Papua New Guinea Personal Tax Guide


A guide to the personal tax system in Papua New Guinea, including tax thresholds, benefits, allowances and rebates. Provided by KPMG’s Port Moresby Office.

Personal tax rates

The current rates of income tax applicable to resident and non-resident individual taxpayers, applying since 1 January 2019, are shown in the table below. Earnings are expressed in PNG Kina:

Resident Individuals Threshold Threshold Rate
0-12,500 0%
12,500 22%
20,000 30%
33,000 35%
70,000 40%
250,000 42%

Non-resident individuals do not get the benefit of the tax free threshold, nor of any rebates, and are thus initially taxed at 22% for all earnings up to K20,000 annually and then at the same marginal rate bands as for residents.

Income subject to tax

A PNG-resident individual is subject to tax on his or her worldwide income. A non-resident of PNG will only be subject to PNG income tax on that income that is considered to have a PNG source. The concept of residency is normally related to where the individual ordinarily lives, subject to certain other statutory tests in the PNG domestic tax law and potentially modified also by provisions in the DTAs that PNG has concluded.

Administration of personal income tax

The tax year is the calendar year ended 31 December.  Alternative year ends are not granted to individual taxpayers.

An individual whose only PNG income consists of fully taxed salary and wages is generally not required to lodge an income tax return (unless specifically asked to by the Internal Revenue Commission). Persons in receipt of any more than K100 in other income, excluding taxed dividend income, are still required to lodge income tax returns.

Dividend withholding tax (DWT) is a first and final tax for individuals resident in PNG as well as non-resident entities and individuals. Thus dividend income that has been subject to DWT does not need to be included in individual tax returns.

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In respect of provisional tax and lodgement requirements for individuals, these are similar to those noted in the company tax section.

Salary and wage income

Salary and wage income is subject to its own special rules in the PNG tax regime. Those rules include the legal imposition of an assessment period of two weeks (one fortnight) instead of an assessment period of one year. This means that there are generally no tax refunds in cases where employees are employed for only part of the calendar year.

Employees are required to complete declaration forms at the beginning of their employment, and when their applicable circumstances change, to assist employers and the IRC to calculate the correct deductions of tax.  Failure to do so means the top marginal rate of tax must be applied.

Employers are responsible for the deduction and remittance of salary and wages tax to the IRC and any shortfalls will be recovered from them and not the employees. Employers remit this tax on a monthly basis and lodge an annual reconciliation with IRC.

Employees with less than K100 in non salary and wages income, the latter not including dividends subject to DWT, are not required to lodge income tax returns in PNG unless specifically requested to by the IRC.

Employee benefits and allowances

Most benefits and allowances, in addition to normal salary and wage income, provided to employees are taxed in the hands of those employees directly. For a number of such employee benefits the tax law provides either a maximum prescribed value or an exemption.

Employee benefit Taxable value per fortnight


1. provided in PNG

2. provided outside PNG

3. mess/barracks


Nil to K2,500 depending on area and market value of rent or accommodation

Based on actual cost to the employer

Nil to K60 depending on area

Housing allowance Cash allowances are generally subject to tax at the marginal rates.  However the taxable amount is Nil for employees on Approved Low Cost Housing Schemes. Other employees with an IRC approved Housing Variation may be taxed on prescribed values applicable to location and value of accommodation plus any excess of housing allowance above allowable housing expenditure, such as rent paid.
Motor vehicles K125 if provided with fuel and K95 if no fuel provided
Annual leave fares Exempt where one annual leave fare is provided to point of origin or recruitment (for employee and their dependants). Equivalent cost of travel within PNG also exempt.  Where PNG travel is substituted for overseas travel the exemption extends to the cost of accommodation.
School fees Nil if paid by the employer directly to the school for annual school fees of dependant children at primary or high school, but not tertiary-level education
Superannuation Nil but note employer contributions to a non-PNG resident fund are not deductible to the employer
Cash allowances Generally taxable in full, subject to any formal substantiation of business usage


The PNG system allows certain rebates against the tax imposed on salary and wages income. The most commonly used of these is where a taxpayer fully maintains dependants such as their spouse, a student child in primary or secondary school or their parents. The level of dependant rebates is however not high, with the total of all dependant rebates limited to K1,050.

The PNG system also has provision for the payment of housing allowances against which reductions may be taken for specified housing expenditure.  This means that personal home loan interest can effectively be tax deductible if correctly structured.

There is a mechanism whereby an employee can claim for legitimate business related expenditure incurred directly by them where no reimbursement from the employer is made.

This mechanism requires full documentary substantiation to the IRC and works by means of a 25% rebate on total net expenditure (less the first K200). This rebate cannot exceed the total salary or wages tax deducted during the relevant year.

This guide to Papua New Guinea’s tax system is produced by KPMG’s Papua New Guinea office and is reproduced here with permission.


  1. Betrin Geluwa says

    Thank you for the simplified explanation on Tax rates, charges and deduction…

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