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Digicel staff flea after Papua New Guinea introduce $100M tax bill

Senior staff of Pacific telecom giant Digicel have left Papua New Guinea after a US$100 million tax was levied against the company, according to police and government sources.

The Papua New Guinean government last month passed a one-off levy on any company with a market share greater than 40 percent in telecoms or banking, affecting only Digicel in the telecoms sector.

The company was hit with an additional 50 million kina (US$14 million) fine for non-payment and executives could face “up to” six months in prison, according to the Australian Financial Review.

“At this stage I am not aware of them fleeing. But I know they are out of the country,” Communications Minister Timothy Masiu told AFP of the Digicel departures.

Sources close to the company told AFP that Digicel’s chief executive for Papua New Guinea, its chief sales officer and five other employees had flown out of the country by last Friday.

The Police Legal Office in Papua New Guinea told AFP it was advised to be prepared for search and arrest warrants but to date had not received anything in relation to the Digicel bosses.

Digicel last week criticised the one-off tax as “sudden, bizarre and unprecedented” and warned it may endanger the company’s US$1.6 billion takeover by Australia’s Telstra.

The Australian government contributed US$1.33 billion to Telstra’s buyout of Digicel Pacific, which has seen the deal framed as a strategic acquisition to block any Chinese state-owned firm buying the company — the South Pacific’s leading mobile and internet provider.

Papua New Guinea’s treasurer Ian Ling-Stucky said he was hopeful the Telstra sale would still proceed “by the end of the month”.

“No one is happy with having to pay a new tax. The complaints are expected. Indeed, we are expecting more complaints and challenges, but that usually comes with good economic reform process,” he said in a statement.

A Telstra spokesperson said its acquisition of Digicel is still awaiting “final regulatory approvals”.

“Therefore any issues that arise in the meantime, such as this tax, are for the seller to resolve,” the spokesperson said. AFP

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