KUA CAUTIONS GOVT ON NEW INCOME TAX REFORM

By Nigel MADO

The Shadow Minister for Minning and Petroleum, Kerenga Kua has raised concerns regarding the recently introduced Income Tax bill on the floor of Parliament this week. Citing Section 28 of the draft bill that could potentially contradict all other laws associated with it.

The first point the shadow minister raised looked into section 28 of the draft bill, adding that that as soon as this law comes into operation, it could override any other law that contradicts it in relation to resource project agreements.

He explained that for resource projects like mining and petroleum, a state negotiating team is appointed to enter into negotiation with a developer for a proposed project and in those negotiation’s they touch on the fiscal regime that will underpin the project, and that always invariably includes the taxation regime that the state side proposes to impose on that project.

It can be a mining agreement, or it can be a petroleum agreement, which includes a gas agreement, and any other resource too.

He explained that an agreement is signed, these are then proposed to the state to be legislated into law. Citing the PNG LNG project, which has a number of fiscal stability agreement acts, that were subsequent to the signing of the agreement were brought into this parliament and entered into, legislated into law.

“Now, and they have their own effect and consequences, and the developer and the state, all of us are now following those legislated fiscal stability agreement acts. What this section is now saying is that once this law comes into effect, you can forget all those other legislations, in the case of a conflict between the two.”