April 2023

IPA migration now complete

A significant IPA update for clients is that the on-line registry upgrade is now complete. As we noted in last month’s Pulse, once the data migration is complete, all entities will need to undertake a re-registration process with the IPA before any documents can be lodged.

It is important to note: 

• All companies must re-register with the Registrar of Companies, and those who are IPA certified must re-register with the Foreign Enterprise Unit (FEU), by 30 November 2023.   

• Companies with registered business names must re-register their name/s before 31 August 2023, or the names will be struck off.

• Companies that do not have any outstanding Annual Returns (AR) won’t need to lodge an AR as part of the re-registration process, as long as the re-registration is completed before the AR is due for lodgement. If the re-registration is not done by this date the company will need to lodge its AR.  

• Business names registered by foreign individuals must complete their FEU re-registration before they re-register their business name/s. 

• All associations are required to re-register prior to 30 November 2023.

• Any changes to a company’s registered details must be correctly captured during the re-registration process. The IPA has stipulated that once re-registration has been processed and accepted, a company is unable to retrospectively date any changes made prior to the re-registration (e.g. an appointment of director prior to the re-registration date). By virtue of re-registering, the company is affirming its records are correct as at the date of re-registration. 

The IPA has indicated companies who fail to capture the correct information at the time of re-registration have potentially violated the Companies Act and may be subject to severe penalties. It is therefore critical the re-registration process be completed accurately. 

Your PwC client team will be reaching out to you in the coming days or weeks to ensure this process is completed accurately and by the prescribed deadlines. 

IRC in the news 

The commitment of the IRC to expanding its reach and to provide taxpayers services to the entire country has been a feature of the IRC’s activities for the past three years and the trend continues. The IRC ‘s commitment to having a physical presence in provinces, and towns around the country was again exemplified through the recent  opening of another regional office, this time in Kerema. 

Another part of the IRC’s mission, which is the collection of data in relation to the presence of taxpayers around the country, also took a step forward with reports highlighting the efforts at taxpayer mapping being conducted in parts of Morobe province. The goal is to identify the physical location of taxpayer’s operations for better tracking compliance and making more meaningful use of data on collections. 

With increased activity and ambition comes the need for additional resources and the IRC is therefore in the process of undertaking a significant recruitment exercise. In the medium term this will mean several hundred additional employees for the IRC as it seeks to deliver on its mandate. 

However, despite recruitment efforts and the advancement of technological solutions, the challenge of keeping up with taxpayer lodgements and submissions is also an ongoing concern. Timeframes for return processing, dealing with amendments or appeals, the validation of GST credits and many other core processes continue to experience delays and challenges with accuracy. Taxpayers will be hoping that initiatives such as recruitment, and the recent restructure of the IRC will lead to better experience for taxpayers.

New Income Tax Act

With the enhanced engagement from the IMF continuing on the back of the recently announced loan program, one of the items that is likely to be in focus is the new income tax act draft. The simplification and updating of fiscal legislation is part of the range of support and reforms that are being supported by the IMF. As of December 2022, the previous draft was not presented to Parliament partly due to the view of business that the draft under consideration lacked detail in areas such as transition provisions and the subsidiary regulations. While there has been no further public consultation, we understand that work has continued on the draft and some progress has been made on the drafting of missing items. Taxpayers should be reacquainting themselves with the potential implications of the new act.  

SEZ’s on the rise

A recent PNG government priority is the proposed development of a number of Special Economic Zones (SEZ). The plans have been gaining prominence in particular since the announcement by the Minister for International Trade and Investment of a nation wide review to identify promising locations. Early May will see the ministry hosting a SEZ conference to further promote the concept. This most recent SEZ concept will presumably complement other previous initiatives that saw the passing of legislation in 2022 to create the Manus Special Economic Region, and the Special Economic Zones Authority Act of 2019. 

A significant challenge for the creation and successful operation of special economic zones which seek to provide tax concessions (which is an advertised feature of the recent SEZ developments) is alignment with other revenue legislation. Neither the current version of the Income Tax Act nor the GST Act makes provision for these recent developments. Therefore as the concept further develops we should be looking for relevant amendments in current or future tax (and other) legislation. 

If you would like to know more about any of these developments or have any other questions, please get in touch with your usual PwC contact.