According to Robin Fleming, the chief executive officer of the Bank South Pacific Financial Group Ltd (BSP), a lot of businesses in Papua New Guinea are not banking their cash. Fleming agreed with the Internal Revenue Commission’s commissioner-general, Sam Koim, that these businesses operated in a black economy to avoid paying tax.
Mr Fleming said BSP had found cash wasn’t coming back to the bank, and branches had to frequently restock with money. “We agree with IRC that many businesses avoid the tax net. There are many businesses who don’t bring their cash into the bank,” he said.
“If they don’t bring their cash to the bank, that would indicate that they are operating in a black economy. Many of our outlying branches or smaller branches around the country, we have to bring cash in far more frequently than expected.
“Manus, for example, you would expect that cash would circulate on the island, it goes to the trade stores, the trade store brings it back to BSP. But we find that in many of those areas, the cash doesn’t get back to BSP and therefore we have to bring more cash in to fulfil the needs of our customers and make sure that the ATMs are stocked up,” Fleming explained.
“If any of those businesses do come in with large cash holdings, they would be subject to more questionings to confirm whether they are registered with IRC, why it’s a round amount, because when someone brings K2 million in cash, this raises suspicions as well.”
Image credit: BSP Financial Group Limited
