The controversial Additional Company Tax (ACT) imposed on BSP Financial Group Limited (BSP) by the government, has been paid out but it is currently being parked in an account with the Central Bank awaiting court proceedings after BSP filed an application with the Supreme Court on the constitutionality of the Tax.
This was revealed just recently by the Group Chief Executive Officer (CEO) Mr. Robin Fleming when presenting BSP’s 3rd quarter results for 2022.
“In relation to the additional company tax, BSP has and continues to progress its challenge by the Supreme Court. We’ve re-filed our application in May and the Supreme Court has been progressing and the next hearing will be relating to the standings of BSP and not to mention the interveners, which include the key superannuation funds as well as IRC (Internal Revenue Commission) and the Attorney General,” said Mr. Fleming.
The application was filed under Section 18(1) of the Constitution and seeks to render the ACT unconstitutional and invalid.
“In the interim, we put our K190million which was due on the 30th of September, into an escrow account with Bank of PNG with the agreement of IRC on the basis that it remains in that escrow account until such time the matter has been heard in the Supreme Court.”
Meanwhile, the Tax applies a flat K190million on any bank that has over 40% market share of financial assets, which could only apply to BSP because the bank’s financial assets are over that percentage mark.
The ACT applies to the following years to come, so that means that BSP is liable for another K190million on the 1st of January 2023.
The main concern of BSP is that the more the bank pays this Tax, the interim dividend paid out to its shareholders, which includes the country’s superfunds, will continue to be reduced.