Analysis: testing out Papua New Guinea’s new Large Taxpayer Office

Papua New Guinea’s new Large Taxpayer Office (LTO) has now been in operation for three months. Karen McEntee, Tax Partner at KPMG, checks in to see how it is progressing.
The Internal Revenue Commission’s new Large Taxpayer Office (LTO) was launched in October 2018 to cater for the IRC’s largest taxpayers.

It caters to taxpayers with a turnover of more than K100 million and/or an undisclosed substantial aggregate tax contribution.

‘Although it is still early days, the feedback from Chief Financial Officers has been very positive.’ -KPMG’s Karen McEntee

The LTO now has 19 account managers managing 97 taxpayers, with a further 100 taxpayers expected to be migrated to the unit by the end of 2019.  The LTO also has 11 audit officers focusing on LTO taxpayers and split across various industry sectors.

Personal touch

Each taxpayer was informed by letter of their dedicated case officer who deals with all of their tax matters. Sam Loi, Assistant Commissioner Large Taxpayer Office, has advised that the LTO are actively trying to meet all of their taxpayers in person, be it through meet-and-greets in Port Moresby and upcoming events in Lae and Kokopo, or through private meetings with overseas-based finance teams when they fly in to Port Moresby.

According to Sam Loi, the LTO’s objective is to better service taxpayers through a centralised and holistic approach.

The aim is to provide a more streamlined and faster service. This plays out as a ‘one-stop-shop’ for all tax matters, including stamp duty, tax clearance applications, certificates of compliance, statements of account and tax returns.

Whereas in the past these services were spread across various tax units—leading to unnecessary delays and repeated requests for the same information—under the LTO one IRC officer would deal, for example, with both the stamp duty and tax clearance aspects of the same transaction.

Positive feedback

Although it is still early days, the feedback from Chief Financial Officers has been very positive.

Experiences recounted include a reduction in tax clearance turnaround times from three or four weeks to one week, monthly compliance and payments being processed within the hour, and instant access to case officers without queues.

‘This is likely, however, to come with a closer scrutiny of taxpayer activities’

There has been mixed feedback regarding legacy issues: while some are happy to finally see the tidy up of legacy issues on their IRC statements of account, others are still waiting for these issues to be resolved despite follow-up.

Looking forward, the LTO promises a more streamlined service for taxpayers, online e-filing (permitting the lodgement of returns through an electronic portal), and regular LTO news updates to taxpayers.

This is likely, however, to come with a closer scrutiny of taxpayer activities, with continued industry-based audits, embedded risk assessment processes and transfer pricing investigations all on the near horizon for LTO taxpayers.

The LTO’s ‘service mindset’ is very apparent when speaking with Sam Loi and is a very welcome advance in perspective. The LTO has made a number of strides in a short period of time towards streamlining their processes and we look forward to seeing further efficiencies for the benefit of taxpayers in the near future.

Karen McEntee is Partner, Taxation Services at KPMG Papua New Guinea