"The Great Timber Heist: The Logging Industry in Papua New Guinea" states that through declaring little to no profit, the Group does not have to pay the 30% income tax on profit imposed by the PNG government on businesses. Meanwhile, Rimbunan Hijau has accumulated around US$32million in tax credits - in just seven years.
The Group's Corporate Policy Manager, Axel Wilhelm, has called the report ‘baseless and inaccurate', claiming it is little more than an attack by ‘Western anti-forestry activists'. Report author Frédéric Mousseau, however, says through under-pricing exports and over-pricing expenses, ‘…the logging industry is able to evade paying hundreds of millions of dollars in taxes - vitally needed revenue for [PNG]'.
PNG - despite its forests playing a key role in the global climate policy going forward from COP21 - has outstripped other African and Asian producers of commercial tropical timber, with exports largely serving the Chinese market. Despite this, the report claims the Group's subsidiaries - the largest local player, with over one quarter of the export timber market - has claimed operating losses almost every year since 2000. This has resulted in most paying no corporate income tax in over 15 years.
‘What the data suggests is that there is indeed tax evasion happening on a massive scale in Papua New Guinea related to the logging activities of these firms… here you have numbers and the numbers are speaking very, very loudly as far as we are concerned.'
PNG's Internal Revenue Commission and Forest Authority did not respond to requests for comment on the report. Approximately one third of the 180,000 square miles of the country are now under commercial lease, mainly for logging.
Wilhelm, who is based at Rimbunan Hijau's PNG offices, stated in an email that ‘it is not possible to comment without seeing the claim', saying that the Institute had not shared its findings directly with the company. He continued ‘I can comment as a matter of principle that Rimbunan Hijau is assiduous in meeting all its legal obligations, including payment of tax'.
This may be a case of ‘timber' for Rimbunan Hijau and other local logging companies on denial of underpricing their product. The average price of timber from exporters such as Cameroon and Burma, both major forces, was USD$388 per cubic metre. This was almost twice the price recorded for PNG, which sat at just US$210 per cubic metre.
Tall tales and trees, perhaps.