Verified Facts
The tax rates in Papua New Guinea range from 22% to 42% for personal income tax, with a corporate tax rate of 30% and a value-added tax (VAT) rate of 10%.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Papua New Guinea has a territorial taxation system, which means that only income earned within the country is subject to tax, regardless of the taxpayer's residency status. However, residents are also subject to tax on their worldwide income, with a credit given for foreign taxes paid. To be considered a resident for tax purposes, an individual must be physically present in Papua New Guinea for at least 6 months in a calendar year, or have a permanent home in the country and be absent for less than 6 months. Non-residents are only taxed on their Papua New Guinea-sourced income.
The tax system in Papua New Guinea is administered by the Internal Revenue Commission (IRC), which is responsible for collecting taxes, processing tax returns, and enforcing tax laws. The IRC also provides guidance and support to taxpayers through its website and offices. Taxpayers can also seek advice from qualified tax professionals, who can help with tax planning, compliance, and dispute resolution.
Personal Income Tax
| Income Bracket (PGK) | Tax Rate |
|---|---|
| 0 - 12,000 | 22% |
| 12,001 - 30,000 | 25% |
| 30,001 - 60,000 | 30% |
| 60,001 - 100,000 | 35% |
| 100,001 and above | 42% |
| Taxpayers in Papua New Guinea are entitled to various deductions and allowances, including a personal allowance of PGK 12,000, as well as deductions for mortgage interest, charitable donations, and medical expenses. Tax returns must be filed by April 30th each year, and taxpayers can file online or through a tax agent. Late filing can result in penalties and interest charges. |
Corporate & Business Tax
- The corporate tax rate in Papua New Guinea is 30%, with a reduced rate of 20% for small businesses with an annual turnover of less than PGK 250,000.
- Small businesses may also be eligible for tax incentives, such as a 5-year tax holiday for new businesses in certain industries.
- Papua New Guinea has several free zones, including the Port Moresby Free Zone and the Lae Free Zone, which offer tax exemptions and other incentives to businesses operating within these areas.
- Businesses must register with the IRC and obtain a tax identification number (TIN) to operate in Papua New Guinea.
- Companies must also file annual tax returns and pay any taxes due by the deadline to avoid penalties and interest charges.
VAT / Sales Tax
- The standard VAT rate in Papua New Guinea is 10%, which applies to most goods and services.
- A reduced VAT rate of 0% applies to certain basic goods, such as food, medicine, and education services.
- Some goods and services are exempt from VAT, including financial services, insurance, and real estate transactions.
- Papua New Guinea has a tourist refund scheme, which allows international travelers to claim a refund of VAT paid on certain goods and services.
For Expats & Foreign Workers
- Tax residency rules in Papua New Guinea are based on physical presence, with individuals considered residents if they are present in the country for at least 6 months in a calendar year.
- Papua New Guinea has double taxation treaties with 11 countries, including Australia, New Zealand, and the United Kingdom, to avoid double taxation of income.
- Expats and foreign workers may be required to pay social security contributions, which are used to fund public healthcare and other social services.
- Remittance rules in Papua New Guinea require taxpayers to declare and pay tax on foreign-sourced income, with a credit given for foreign taxes paid.
- Expats and foreign workers may also be eligible for tax exemptions on certain types of income, such as foreign-earned income.
- It is recommended that expats and foreign workers consult a qualified tax professional to ensure compliance with Papua New Guinea tax laws and regulations.
Crypto & Investment Income
- Investment income, such as dividends, interest, and rents, is subject to tax in Papua New Guinea, with a withholding tax rate of 15% applying to certain types of income.
- Capital gains tax applies to the sale of assets, such as real estate and shares, with a tax rate of 15% applying to gains made on the sale of assets held for more than 12 months.
- Cryptocurrency is considered a taxable asset in Papua New Guinea, with gains made on the sale of cryptocurrency subject to capital gains tax.
- Taxpayers must declare and pay tax on investment income and capital gains in their annual tax return, with penalties and interest charges applying to late or non-payment of tax.