The Government of Papua New Guinea Cracks Down on Logging Companies
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May 13, 2021 8:00 AM PT
Oakland, CA — On May 10, 2021, Papua New Guinea’s Internal Revenue Commission (IRC) announced a crackdown on the logging industry — accusing it of being “one of the most delinquent sectors insofar as tax compliance is concerned, and guilty of “egregious” transfer pricing, “entrenched” tax evasion, and “deceptive behavior.” The announcement comes after two reports from the Oakland Institute, The Great Timber Heist and The Great Timber Heist Continued, exposed massive tax evasion by logging companies that have been plundering the third largest rainforest in the world. The reports revealed how these firms have evaded corporate income tax for decades by continually claiming losses every year, despite millions of cubic meters of tropical timber exported. The investigation found, for instance, that all together the 16 subsidiaries of the largest logger in the country, the Malaysian Group Rimbunan Hijau, declared losses of US$277 million from their operations between 2000 and 2016.
The Commission has launched an audit of 20 companies and expects more to be added to the list as it scales up compliance activities, which could include criminal prosecutions. This latest move by the government of Papua New Guinea comes after an increase in the log export tax in 2019, which already had an impact on the activities of logging firms. Rimbunan Hijau announced in 2020 that it was ceasing logging activities in the country as a result of the increase in log export tax.
“The Oakland Institute praises the government of Papua New Guinea for tackling the fraudulent activities of the logging industry — critical to stop the environmental devastation and to put an end to the loss of livelihoods and widespread human rights abuses caused by the companies involved,” said Frédéric Mousseau, Policy Director of the Institute. “Papua New Guinea sets an example for the rest of the world by showing that governments in the Global South have the power to stand up to the powerful interests responsible for environmental devastation, deforestation, and climate change.”