Move by James Marape raises fears that Papua New Guinean island could become a tax haven

This article is more than 1 year old

This article is more than 1 year old

The prime minister of Papua New Guinea has declared Manus Island will become a corporate tax-free zone, prompting fears it could become a Pacific tax haven.

James Marape was speaking at an investor summit in Port Moresby on Wednesday, where he outlined his vision to boost PNG’s economic prospects.

“At this time let me … just give you an indication as where we might go: Manus will be declared as the first corporate tax-free zone in our country,” Marape said.

“We can still collect tax from other areas.”

He gave no more details and his office told Guardian Australia the proposal would be fleshed out by the treasurer at some point.

Jason Ward, of the Centre for International Corporate Tax Accountability and Research, said the proposal was vague but sounded like it intended to make Manus the first of PNG’s 22 provinces to become a tax haven.

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Ward said the proposal could prove lucrative for Australian companies based in Manus but running operations elsewhere.

“In the context of the speech it sounds like the conclusion is that Manus has no other economic potential,” Ward said. “This has obvious consequences for tax collections in the rest of PNG and elsewhere, including Australia, for companies that set up there to take advantage of no corporate tax but have operations outside of Manus.”

Marape reportedly said the intention to make Manus a tax-free zone was in response to the regular negative exposure the island had received. He also signalled he planned to cut red tape for business and said he was “all about maximising gain from the resources that we have in this country”.

“We intend to remove impediments in the system so that you will have ease of doing business,” Marape said. “Gone are the days where you think you owe a favour to a politician to push your papers through for you.

“We want to remove impediments in the system so that your project submissions, you’re dealing with [the] government, is done with less blockages.”

At the same time he voiced his support for new whistleblower protections and anti-corruption measures.

“We are trying to create a safe environment and give you, as businessmen and business women and as company, the impetus as businessmen, businesswomen and company that you have a safe environment that is less susceptible to corruption and bribery and lawlessness,” he said.

“You can then ensure that you grow as a business in our country and together we can prosper.

“You can prosper for your shareholders and we prosper for our shareholders, the 8 million people of Papua New Guinea.”