Tax laws Papua New Guinea
Papua New Guinea (PNG) operates a comprehensive taxation system encompassing various taxes, including income tax, goods and services tax (GST), and other levies. The primary legislative framework governing taxation includes the Income Tax Act 1959, the Goods and Services Tax Act, the Stamp Duties Act, the Customs Act, and the Excise Tax Act.
Individual Income Tax:
Residency and Taxable Income: Residents are taxed on their worldwide income, with potential foreign tax credits to offset taxes paid abroad. Non-residents are taxed only on PNG-sourced income, including passive income such as dividends, interest, and royalties, which may be subject to withholding tax (WHT).
Tax Rates: For residents, the progressive tax rates are as follows:
Up to PGK 20,000: 0%
PGK 20,001 to PGK 33,000: 30%
PGK 33,001 to PGK 70,000: 35%
PGK 70,001 to PGK 250,000: 40%
Above PGK 250,000: 42%
Corporate Income Tax:
Taxable Entities: PNG resident companies are taxed on their worldwide income, while non-resident companies are taxed only on PNG-sourced income. Non-resident companies' passive income is subject to WHT, typically withheld by the payer.
Tax Rates: The standard corporate tax rate is 30% for resident companies. Non-resident companies are taxed at 48%, and commercial banks face a rate of 45%.
Goods and Services Tax (GST):
- Rate and Registration: GST is levied at a rate of 10%. Businesses with an annual turnover exceeding PGK 250,000 must register for GST, while those below this threshold may register voluntarily.
Recent Developments:
In December 2024, Australian gold mining company St Barbara received a tax assessment from PNG's Internal Revenue Commission (IRC) alleging over PGK 523 million (approximately AUD 206.8 million) in owed taxes, spanning nearly two decades and including fraud allegations. St Barbara disputes these claims, citing legal errors and miscalculations, and plans to appeal.
Tax Incentives:
PNG's tax laws provide various incentives for investors, including tax holidays, accelerated depreciation, and exemptions, particularly in sectors like mining and petroleum. The government periodically reviews these incentives to attract investment while ensuring compliance with tax obligations.
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