Business gets serious about Papua New Guinea tax review


Business in Papua New Guinea is now starting to focus on the looming deadlines for the country’s taxation review – a review that could have major implications for business, including the country’s resources sector.

Tax_pic_webWith the PNG Government planning for additional revenue of K585 million (US$229 million) to be collected by the PNG Internal Revenue Commission (IRC) this year, the pressure is on to improve the way the country is taxed.

PNG’s taxation review will look at competitiveness and efficiency in PNG’s current tax system and non-tax revenues, and identify opportunities for greater fairness and simplicity. It will also look at ways of improving compliance and outline possible changes to the country’s tax mix.

The review, undertaken by a committee of distinguished Papua New Guineans headed by Chairman Sir Nagora Bogan, is being supported by the Department of Treasury, PNG Customs, the IRC and the IFC.

Chairman of the PNG Taxation Review Committee, Sir Nagora Bogan

Taxation Review Committee members

  • Sir Nagora Bogan (Chairman, right)
  • David Sode (Deputy Chairman)
  • Sir John Luke Critton
  • John Lohberger
  • Aivu Tauvasa


It will incorporate the long-awaited review of the taxation regime for the mining and petroleum industry, PNG’s most lucrative industry sector.

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Submissions deadlines

Submissions to the review have been invited, with a deadline of 31 March 2014 for those on mining and petroleum, and 30 April for other submissions.

Business bodies such as the PNG Chamber of Mines and Petroleum, the Manufacturers Council of PNG and the PNG Chamber of Commerce and Industry have advised Business Advantage PNG they are currently planning submissions to the review.

‘As a community, there’s an opportunity to let government know our perception of how things work and what’s important to us. We can’t just expect them to know. We need to make sure business is taken into account.’

While he says it’s too early to anticipate the review’s recommendations, Bouke Wagenaar, Partner Taxation Services at Deloitte PNG, tells Business Advantage PNG that the Government will be looking to collect more tax from business to fund tax breaks for the masses.

Sensible rules

Instead of new taxes, an improved focus on the efficient application of existing tax rules would be desirable.

‘This isn’t a legislative issue. PNG has a lot of sensible rules but they’re not necessarily applied effectively. If they can ramp up the IRC, make it more efficient and make sure people who should be registered to pay tax are registered, that would make a big difference.’

Wagenaar says the IRC has already taken some steps to improve matters, through the introduction of new technology and an internal reorganisation, but there is a way to go before the tax system benefits fully from technology.

‘At present, the new system only covers withholding tax and only the largest tax payers are on it,’ he says.

Technology can have a downside too, however: there are concerns that automated work processes at the IRC could lead to penalties being applied much more often than is the case today.

Expert submissions

Deloitte and KPMG are just two accounting firms currently consulting with clients with a view to making their own expert submissions to the review, while PricewaterhouseCoopers has already lodged a number of submissions, according to Partner David Caradus.

Wagenaar’s advice to business people is to provide feedback to the review on the experience of complying with the current tax system:

‘As a community, there’s an opportunity to let government know our perception of how things work and what’s important to us. We can’t just expect them to know. We need to make sure business is taken into account.’

PNG’s current tax rates at a glance

  • Corporate income tax rate   30%
  • Capital gains tax rate   0%
  • Branch/non-resident company tax rate   48%
  • Dividend withholding tax   17%
  • Interest withholding tax   15%
  • Royalty withholding tax   10%
  • Foreign contractors tax   12%
  • Management fee withholding tax   17%
  • Superannuation funds   25%
  • Trusts   30%
  • Goods and services tax (GST)   10%

Personal income tax thresholds:

  • K0-K10,000   0%
  • K10,000         22%
  • K18,000         30%
  • K33,000         35%
  • K70,000         40%
  • K250,000       42%

SourceThe PNG Investors’ Manual, 3rd edition (POMCCI)

Tax threshold increase?

Prime Minister Prime Minister O’Neill has already flagged this week a possible increase in the tax threshold of ordinary workers from the current K10,000 (US$3935) up to K20,000 (US$7870).

‘This would be a very sensible thing to do, because the threshold is quite low compared with other jurisdictions and isn’t indexed,’ says Wagenaar. ‘It would also reduce the payroll burden on businesses employing casual workers and help deliver better pay conditions for government workers.’


  1. Samuel Viu says

    I am also agree with both Nigel and JBs comment. I am Final year student at UOG I spend four years just to get a degree and go out with a lousy salary of K750 when certificate holders and diploma graduates go out with more then a grand per fortnight. Its un fair with PNG government to impose more tax to such workers and reducing dependent rebates to less than three.

  2. Janet Toddie says

    I totally agree with JB. If we are being taxed through the salaries and wages that we receive, why is the government deducting tax again from the goods and services that we pay for?? that is so unfair!!

  3. I am woking with Porgera gold mine. My salary is K2000.00. but iam taxed at 42% of my salary which is equals K840.00 of K2000.00. I go home with around K800.00 after my NASFUND deductions.
    With that K800, iam also taxed at the bank when i withdraw money. and when i go to the store and do my little shopping, iam also taxed 10% VAT. Come on, tabout 70% of of what i work for is taken away by tax which is really not good. You see, iam taxed three (3X) times. this is really really unfaire and iam sure the PNG tax system is ripping its own people.
    If we are to be taxed and goods and services, we might aswell must not be taxed from the pay office or salarries.. Please do something about it and reduce the tax for the poor png grassroots.

    JB K

  4. Nigel Onge John says

    I teach at Wawin National High School. As the Head of department for English, I am paid a gross salary of K1095.11 per fortnight. I pay K145.84 tax and K65.71 super fund. I go home every fortnight with a net of K883.56.

    While my expatriate colleague who is doing the same thing as me is getting a net salary of close to K2000 per fortnight. Some of these expatriates are being trained by us again but get more than us. I sometimes feel that my country is unfair with me.

    All I am asking is for national teachers to pay no or less tax so that at least I go home with K1000.00 every fortnight. I also suggest teachers should have a fixed taxation system and not progressive

    nigel onge john
    Wawin National High School, Lae, Morobe Province, PNG.

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