Foreign Loggers in PNG avoid Tax

A new report has exposed massive tax evasion and financial misreporting by foreign logging companies, allegedly resulting in nonpayment of hundreds of millions of Kina in taxes.

The independent US-based policy think tank, Oakland Institute, released the report yesterday, titled The Great Timber Heist: The Logging Industry in Papua New Guinea.

The report said, Papua New Guinea is considered to have one of the richest forest and logging areas in the world, and as of 2015, has the highest level of exports of tropical Roundwood in the world.

It reveal despite this, PNG is collecting virtually no income tax from loggers claiming to be running at continued losses.

The report said, the 15 largest logging companies in the country are continually reporting that their operations are at a net loss, and are subsequently not paying any income tax.

Over the last 12 years, only one logging company saw a greater number of years with gains then losses, and one other company saw an equal number, while all other operators saw a much greater number of years with net losses.

The researchers of the Oakland Institute claim that the continued net losses can be attributed to mis-pricing and aggressive transfer pricing practices, with logging companies continually under-reporting the price of their exports, while inflating their inflation to mask any profits made.

It is estimated that if the logging companies did not engage in the tax avoidance mechanisms, the government could see the collections of tax revenues rise by more than 300 million Kina million per year.

 Source: Oakland Institute- US (Report)