Papua New Guinea

PNG resident companies are liable for income tax on their worldwide income. Companies that are not resident in Papua New Guinea are only required to pay tax on income sourced in Papua New Guinea. A non-resident’s PNG-sourced passive income, including dividends, interest, and royalties, may be subject to WHT. It is ordinarily the case that the payer of the dividend, interest, or royalty must withhold the relevant amount of the tax and remit this to PNG’s IRC.

Papua New Guinea levies CIT on companies (other than commercial banks) on a flat rate basis.

Generally, trading profits and other income (except income that is specifically exempt) of resident companies and the PEs of non-resident companies in Papua New Guinea are assessed tax at a rate of 30%. Further, non-resident PEs must pay a remittance tax of 15%.

For commercial banks, the rate will depend on the level of taxable income. Below 300 million PNG kina (PGK), the rate of CIT is 35%, for taxable income in excess of that level, rates will progressively reduce from 43% to 35% year-by-year through to 2034.

Taxation of non-residents

The key concepts relevant to a non-resident deriving PNG-source income are: 

• PNG-source income.

• Implications of having a PE in Papua New Guinea.

• Non-resident (withholding) tax.

PNG-source income

Section 9 of the ITA 2025 defines PNG-source income, which establishes the territorial scope of PNG’s taxing rights over non-residents.

In broad terms, PNG-source income includes:

• Business income attributable to a PE in Papua New Guinea, or from sales in Papua New Guinea of goods / merchandise of the same or similar kind as those sold through a PE, or from similar business activities carried on in Papua New Guinea. 

• Passive income, such as dividends, interest, royalties, technical fees, annuities, natural resource amounts, insurance premiums relating to PNG risks, rent from PNG real property, and gains on disposal of PNG assets. 

• Any income that Papua New Guinea has the right to tax under an applicable tax treaty.

The taxation outcome for a non-resident deriving PNG-source income therefore depends critically on whether the non-resident has a PE in Papua New Guinea under Section 8. See ‘Permanent establishment (PE)’ in the Corporate residence section for more information.

Implications of having a PE in Papua New Guinea

Where the non-resident has a PE in Papua New Guinea, the attributable business profits are taxed on a net income basis under the ordinary income tax rules at the CIT rate of 30%. In addition, the repatriated profit of the PNG PE (calculated under Section 71 as a notional remittance based on accounting profits adjusted for assets / liabilities) is subject to non-resident tax at 15%. This creates a potential combined effective rate of approximately 40.5% on fully repatriated profits, the same effective tax rate for a non-resident shareholder receiving a dividend from its PNG subsidiary.

This brings into focus checking whether the non-resident has a PE under the terms of a double taxation treaty (DTT), as a broader treaty PE (e.g. a shorter service PE threshold) could trigger net-basis taxation (30% CIT on attributable profits plus 15% branch profits tax on repatriated amounts) even where domestic rules alone would not.

Non-resident (withholding) tax

Non-resident tax (NRT) under Section 14 of ITA 2025 imposes a final tax (via withholding under Part 10) on specified categories of PNG-source income derived by non-resident persons (individuals or corporations) where the income is not attributable to a PE in Papua New Guinea. This streamlined regime consolidates previous separate WHTs into a uniform framework, effective from 1 January 2026, with rates applied to gross amounts as set out in Schedule 1, Part 1. See the Withholding taxes section for more information.

International transportation income tax

Income derived by overseas shippers or charterers carrying passengers, livestock, mail, or goods out of Papua New Guinea is taxable in Papua New Guinea. The tax is calculated as 2.4% of gross income. The IRC may exempt the overseas shipper from tax if the shipper’s home country exempts PNG shippers from a similar tax.

Local income taxes

There are no provincial or local income taxes in Papua New Guinea.