Digicel execs leave PNG following tax demand

Digicel execs leave PNG following tax demand

The story of the recently reported US$100 million tax levy in Papua New Guinea that has so far targeted only two companies – one of which is operator Digicel Pacific – has now taken a rather dramatic turn. It appears senior Digicel staff have left the country.

Reuters cites police and government sources for the information, though it is not clear why the senior staff of Digicel have left.

AFP cites sources that say Digicel's chief executive for Papua New Guinea, its chief sales officer and five other employees had flown out of the country by last Friday.

The levy was passed into law last month. It targets any company with a market share greater than 40 percent in telecoms or banking. Digicel is the only telecoms company to which this applies. In the banking sector too only one company seems to have been hit: Bank of South Pacific.

On top of the US$100 million tax levy an additional US$14 million fine for non-payment is also said to be due, with prison sentences among possible penalties for non-payment. Whether the Digicel executives can expect arrest as and when they return is not clear.

Despite Digicel comments that the one-off tax was "sudden, bizarre and unprecedented" the government has not indicated any plans to rethink its action. 

There have also been warnings that the tax may endanger Digicel Pacific’s US$1.6 billion takeover by Australia's Telstra. Telstra, however, has kept a low profile on the matter, suggesting that, while it waits for regulatory approvals to go through, issues like these are for the seller to resolve.

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