State to refund K95 million to Bank South Pacific
Papua New Guinean’s largest retail bank will get half of K190 million repaid into its account, from additional company tax it paid to the State, in 2022.
In a joint media statement today, Internal Revenue Commission [IRC] Commissioner Sam Koim and Bank South Pacific Financial Group [BSP] Chief Executive Officer Mark Robinson announced that a settlement of the Supreme Court judicial review of the PNG Government's imposition of the additional company tax has been reached.
“As announced in December 2022, pending the outcome of that judicial review, the amount of K190 million was paid by BSP into an escrow account with the Bank of PNG”, the statement reads.
Under the terms of settlement, BSP will get a refund of K95 million, and the balance K95 million will be paid to the IRC in full, the final settlement of the litigation concerning the imposition of the additional company tax.
BSP took the State to court following a decision by the Marape Government in 2021, to raise additional revenue in the 2022 National Budget.
This saw then Treasurer, Ian Ling-Stuckey introducing a ‘Dominant Industry Player Levy’ on any commercial bank which had a total asset value exceeding 40 percent including mobile telecommunication companies who also dominated the PNG market.
BSP took out a Supreme Court Reference challenging the government’s decision to charge the bank an additional company tax.
The joint statement reads “the settlement is conditional upon consent of the Attorney General of PNG, the superannuation funds who formally supported the judicial review by BSP and, once those are provided, final consent of the Supreme Court of Justice of PNG. A period of approximately a month is contemplated for these consents.
“The expected financial outcome is that BSP and the IRC will each receive K95 million in the first or second calendar quarter of 2024.”
BSP CEO Mark Robinson said “I am pleased that this matter is able to be settled, and thank our relevant superannuation fund shareholders for their unwavering support of BSP.
IRC Commissioner Sam Koim said “the IRC is pleased to settle this outstanding tax matter with BSP and appreciates the professionalism of all parties involved in addressing this case. The Prime Minister, James Marape, in his role as the Treasurer, has issued instructions for this outstanding matter to be settled and we are happy to settle this on mutually agreed terms.”
In the 2023 National Budget, the government scrapped the additional company tax revenue, made amendment to the law, increasing company tax for all commercial banks from 30 to 45 percent.