News

Thursday 09th October, 2003

Forestry loses out on VAT

THE National Forest Service (NFS) does not have a Value Added Tax (VAT) registration number, a report has uncovered.
This means the NFS only pays VAT but does not collect any VAT on timber royalties, reforestation levies, log tags and other income.
A due diligence investigation into the internal financial controls of the NFS by a local investigation company — Quest Investigations International Limited — found that all VAT paid and sent out was not reported in the VAT expense account but was debited to the same account.
“It is observed that all those entries made after July 1, 1999, when VAT was introduced has been wrongly entered,” the report stated.
“On payment vouchers, we have not sighted the Certificate of Compliance for making VAT payments.”
The investigation by Quest was carried out between February 24 and June 30 this year at the request of the NFS.
Copies of the report have been given to the Office of the Prime Minister, Ombudsman Commission and the office of the chairman of NFS.
A check with the Internal Revenue Commission yesterday confirmed that the National Forest Service had no VAT registration number. The IRC, however, has on its records Papua New Guinea Forest Authority as having a VAT registration number.
This, according to the suspended managing director of National Forest Service David Nelson, is wrong because NFS is the implementing arm of the industry and not the PNGFA, which is composed of the board.
He said he had tried to fix the problem while in office but continuous suspension by Forest Minister Patrick Pruaitch has handicapped proper follow-ups.
IRC boss David Sode said it was not necessary for government agencies or departments to have VAT registration numbers unless they were engaged in conducting business or involved in “VATable” activities involving hundreds or thousands of kina.
Meanwhile, the report by Quest Investigation International Limited recommended that VAT be properly accounted for in the VAT expense account and that the tax be budgeted and recorded as an expense under separate cost centre so NFS could go back to the IRC and claim the amount.
“The amount of refund from the government and or the Internal Revenue Commission should be worked from July 1, 1999, and all VAT paid should be calculated and reconciled from the day VAT was introduced,” the report recommended.
“Refund for VAT paid should be adjusted against past and or future payment of income tax under PAYE scheme.”

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News

Thursday 11th March, 2004

Leaders shun proposal for national ID card system

A national identity card system aimed at providing good governance and promoting and maintaining accountability and transparency has been proposed to government but authorities seemed uninterested.
The idea is the brainchild of visiting consultants of Quest Investigation International Limited which is run by forensic accountant Shiraz Karmally.
Mr Karmally said that in August 2002 prior to the same recommendation made by the Commonwealth election review team, he had floated the idea to government and other leaders but no one seemed to be interested even though the product was designed to address most of the chronic problems facing the country like election process defects, accurate census figures, property rights for customary landowners, transparency and accountability.
He said the card system, to be called “kumul kat”, was the result of many years’ experience and lessons learned from things that had gone wrong in Papua New Guinea.
“The kumul kat proposal will cost a few hundred million kina but would save untold millions in the long run and contribute to good governance and PNG development,” he said, adding the proposal was aimed to strengthen the government’s ability to govern by a service that will provide legal recognition of every individual from every land group in the country.
“All Papua New Guineans who had attained the age of 18 would possess their individual kumul kat. Accurate common roll and computer controlled voting would remove all fraud from the national elections. With immediate application of adequate resources the scheme could be introduced for the 2007 elections,” Mr Karmally said.
He said the proposal had a dual advantage in that it would strengthen good governance and at the same time contribute to empowering citizens to become more involved in the modern economy while holding onto their customary land and land group integrity.
“Once implemented, this service will provide a service to all Papua New Guineans, every single government department and every province,” Mr Karmally said, adding that the card would store information like name, personal identification number, address, date of birth, blood group, colour photograph, left thumb print and signature.
He said the kumul kat database would be designed in such a way that would enable it to relate to other databases and the system would be completely integrated and stored in a main server with hub stations in every province.

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