Ronesh Dayal, the acting CEO of Bank South Pacific, warned that the tax increase would penalise growth in the sector.

 

Dayal said the tax rate only applied to commercial banks, while all other companies in the country would still maintain a 30% tax rate, PNG Today reported.

 

He urged the government to promote a stable taxation and regulatory regime to encourage investment in the country by local and international companies.

 

Kina Bank CEO Greg Pawson echoed Dayal's sentiments, saying that the tax increase was disappointing as it targets a sector of the market that is critical for supporting PNG's economic growth aspirations.

 

Pawson expressed concern that the tax increase would impact the ability of challenger brands in PNG to continue an aggressive and inclusive growth agenda.

 

He said key elements of Kina Bank's K30 million capital investment program were now at risk due to the tax increase. Pawson called for more open dialogue with the government on tax increases and urged the government to think through carefully any policy adjustments.

 

The Association of Superannuation Funds of Papua New Guinea (ASFPNG) said BSP's 2022 profit of over K1 billion was a substantial return on investments of three major super funds.

 

However, ASFPNG president Ian Tarutia expressed concern about the tax increase on banks to 45%.

 

He said the association supported BSP's Supreme Court action to overturn the state's decision to impose the banking levy, which has now been replaced by a new tax on all banks.

 

Tarutia said that the tax increase would adversely impact BSP's performance in 2023 and beyond.

 

Nonetheless, the superannuation industry would continue to support the banking sector to deliver the best results for shareholders and customers.