“Transfer pricing” is allegedly taking place in PNG whereby logging companies underestimate the value of timber exported from PNG, allowing them to reduce export taxes paid to the PNG government.
Timber is allegedly being channelled through exporters’ overseas subsidiaries, with importers buying the wood at far higher prices than those stated to the PNG tax office.
Australian forestry minister Eric Abetz said he was concerned about any practice which could distort the timber market or encourage illegal logging.
AusAid, which funded a 2001 review of PNG forestry revenues, is working with the PNG government to face challenges in the country’s forestry industry.
Figures from the International Tropical Timber Organisation show big drops in export prices for 11 types of PNG hardwood since the mid-1990s. Export prices in West Africa or Malaysia either increased or remained stable during the same time.
