Papua New Guinea

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. 

The complete list of PNG-source income types subject to NRT under Section 14(1)(a), together with the applicable domestic rates (as final tax), is as follows: 

• Dividends: 15% (standard); 30% for dividends paid by a non-profit body or former non-profit body out of exempt income.

• Interest: 15%.

• Royalties: 10% (non-associate recipient); 30% (associate recipient).

• Technical fees (including administrative, management, technical, professional, and consultancy services): 15%.

• Annuities: 15%.

• Natural resource amounts: 15%.

• Insurance premiums (on gross premiums for risks in Papua New Guinea): 3%.

• Entertainment fees (payments to non-resident entertainers or entertainment groups): 10%.

Royalties 

The definition of ’royalty‘ is broad and includes periodic or lump-sum payments as consideration for the use of, or right to use, any copyright, patent, trademark, design, model, plan, secret formula, or process, as well as payments for the use of, or right to use, industrial, commercial, or scientific equipment (covering equipment leases).

The royalty definition also extends to various intangibles and, depending on the facts and nature of the arrangement, software-as-a-service (SaaS) and similar digital / cloud services.

Double taxation treaties (DTTs)

A DTT may provide a different (typically lower) tax outcome for certain items where the non-resident qualifies under the treaty (e.g. resident in a treaty country, beneficial owner, and no PNG PE attribution per Section 75). PNG's treaties (Australia, Canada, China, Fiji, Germany, Indonesia, Korea, Malaysia, New Zealand, Singapore, United Kingdom, plus the MLI) generally focus on dividends (capped at 15%), interest (often 10%, or 15% in some cases, like Malaysia), royalties (often 10%, or 15% under Fiji), and technical fees (0% in many treaties, or 10% - 15% in others).

DTTs do not typically reduce rates for annuities, natural resource amounts, insurance premiums, or entertainment fees; Papua New Guinea retains the full domestic rate on these.

Notes

1. There is no WHT on interest when:
   • interest is paid or credited to a licensed financial institution in Papua New Guinea, the Bank of Papua New Guinea, or the state, or
   • the interest income is otherwise exempt income in the hands of the recipient.
2. A royalty paid to a non-resident associate of the payee will suffer a 30% WHT. Where the non-resident is not an associate of the payee, the WHT rate will be 10% (or 48% of the taxable income derived from the royalty if the non-resident chooses to lodge an income tax return in Papua New Guinea).
3. The treaty with Germany has not yet been ratified by Germany.

Business income payments WHT

Income derived by local contractors in certain industries is covered by the business income payments WHT regime. The industries affected include:

• Building and construction.

• Road transport.

• Motor vehicle repairs.

• Security services.

• Construction of items of joinery.

Businesses affected are required to have a nil withholding authority and to produce it when entering into contracts with their customers. A nil withholding authority will be issued by the Commissioner General upon satisfaction of certain requirements and will remain in force for a period specified in the authority unless revoked earlier. Payers are required to deduct a 10% WHT if payees do not produce a nil withholding authority.