Sunday 15 October 2023
Treasurer Hon. Ian Ling-Stuckey, (first right), with Wong Partnership Lawyers, Joel Quek and legal team in their briefing on the Digicel court case, in Singapore on Saturday 14 October 2023.(picture supplied).
Minister for Treasury, Hon. Ian Ling-Stuckey was being briefed by the PNG Government legal team in Singapore, over a taxation dispute with former owners of Digicel PNG.
Mr Ling-Stuckey’s meeting with Wong Partnership Lawyers, currently acting on behalf of the PNG Government, was to determine the best way forward to collecting outstanding tax of K350 million, from former owners of Digicel PNG.
Mr Ling-Stuckey explained that PNG is involved in a taxation dispute with the former owners of Digicel PNG, stating, “The stakes are high. K350 million in tax revenues, as well as legal costs.”
“ Unfortunately, rather than this case being considered by PNG courts, it is being heard in an arbitration seated in Singapore.
“ The fundamental and erroneous claim is that the 2022 tax involved, the Additional Company Tax, discriminated against the foreign-owned Digicel.
Mr Ling-Stuckey says that revenues must be protected to protect basic government services to Papua New Guineans.
“ If we don’t collect the revenues, we can’t spend the money on the services that our people expect of Government. PNG’s level of taxation as a share of GDP declined significantly from 2014 to 2019.
The Marape-Rosso Government is committed to stopping this decline and lifting this ratio to at least 17.9 per cent by 2027..
In a statement released in Singapore, Mr Ling -Stuckey said this is still well below the level in similar countries according to the World Bank. Part of lifting this revenue ratio is ensuring everyone pays their fair share of tax.
He added that the PNG tax laws must be enforced, and called on all businesses operating in the country, whether domestic or international, to comply with laws that have been passed by the government.
“This is part of a fundamental understanding between businesses and Government :PNG wants businesses to thrive and make profits and create jobs, but this must be done within the laws of our country.
“ The shareholders of our domestically owned Bank of the South Pacific, which also paid this tax, would be surprised by this argument.
“How can you claim a tax discriminated between domestically owned and foreign owned companies, when it is applied to both? They both met the clear objective criteria of having over a 40 per cent market share.
“And this high level of concentration was chosen for tax policy reasons, as it is usually associated with high levels of market power that can lead to monopoly-type profits.”
“This could be a long-running case, with the State’s advisers indicating that it may only be resolved by 2026,” he said.
The legal costs of the arbitration will be high, with the Government already spending considerable funds for the international tribunal, as well as its own Singapore based lawyers.
“ But the stakes are also high,” he adds.
“Not just K350 million which is held in an escrow account at PNG’s Central Bank, but also for the principle that our tax laws apply equally to domestic and foreign firms, and that the tax laws must be enforced. We should not be bullied.
“As Treasurer, let me assure everyone that I will ensure that the funding continues to be provided year after year, until we have won this case”.
Digicel also operates across Vanuatu, Nauru, Samoa, Tonga and Fiji.