Papua New Guinea

Individual - Other issues

Last reviewed - 17 December 2019

Treatment of flow-thru business entities

In Papua New Guinea, individuals may conduct their business through various different structures, including as a sole trader, a partnership, or a trust.

A partnership is required to submit a return of income to the IRC. The net income disclosed in the partnership return is then shared amongst the individual partners for inclusion in their income tax returns. Similarly, losses are also able to be shared amongst partners to offset their individual income.

Trusts that operate a business in Papua New Guinea will be deemed to be resident in Papua New Guinea unless certain criteria are satisfied. The trustee is generally taxed at 30% of the net income of the trust; and unless the trust is a unit trust that meets certain criteria, the income is also taxed in the hands of the beneficiaries who are presently entitled to a share of the net income.