PNG TAX OVERVIEW/MERGERS & ACQUISITIONS
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 IRC). Persons in receipt of any more than 100 kina 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 entities, including individuals, which are non-residents of PNG for income tax purposes. Thus dividend income that has been subject to DWT does not need to be included in individual tax returns. In respect of provisional tax and lodgement requirements for individuals, these are similar to those noted in the company tax section above.
5.4.4 Taxation of salary and wages Salary and wage income Salary and wage income is a separate subset of taxable income in PNG which is subject to its own special rules. Those rules include the legal imposition of an assessment period of two weeks (one fortnight) instead of an assessment period of one year. This is done for two main reasons:
> to ensure that individuals who are in receipt of only salary and wages income do not need to lodge an income tax return, unless specifically requested by the IRC to do so. > to ensure that employees who leave PNG part way during the financial year do not receive income tax refunds solely for that reason. 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. 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. 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.
THE PNG INVESTORS’ MANUAL - THIRD EDITION
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