparency standards of exchange of information on request (EOIR) and automatic exchange of information (AEOI). These standards aim to put an end to bank secrecy and tackle tax evasion. PNG currently implements the international tax transparency standard of EOIR only.

In 2019, PNG underwent a peer review of its implementation of the EOIR Standard. The Peer Review assessed the legal and regulatory framework and the practical implementation of the EOIR Standard, considering the EOIR requests that were received and sent during the review period from 1 October 2015 to 30 September 2018. The review rated PNG as “Largely Compliant (LC)”. The LC rating was a result of the efficient collaboration between IRC, FASU and IPA and a testament to the work that was undertaken in that space. The Global Forum also made certain recommendations for PNG where it identified gaps in our legal and administrative framework. The three (3) agencies have made considerable efforts to address those recommendations since 2019. This includes legislative reform undertaken by the IPA and the signing and ratification of the Convention on Mutual Administrative Assistance in Tax Matters (MAAC).

It is vital that PNG continue to take steps to address the gaps in the legal and administrative framework pertaining to the effective implementation of the EOIR Standard. This will ensure that PNG is fully compliant with the EOIR Standard. Effective collaboration between the relevant stakeholders is necessary to strengthen PNG’s systems and processes and demonstrate to the global community our commitment to removing bank secrecy and tackling tax evasion. The EOIR CAP will ensure that such collaboration continues to achieve full compliance with the EOIR Standard.

The Commissioner General of IRC, Mr. Sam Koim, stated that the IRC operates within the evolving global taxation landscape. The traditional tax norms, enduring for centuries, are transforming due to rapid digital economic shifts. Mr. Koim elaborated further that participation in international taxation entails sharing legal and beneficial ownership information with other jurisdictions, eradicating banking secrecy, thoroughly analyzing financial data, and fairly distributing taxing rights among states. The IRC is taking significant strides to suppress illicit financial flows and eliminate tax evasion. He highlighted that cross-border trade-based tax evasion is on the rise, which is a significant step in curtailing that. ?

The Acting Director of FASU, Mr. Wilson Onea, emphasized that FASU will continue to perform its mandated function under the Anti-Money Laundering and Counter-Terrorist Financing Act 2015 (AML/CTF Act) in respect to supervising and enforcing compliance by financial institutions (FIs) and designated non-financial businesses or professions (DNFBPs) which are relevant to the implementation of the Global Forum standards. He further stated that the PNG Money Laundering and Financing of Terrorism (ML/FT) National Risk Assessment (NRA) identifies taxation and revenue fraud as one of the major areas of criminal activities posing significant money laundering (ML) threats to PNG. He is confident that partnership in this space would assist in deterring and disrupt tax crimes and contribute to improving tax revenue generation for PNG in the future.

The Managing Director of IPA, Mr. Clarence Hoot, in his address, reiterated that the IPA undertook significant exercises to review the laws under its jurisdiction purposely to address PNG’s international obligations on Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) reforms and to keep up to par with new developments of technology in the area of business registry systems. He further stated that the legislative amendments have now been passed and come into operation, which include the Companies (Amendment) Act 2022, Business Groups Incorporation (Amendment) Act 2022, Associations Incorporation Act 2023, and the Investment Promotion Authority (Amendment) Act 2023.

Mr. Koim extended his profound gratitude to FASU and IPA for their exceptional collaboration in addressing the EOIR Peer Review recommendations since 2019. He highlighted that their diligent efforts have provided essential information and fulfilled statutory obligations, upholding principles of tax transparency and contributing to the effective implementation of EOIR in PNG.

The final published Peer Review report was published by the Global Forum and is publicly accessible on the Global Forum website: www.oecd.org/tax/transparency .

The published and complete EOIR CAP 2019 – 2024 can be accessed on the IRC website: www.irc.gov.pg .