Papua New Guinea

Income Tax Act 2025

From 1 January 2026, a new income tax act is in force, replacing the previous 60 year old legislation.  

The most significant changes to the tax regime include:

• Capital gains tax (CGT): CGT will apply to interests in mining and oil and gas projects.
• Resources taxation: Whilst ring fencing of project income and expenditure is generally maintained, changes to depreciation calculations, including deductions for acquisition costs and the reduction in the additional profits tax uplift factor from 15% to 13%, may impact the resources sector. However, the impact of these provisions will be limited to those projects commencing after the new act takes effect. For existing projects, the resource taxation elements of the old act will continue to apply. 
• Taxation of employment benefits: The taxable value of certain benefits (in particular motor vehicles) has been changed and increased. There are also some additional benefits included. 
• Taxation of non-residents: Non-residents operating through a permanent establishment (PE) in Papua New Guinea (PNG) will no longer be subject to tax on PNG source income through withholding. PEs are required to file an income tax return and pay tax on a net income basis. PEs are also subject to a branch profits tax of 15%.
• There are also some changes to the existing withholding tax (WHT) applicable for payments to non-residents with the introduction of a broad technical fees provision replacing the existing management fee WHT.

Further subsidiary regulation and additional guidance is expected to be released during 2026.

If the matters above are relevant to your circumstances, then these potential changes should be considered and discussed with a PwC contact.

MLI and MAAC ratified

At the end of August 2023, the Internal Revenue Commission announced that Papua New Guinea has ratified the Multilateral Administrative Assistance Convention (MAAC) and the Multilateral Instrument (MLI), establishing Papua New Guinea's presence within the realm of international tax collaboration. However, there have been no consequential amendments introduced to legislation through to 2025.

OECD Pillar 2 (GloBE Rules)

The OECD Pillar 2, also known as the Global Anti-Base Erosion (GloBE) rules, establishes a 15% global minimum effective tax rate for large multinational enterprises (generally those with consolidated annual revenues exceeding EUR 750 million) to address base erosion and profit shifting. The rules operate through mechanisms such as the Income Inclusion Rule (IIR), Undertaxed Profits Rule (UTPR), and an optional Qualified Domestic Minimum Top-up Tax (QDMTT), with the top-up tax generally collected by the jurisdiction where low-taxed profits arise or, failing that, by the parent entity's jurisdiction.

As of February 2026, the Internal Revenue Commission has not announced any implementation by Papua New Guinea of the GloBE rules, including no adoption of a QDMTT or other elements. In the absence of domestic implementation, any top-up tax liability would primarily be collected by the parent jurisdiction of the multinational group rather than by PNG.