Papua New Guinea Tax Profile

7 Tax Authority Tax Authorities Tax audit activity Appeals Internal Revenue Commission Link to Internal Revenue Commission The tax authority has limited resources to conduct audits and income tax audits are not common. Returns are selected for tax audit by the tax authority primarily based on industry, for example, mining. A tax audit may be opened into any tax return filed. A typical tax audit commences with a letter requesting provision of supplementary analysis or information. Taxpayers are advised to contact their tax advisor immediately when a tax audit commences or any correspondence is received from the tax authority. Key focus areas for the tax authority in tax audits conducted in recent years have included: GST refunds Group tax (employee withholding), especially individual foreign contractors The tax authority recently redesigned the format of income tax returns to enable benchmarking between taxpayers by industry classification. We expect that this will lead to audits of taxpayers where the reported results are significantly different to industry averages. The new tax return forms also require disclosure of international dealings and this data is expected to result in transfer pricing reviews. The tax authority's approach to tax audits is largely a manual approach including detailed consideration of invoices and key documents. The tax authority is transitioning to using more sophisticated tools to identify taxpayers for audit. Assessments are issued to taxpayers following lodgement of their tax return. If a taxpayer disagrees with an assessment, the taxpayer has 60 days time from the date the assessment was issued to object to the assessment. Where a full and true disclosure has not been made the Commissioner may amend an assessment at any time in cases involving tax evasion or avoidance, or in other cases the assessment may be amended within six years of the tax becoming due and payable. Where a full and true disclosure has been made the time period for amending an assessment is three years. Salary and wage assessments may be amended up to six years after the assessment. KPMG © 2015 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. 12

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