Press Release

Cooperation through forums such as APEC plays a key role in strengthening international tax system

26/07/2018

The Base Erosion and Profit Sharing (BEPS) workshop currently underway in Port Moresby emphasised more on strengthening international tax system within the Asia Pacific Economic Cooperation (APEC) region.

The Base Erosion and Profit Sharing (BEPS) workshop currently underway in Port Moresby emphasised more on strengthening international tax system within the Asia Pacific Economic Cooperation (APEC) region.

Speaking at the opening of the workshop, Commissioner General of the Papua New Guinea Internal Revenue Commission, Betty Palaso stressed that multinational enterprises now represent a significant proportion of global Gross Domestic Product (GDP) and its no secret there are many that seek to exploit legal gaps and mismatches in tax rules, which pushes the boundaries of acceptable tax planning.

In addition to that, she said the complexities of digitisation further muddy the water of traditional concepts of online establishments.

“Tax and policy officials have to grapple with intreprative challenges trying to adapt new business models into a dated legislative framework for example, generally speaking through our tax treaties, we know that right to tax business profits of a non-resident business arise if a permanent establishment exist.

“The concept of permanent establishment traditionally relied heavily on the existence of a physical business presence but with the evolution of modern digital businesses, often there is no physical presence.

“Therefore, our rules must adapt and keep up with these challenges but these challenges are most effectively met if there is a coordinated effort globally.

“Tax administrations have for far too long worked independently in assessing the activities of multinationals that have structures and activities across multiple jurisdictions. It is only with this close collaboration that we can work together to close these gaps.

“The guidance from the BEPS Action plan and wide international collaboration and adoption of BEPS Actions have already seen tangible and immediate results,” said Ms Palaso.

She added that the work forms part of the focus on fostering international tax corporation and transparency work, which is one of the three policy priority areas for 2018.

It has been recognised that cooperation through forums such as APEC plays a key role in strengthening the international tax system.