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Value Added Tax Revenue Distribution Act 1998

PAPUA NEW GUINEA

Value Added Tax Revenue Distribution Act 1998

No. 39 of 1998.
Certified on: 17.12.93

ARRANGEMENT OF SECTIONS.

1. Interpretation -

"Commissioner General"
"mining levy"
"Provincial VAT Trust Account"
"this Act"
"top up distributions".

2. Establishment of trusts.
3. Establishment of the Trust Accounts.
4. Value added tax revenue to be paid into trust accounts.
5. Additional revenue to be paid into Provincial VAT Trust Accounts.
6. Value of distributions to provinces.
7. Order of precedence of distributions from the Trust Accounts.
8. Trustees to decide when payments shall be made to the Consolidated Revenue Fund.
9. Time of distribution of revenue to the provinces.
10. Administration of the Trust Accounts.
11. Power of Delegation.
12. Regulations.

AN ACT

entitled

Value Added Tax Revenue Distribution Act 1998,

Being an Act to make provision for the control and disbursement of revenue accruing consequent on the imposition of a value added tax in Papua New Guinea, to be read as one with the Value Added Tax Act 1998,
MADE by the National Parliament to come into operation on 1 January 1999.

1. INTERPRETATION.

In this Act, unless the context otherwise requires -

"Commissioner General" means the Commissioner General of Internal Revenue;
"mining levy" means the mining levy imposed by virtue of Subdivision III.10F of the Income Tax Act 1959;
"Provincial VAT Trust Account" means, in the case of any province, the trust account established under Section 3(3) for the receipt of that province's value added tax revenue;
"this Act" includes the regulations;
"top up distributions" means the amount payable into a Provincial VAT Trust Account from the National VAT Trust Account pursuant to Section 5.

2. ESTABLISHMENT OF TRUSTS.

(1) There shall be established a National VAT Revenue Trust -

(a) consisting of six trustees being -

• (i) the Commissioner General; and
• (ii) the Governor of the Central Bank; and
• (iii) four persons, each one of whom shall represent one of the four main regions of the country, who shall be nominated and appointed by the Provincial Governor's Council; and

(b) whose purposes, functions, powers and procedures shall be as prescribed.

(2) There shall be established for each province a Provincial VAT Trust -

(a) consisting of two trustees being -

• (i) the Commissioner General; and
• (ii) the person holding, for the time being, responsibility for the fiscal affairs in the province; and

(b) whose purposes, functions, powers and procedures shall be as prescribed.

3. ESTABLISHMENT OF THE TRUST ACCOUNTS.

(1) Trust accounts for the receipt of revenue arising from the imposition of a value added tax shall be established in accordance with this section.

(2) There shall be established in the Central Bank a trust account entitled the National VAT Trust Account which shall be subject to the provisions, as prescribed, of the National VAT Revenue Trust.

(3) There shall be established in each province a trust account, in a bank nominated by the Governor of the respective province, entitled the (insert name of Province) VAT Trust Account, which -

(a) shall be subject to the provisions, as prescribed, of the Provincial VAT Trust; and
(b) shall be established no later than the 1 July, 1999.

4. VALUE ADDED TAX REVENUE TO BE PAID INTO TRUST ACCOUNTS.

All revenue collected from the imposition of a value added tax in Papua New Guinea shall, immediately following receipt, be paid into the trust accounts established under this Act, as follows:-

(a) value added tax revenue collected pursuant to Section 6 of the Value Added Tax Act 1998 shall be paid into the National VAT Trust Account established under Section 3(2); and
(b) value added tax revenue collected pursuant to Section 8 of the Value Added Tax Act 1998 shall, to the extent that it is collected on supply made within a province, be paid into the Provincial VAT Trust Account for that province.

5. ADDITIONAL REVENUE TO BE PAID INTO PROVINCIAL VAT TRUST ACCOUNTS.

The following additional amount shall be paid into the Provincial VAT Trust Accounts:-

(a) in each province in which a mine operates which is liable to pay mining levy - an amount equal to 30% of the amount of the mining levy paid by the respective mining operation in that province, which shall he paid into the Provincial VAT Trust Account forthwith on receipt of the mining levy; and
(b) during the period 1 July 1999 to 31 December 1999 - such additional amounts as are required to meet any shortfall between the amounts deposited into a Provincial VAT Trust Account and the amount needed to meet the revenue entitlement of that province as prescribed pursuant to Section 6(1).

