Digicel Group slated the delivery of a large tax demand by authorities in Papua New Guinea, warning what it described as a perplexing and bizarre levy could impact the ongoing divestment of its Pacific subsidiary to Telstra.
In a statement, the Jamaica-based company explained an amendment to regulations in Papua New Guinea introduced on 25 March and approved by its parliament early last week, had landed it with an Additional Company Tax bill of PGK350 million ($99.4 million).
It was also hit with a fine of PGK50 million for failing to pay by 30 March.
Digicel claims to have previously received assurances from the country’s prime minister the tax proposal would not proceed. The operator group is in discussions with authorities related to this apparent commitment alongside consulting its legal advisers on the issue.
“Introduction of the new arbitrary, company-specific tax Act…without any consultation is perplexing not just for Digicel, but also for the Papua New Guinea economy given the reputational and credit rating implications of this sudden, bizarre and unprecedented tax”, the company added.
The operator is in the process of selling Digicel Pacific, which includes the Papua New Guinea business, for $1.6 billion to Telstra in a deal backed by the Australian government.
Digicel indicated the tax demand would likely delay the transaction even though it already had all but one of the approvals needed.Subscribe to our daily newsletter Back