The Oakland Institute, in its report titled “The great timber heist: The logging industry in Papua New Guinea”, said the firm’s 16 subsidiary companies in PNG were suspected to have under-reported their profits between 2000 and 2011 despite the country’s forest industry raking in an annual revenue of up to US$300 million.
By under-declaring or not declaring profits at all, the companies did not have to pay the 30 per cent income tax on profit that PNG imposes on business, it alleged.
The logging group had also accumulated around US$32 million in tax credit in just seven years, said the report.
According to the author of the report, Frederic Mousseau, the companies often cheated the system by underpricing exports and overpricing expenses.
The former involved a buyer “officially” paying a lower price to purchase goods from a seller. Overpricing expenses involved companies, for instance those under the same group, charging each other artificially high prices for goods, equipment and services.
This in turn would make the company’s expenses higher than its revenue, allowing the company to declare an operational loss for the year.
Mousseou then called for PNG’s Internal Revenue Commission to take action against such companies, to defend the “interests and rights of Papua New Guinea citizens”.
Meanwhile, The Malaysian Insider quoted Rimbunan Hijau Group dismissing the report as “baseless and inaccurate”.
The group’s corporate policy manager, Axel Wilhelm, told the portal that large-scale forestry companies in PNG sometimes operated at a loss due to volatile international prices and operational cost pressures.
“Rimbunan Hijau Group meets all its legal obligations, including payment of taxes, duties, levies and royalties.
“This report is just the most recent groundless attack by Western anti-forestry activists who have been making exaggerated and inaccurate claims about forestry in Papua New Guinea for nearly 20 years,” he told the portal.
Wilhelm said the Oakland Institute was just trying to sustain a campaign previously funded by Greenpeace, to halt commercial forestry in PNG.
He also said there was no truth in claims that PNG’s forests were being decimated, adding that 80 per cent of the country remains forested.