- Papua New Guinea (PNG) faces challenges in developing its economy and promoting downstream processing.
- The current value-added tax (VAT) regime in PNG has limitations, including the cascading effect, complexity, and favoring imports over local production.
- The cascading effect of VAT results in multiple layers of taxation, increasing the overall tax burden and hindering profitability for downstream industries.
- The complexity of the VAT regime diverts resources and time away from core business activities, discouraging small and medium-sized businesses from engaging in downstream processing.
- VAT on imports creates an uneven playing field for local producers, making locally manufactured goods less competitive.
- Implementing a goods and services tax (GST) regime would enhance competitiveness by eliminating the cascading effect of taxation and reducing the tax burden on each stage of production and distribution.
- GST is a simpler and more straightforward tax system compared to VAT, reducing administrative burdens for downstream processors.
- A GST regime would level the playing field between locally produced goods and imports, encouraging local production and supporting downstream processing industries.
- Implementing a GST regime would create a conducive environment for downstream processing and foster economic growth in PNG.
Source: thenational.com.pg
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
