Seeking benefits: PNG Prime Minister Michael Somare
ExxonMobil denies PNG tax waiver
ExxonMobil has strongly denied reports that it will not pay income tax on earnings from the giant PNG LNG liquefied natural gas project under recent changes to Papua New Guinea’s tax law.
Reports by Radio Australia and Radio New Zealand claimed former PNG treasurer Bart Philemon said a move to exempt investors in the $15 billion project from paying income tax set a bad precedent as it could deprive the country of revenue for future projects. He reportedly said big investors in future big projects would expect similar treatment.
According to the report on Radio New Zealand’s Web site, PNG’s Parliament last week exempt partners in the ExxonMobil-led PNG LNG venture from paying interest withholding tax and general sales tax on their investments.
The exemptions were part of amendments to the Income Tax Act and the Goods and Services Act, the report said.
ExxonMobil’s PNG LNG public & government affairs manager Miles Shaw rejected claims that the project would not pay income tax.
“The suggestion that the project will not pay income tax is absolutely false,” he wrote in a statement sent in response to a query from Upstreamonline.
Radio New Zealand reported PNG Prime Minister Michael Somare defended the exemptions, which had been negotiated over two years, saying they would help to bring in investors.
The broadcaster said Somare was “jealously guarding” a 30% corporate tax on the project, which would he said would benefit PNG greatly.
The project will start LNG exports from two trains to be built near Port Moresby in 2013 and 2014, with production set to peak at 6.3 million tonnes per annum.
The PNG government’s Independent Public Business Corporation holds a 16.6% stake in the project. ExxonMobil holds 33.2% and Oil Search holds 29%.