Papua New Guinea

Taxable period 

The tax year is generally the period 1 January to 31 December; however, application may be made for a substituted tax year-end. These will normally be granted where the substituted tax year-end coincides with the accounting year-end of an overseas holding company. A company’s tax year does not need to be the same as its accounting period. 

Tax returns 

Papua New Guinea operates on a full assessment basis, and companies are required to lodge an annual CIT return showing the calculation of taxable income for the year. In addition, the return must provide detailed disclosures in relation to income derived and expenses incurred during the year of income. 

A company must file a tax return within six months from the taxpayer’s year-end where the return is not lodged through a registered tax agent. However, an automatic extension to nine months from the taxpayer’s year-end applies for corporate tax lodged through a registered tax agent. 

Payment of tax 

CIT is collected under a provisional tax system. Under this system, tax is paid in respect of a company’s current year profits (i.e. payments made in the year of income are in respect of income derived in the same year as the payment is due). 

Provisional tax is assessed by the IRC based on the last return lodged. In the event that no tax was payable on the previous year’s return, the Commissioner General has the right to estimate the amount of tax based on any other information available. 

Provisional tax is payable in three equal instalments, each due by the last day of the month following the end of the third, sixth, and ninth months of the taxpayer’s tax year (typically 30 April, 31 July, and 31 October for a 31 December year-end).. 

Applications may be made to reduce provisional tax assessed if the tax due for the year in question is expected to be lower than the provisional tax assessed. Where estimated provisional tax is less than 75% of the income tax ultimately assessed, additional tax may be levied. Additional tax at a rate of 20% will be assessed, based on the difference between the estimate lodged and the provisional tax originally determined, or the actual tax payable, whichever is less. The Commissioner General has the discretion to require payment of additional tax. 

Mining, petroleum, and gas companies are subject to advance payments tax, a system that broadly mirrors the provisional tax system in place for non-resource companies. The main difference for resource companies is they have the option to lodge an estimate of their taxable income for the year prior to 120, 210, and 300 days from the commencement of its income year, which the IRC uses to assess each advance payments tax instalment.  

Following the lodgement of the CIT return, the IRC will serve a notice of assessment on the company. The balance of tax payable for a year of income, after the application of provisional tax (or advance payments tax in the case of a resource company) and other tax credits or rebates, is due to be paid within 30 days of the date of service of the notice of assessment.