BSP Financial Group Ltd has filed a special Supreme Court reference under s.18 of the Constitution to declare the new income tax law as unconstitutional.
The matter came before Chief Justice Sir Gibbs Salika, sitting as a single Supreme Court judge at the Waigani Supreme Court yesterday and was further adjourned to July 5 to allow interested interveners to sort out other preliminary issues.
This was after Solicitor General Tauvasa Tanuvasa representing the Attorney General and the State asked for an adjournment since he was short-served with the application and needed time to file his responds and application to intervene in the proceeding.
Other interveners interested in the matter included the Internal Revenue Commission, Comrade Trustee Services, Nambawan Super and Nasfund.
The application by BSP Group seeks to declare the Income Tax (2022 Budget) (Amendment) Act 2021 unconstitutional and invalid.
The amended Income Tax was certified on March 29, 2022 and published in the gazette on the same day.
It provided for BSP to make a payment of K190 million as additional company tax made payable either on January 1 each year or September 30 commencing in 2022.
A breach of the requirements for payment under s.170F(2)(a) of the Act, would potentially expose the particular additional taxpaying company (and its officers, servants and agents) separate from administrative penalties, to the risk of penalties of a fine not exceeding K50,000 or imprisonment for a term not exceeding six months.
BSP argues that the additional company tax only applied to BSP together with its officers, servants or argents which may be allegedly liable for the monetary penalty or imprisonment.
Hence, BSP argues that it has been directly and adversely affected by the operation of the said provisions of the amended Income Tax Act, such that the validity, or otherwise, of the said provisions has a direct negative financial and commercial impact on BSP, its shareholders and the public who use BSP’s services.