Papua New Guinea

A company will be deemed a resident for CIT purposes if it meets either the (i) incorporation test or (ii) the management and control test.

Incorporation test

A company incorporated in Papua New Guinea is automatically regarded as a PNG tax resident. However, the operation of the law of another country and a relevant double taxation treaty (DTT) may result in a company also being treated as resident in another country.

Management and control test

A company is a PNG tax resident if it is managed and controlled in Papua New Guinea, regardless of where it is incorporated. Generally, a company is managed and controlled in Papua New Guinea if key decisions affecting the company are made at directors’ meetings held in Papua New Guinea. This also includes a company incorporated outside Papua New Guinea that trades in Papua New Guinea and has its voting power controlled by resident shareholders.

Dual residence

An entity may be a tax resident of both Papua New Guinea and another country by application of domestic legislation. A DTT entered into between Papua New Guinea and another country may contain a tiebreaker test to determine the country of residence for the purposes of the DTT.

Permanent establishment (PE)

The concept of 'permanent establishment' – defined in Section 8 of ITA2025 – is central to the taxation of non-residents deriving PNG source income.  This is discussed in detail in the section dealing with the taxation of non-residents.