Deputy Prime Minister & Minister for Commerce and Industry, Hon. Samuel H Basil, MP this week flagged that the Marape-Basil Government has commenced a review exercise and a re-think of the K200 million loans disbursement for Small and Medium Enterprises.
“It is important that the impact and focus of this loans disbursement addresses not just those impacted by
Covid-19 but those who are contributing honestly and directly to nation-building,” said Mr Basil.
Flanked by Internal Revenue Commissioner-General Mr Sam Koim and Investment Promotion Authority Managing Director Mr Clarence Hoot, Mr Basil said:
”100% IRC tax compliance by Small and Medium Enterprises (SME’s) in PNG will attract preferential treatment in accessing future stimulus support of loans or grants together with furnishing of timely annual reports to Investment Promotion Authority by this registered SMEs.
The partnership with IRC is key to making decisions based on data: not feelings based on political convenience.
“Following the review exercise, I intend to bring an NEC Paper that ensures a fairer, more equitable and more strategic way to disburse the loans with clear beneficial outcomes,” said Mr Basil.
He urged SMEs to be 100% tax compliant to be eligible to access the Marape-Basil Government’s planned future economic stimulus packages.
“In order to qualify SMEs must have an existing relationship and positive history of compliance with IRC & IPA. It’s that straight forward. I intend to end this funding of overnight sprouting SMEs who don’t pay taxes because they don’t last and often have their loans conveniently written-offs.
“I have directed my department to compile a report on the disbursement of the K200m loan to rescue SME’s in 2020 as I remain unconvinced that the strategies and mechanisms adopted by the financial institutions tasked to disburse the first K200m were effective or consistent with the Marape-Basil government’s key priority to support PNG families.
“I have therefore directed the Department of Commerce & Industry (DCI), Investment Promotion Authority (IPA) and the SME Corporation to work closely with the Internal Revenue Commission (IRC) to:
- Identify well-performing, tax-paying and legal/regulatory compliant SME’s based on IRC data and IPA data;
- Ascertain the impact of COVID-19 on their tax paying capacity;
- Ascertain the kind of assistance – if any – may be required;
- Appreciate which sector these SMEs are located in; which regions and provinces/districts they do business; and their ownership;
- And how many of them have benefitted from the loans disbursed by BSP, NDB and DCI grants
The data collected by the IRC will provide the valuable statistics needed for the diagnostic tool to assess the performance and eligibility of compliant PNG taxpayers. The data collected will also assist us to measure the strengths and weaknesses of tax compliance and business certification in PNG for SME’s and more broadly to encourage foreign direct investment in these challenging economic times.
Mr Basil said that the data will also help us to encourage disbursements fairly in sectors and in the four regions and 22 provinces.
“I am relieved that future initiatives to support hardworking PNG family businesses or SME’s will be assisted by such an operational measure within the IRC that aims to identify and reward those who pay taxes on time and within the processes required of their category of business.
“So while the concerns over the effective roll out of the SME Policy and its funding remain, we are ensuring that our efforts to assist SME’s in PNG remain robust, fair, strategic and transparent,” Mr Basil said.
A visibly relieved Mr Koim said that he is pleased with the new focus by the Government and will ensure that IRC assists. He also took time to explain the rollout of the new diagnostic tool designed and used by the IRC to grade and categorize tax compliant and IPA registered SME’s in PNG.
IRC Chief Commissioner, Mr Sam Koim said “the K200m is taxpayers money and those taxpaying small entities who have been faithfully looking after the government will now receive some form of relief from the government at this stressful time.” He added “this is not a free cash cow for mushroom and popup businesses.”
“Government subsidies cannot be absorbed by non-compliant entities…compliance is key,” Mr Koim said.