Communications company Digicel is considering an appeal against a “sudden, bizarre and unprecedented” new income tax introduced by the Papua New Guinea government.
The tax would impose a one-off tax liability on Digicel of PGK 350 million (about US$100 million or €91 million), with a further penalty of an additional PGK 50 million (about US$14 million) for non-payment.
The so-called Additional Corporate Tax, part of a new income tax law, applies to all telecom and banking companies.
In a statement today, Digicel, which is owned by businessman Denis O’Brien, said it was “considering its legal options”.
The statement said the tax was imposed without consultation and was “confusing not only for Digicel but also for the economy of Papua New Guinea”. Under the new law, the disputed tax was due March 30.
At a meeting last week, Mr O’Brien said he had been assured by the Prime Minister that the new tax would not be imposed.
Digicel is currently in discussions with the government of Papua New Guinea and other relevant stakeholders to ensure this commitment is met, the company said in a statement.
Last year, Digicel struck an agreement to sell its Pacific arm to Australian telecom giant Telstra, valuing the deal at up to $1.85 billion (€1.58 billion).
Telstra operates telecommunications businesses and infrastructure in Papua New Guinea, Fiji and other Pacific markets.
Tax law will affect the timing of the announced sale to Telstra, with all but one of the regulatory approvals required to complete the transaction being obtained shortly before the tax became effective.
“This matter requires an urgent resolution given its impact on the sale of Digicel’s Pacific operations to Telstra, but also given the implications for all FDI exiting Papua New Guinea and the broader impact on Papua New Guinea’s reputation and creditworthiness. New Guinea at the international level.” the company statement reads.
“In parallel with these discussions, Digicel is also considering its legal options if this discriminatory tax is not eliminated.”
https://www.independent.ie/business/irish/digicel-considering-legal-options-after-papua-new-guinea-tax-41518257.html Digicel considering Papua New Guinea tax legal options