M’sian Logging Firm Evaded Tax in PNG, Claims Think Tank

PETALING JAYA: Malaysian logging firm Rimbunan Hijau Group has evaded tax and misreported its finances in Papua New Guinea (PNG), a US-based think tank has alleged.

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.