In brief: The Papua New Guinea Government has delivered its 2015 National Budget, which contains a number of amendments to taxation legislation that are part of the Government's efforts to improve compliance and strengthen its revenue base. Senior Associate Ryan Warokra reports.

BACKGROUND

The Minister for Treasury, the Honourable Patrick Pruaitch MP, delivered the 2015 National Budget on 18 November 2014. The Government has announced a number of amendments, including to the Stamp Duties Act (Chapter 117) and the Goods and Services Tax Act 2003.

STAMP DUTIES ACT (CHAPTER 117)

The proposed amendments to the Stamp Duties Act (Chapter 117) are aimed at implementing a new rental compliance scheme. Under the new provisions, it will be compulsory for landlords/lessors of real property to provide their Taxation Identification Number on lease agreements in order to have them stamped.

The amendments are intended to assist the Internal Revenue Commission cross-check tax returns and identify landlords/lessors that lease real property but do not declare rental income in their tax returns.

A Taxation Identification Number is a unique number issued to each taxpayer upon registration with the Internal Revenue Commission.

Agreements for lease of real property are dutiable and must be stamped under the Act to be good and useful at law and admissible as evidence.

GOODS AND SERVICES TAX ACT 2003

The proposed amendments to the Goods and Services Tax Act 2003 (the GST Act) will introduce liabilities for directors of companies in relation to Goods and Services Tax.

Currently, there are no provisions in the GST Act to hold directors of a company liable for failing to ensure that the company complies with its GST obligations. The proposed amendments are intended to establish a penalty regime for company directors similar to the existing regime under the Income Tax Act 1959 that imposes penalties for directors in respect of non-compliance by a company of its salary and wages tax obligations.

Under the new GST Act provisions, if a company fails to remit GST to the Internal Revenue Commission, its directors may be held personally liable for the non-compliance and required to pay a penalty equal to the amount that the company ought to have remitted to the Internal Revenue Commission.

TIMING

The legislative amendments will take effect on and from 1 January 2015.

WHAT DOES THIS MEAN FOR YOU?

Stamp Duties Act (Chapter 117)

Landlord/lessors should include their Tax Identification Number on all real property leases entered into on or after 1 January 2015.
For agreements entered into before 1 January 2015 but that are unstamped, the Internal Revenue Commission may request this information before stamping the lease agreement.

Goods and Services Tax Act 2003

Directors of companies should be aware of the potential personal liability should their company fail to comply with its obligations under the GST Act.