6. VALUE OF DISTRIBUTIONS TO PROVINCES.

(1) For the period 1 August 1999 to 31 December 1999, each province shall be entitled to receive an amount of value added tax and mining levy revenue as prescribed, and such amount shall equal not less than 5/12ths of the amount collected by them as provincial sales tax in respect of the 12 months ended 30 June 1999.

(2) In the calendar year 2000 and in subsequent years, the amount of revenue each province shall be entitled to receive shall equal the total amount of revenue correctly deposited into the respective Provincial VAT Trust Account, as reduced by the amount of value added tax refunds correctly paid pursuant to Section 7(b)(i).

(3) Distributions made to the provinces shall not, in total, exceed the sum of 30% of the total value added tax collected under Sections 6 and 8 of the Value Added Tax Act 1998, plus 30% of the total mining levy.

7. ORDER OF PRECEDENCE OF DISTRIBUTIONS FROM THE TRUST ACCOUNTS.

Revenue held in the Trust Accounts established under this Act is appropriated and shall be paid and distributed as follows:-

(a) for the National VAT Trust Account -

• (i) the first charge shall be for the payment of refunds of value added tax as prescribed; and
• (ii) the second charge on the account shall be top up distributions due and payable to Provincial Governments by virtue of Section 6(2); and
• (iii) the balance remaining shall be paid to the Consolidated Revenue Fund; and

(b) for each Provincial VAT Trust Account -

• (i) the first charge shall be for the payment of refunds of value added tax revenue, as prescribed; and
• (ii) the second charge on the account shall be the amount due and payable to that Provincial Government by virtue of Section 6; and
• (iii) the balance remaining shall be paid to the Consolidated Revenue Fund.

8. TRUSTEES TO DECIDE WHEN PAYMENTS SHALL BE MADE TO THE CONSOLIDATED REVENUE FUND.

(1) The Trustees shall, from time to time, by mutual agreement, decide the balance required to be kept in the respective Value Added Tax Revenue Trust Account to meet commitments arising from the provisions of Section 7(a) and (b).

(2) The balance referred to in Subsection (1) may vary from week to week and month to month.

(3) When the balance required to be kept at any one point in time has been reached any further payments into the Trust Account shall forthwith be paid to the Consolidated Revenue Fund.

9. TIME OF DISTRIBUTION OF REVENUE TO THE PROVINCES.

A province shall, within 21 days of the end of each month, be entitled to receive the total amount of revenue paid into its respective Provincial VAT Trust Account during the preceding month, as reduced by the amount needed to pay any amounts appropriated by virtue of Section 7(2)(a) and subject to the limit set by Section 6(3).

10. ADMINISTRATION OF THE TRUST ACCOUNTS.

(1) The trust accounts established under the provisions of this Act shall be administered by the Commissioner General, who shall be responsible for the transactions relating to these accounts.

(2) In his administration of the trust accounts, the Commissioner General shall be subject to the direction of the trustees appointed under Section 2.

(3) The trustees may not direct the Commissioner General to perform any action which would breach any provision of this Act.

11. POWER OF DELEGATION.

(1) A person appointed to exercise any powers, or to perform any duty, under the provisions of this Act, may delegate, by writing under his hand, any of the powers or duties under this Act (other than this power of delegation).

(2) A power or function delegated under Subsection (1) may be exercised or performed by the delegate in accordance with the instrument of delegation.

(3) A delegation under this section is revocable at will and does not prevent the exercise or performance of a function by the person who delegated his powers or duties

12. REGULATIONS.

The Head of State, acting on advice, may make regulations not inconsistent with this Act, prescribing all matters that are required or permitted to be prescribed or that are necessary or convenient to be prescribed for the purpose of giving effect to this Act.

I hereby certify that the above is a fair print of the Value Added Tax Revenue Distribution Act 1998 which has been made by the National Parliament.

Clerk of the National Parliament.

I hereby certify that the Value Added Tax Revenue Distribution Act 1998 was made by the National Parliament on 24 November 1998.

Speaker of the National Parliament.