Papua New Guinea
Residents of Papua New Guinea are taxed on their worldwide income. A foreign tax credit may be available to offset foreign tax paid against PNG tax payable (see the Foreign tax relief and tax treaties section).
Non-residents are generally taxed only on their PNG-sourced income. A non-resident's PNG-sourced passive income, including dividends, interest, and royalties, may be subject to WHT. The payer of the dividend, interest, or royalty must withhold the relevant amount of the tax and remit this to PNG's Internal Revenue Commission (IRC).
Personal income tax rates
Income derived by individuals, including salary or wages income, will generally be taxed at the following rates:
The rates for residents are as follows:
|Taxable income (PGK*)||Tax thereon (PGK)||Tax on excess (%)|
*Papua New Guinea kina
The rates for non-residents are as follows:
|Taxable income (PGK)||Tax thereon (PGK)||Tax on excess (%)|
Small and medium-sized enterprise (SME) taxation of individuals
The 2020 Budget included changes to introduce a new SME taxation regime. The regime, which only applies to individuals and excludes employment income and income from professional services, applies such that all tax compliance obligations for the SME (e.g. goods and services tax [GST], personal income tax [PIT]) are satisfied where tax is calculated and paid on the following basis:
- 2% of turnover for an SME that derives less than PGK 250,000 in an income year, or
- a PGK 400 annual fee for a business with a turnover of less than PGK 50,000.
Once a taxpayer elects out of the SME regime, or exceeds the threshold, they will be taxed as an individual (i.e. at marginal tax rates).
The changes are intended to encourage the development and increased compliance of SME businesses in Papua New Guinea.