purposes for as little as six months to be a resident of PNG for domestic tax purposes. For purposes of the residency tests, a person’s facts and circumstances should be weighed and considered appropriately. For example, whether a person has a usual place of abode outside PNG should also be considered. Because PNG has a relatively limited treaty network, the residency test under PNG domestic law can be very important.
Income subject to tax. Except for salary and wages, income is calculated by subtracting deductible expenses and losses from the assessable income of the taxpayer. The taxability of various types of income is discussed below.
Employment income. Salary, wages, allowances and most cash compensation is included in the employee’s assessable income in the year of receipt. Noncash benefits are either taxed in the employee’s hands (often at concessional rates) or are exempt from tax. No specific PNG tax is imposed on employers with respect to the provision of noncash benefits. However, SWT withholding obligations exist for employers to the extent that employees are taxed on such benefits.
Self-employment and business income. Taxable income from selfemployment or from a business is subject to PNG tax. Each partner in a partnership is taxed on his or her share of the partnership’s taxable income.
Directors’ fees. Directors’ fees are included in assessable income as personal earnings and are taxed in the year of receipt.
Dividends. Dividends paid to resident individuals, resident trust estates and nonresidents by PNG companies are subject to a 15% dividend withholding tax unless the income is expressly exempt.
Dividends that have been subject to dividend withholding tax are excluded from the assessable income of resident persons, resident trust estates and nonresidents.
For dividends derived from nonresident sources, a foreign tax credit (FTC) may be allowed for foreign taxes paid. The FTC allowed is equal to the lesser of the foreign tax paid or the amount of PNG tax payable on that income.
Interest, royalties and rental income. Interest, royalties and rental income derived by residents are included in assessable income with a deduction allowed for applicable expenses.
If tax is paid in the foreign country on foreign income, the resident may be able to claim an FTC. If the foreign investment results in a tax loss (that is, deductible expenses exceed assessable income), the tax loss is quarantined and can only be offset against other foreign-source investment income.
Interest paid by residents to nonresident lenders is generally subject to a final withholding tax of 15% (subject to any reductions available under an applicable double tax treaty).
Accrued foreign company income. The PNG tax law does not currently contain controlled foreign company rules or any similar measures. Accordingly, income or gains accumulating in foreign companies or foreign trusts are typically only taxed on a receipt basis.
Converting transactions denominated in foreign currency into PNG kina amounts. Taxpayers are generally required to convert income amounts denominated in foreign currency into PNG kina (PGK) amounts at the time of derivation of the income. Likewise, taxpayers must convert expense amounts into kina amounts at the time of payment.
Realized foreign-exchange gains are assessable and realized foreign-exchange losses are allowable deductions, to the extent they relate to the derivation of income assessable in PNG.
Concessions for individuals on short-term assignments. PNG tax legislation does not contain concessions with respect to living away from home allowances. Any such allowances paid in cash are fully taxable to employees.
Taxation of employer-provided stock and stock options. The PNG tax law does not contain any specific rules that deal with the taxation of employer-provided stock options. However, discounts provided to employees on stock or options acquired under an employee stock scheme are generally taxed as ordinary income in the employees’ hands.
Capital gains and losses. Capital gains are generally not subject to tax in PNG. However, the disposal of a capital asset may be subject to tax to the extent the disposal takes place as part of a profit-making scheme or is part of the ordinary business of the taxpayer.
Deductions
Deductible expenses. To claim deductions, an individual must file an income tax return (see Section C). Expenses of a capital, private or domestic nature, and expenses incurred in producing exempt income are not deductible.
Some employment-related expenses may be rebated.
Business deductions. Losses and expenses are generally fully deductible to the extent they are incurred in producing assessable income or are necessarily incurred in carrying on a business for that purpose, and are not capital or of a capital, private or domestic nature. Deductions are allowed for salaries and wages paid to employees, as well as for interest, rent, repairs, commissions and similar expenses incurred in carrying on a business.
Specific records must be kept for all business expenses incurred.
Expenditure for the acquisition or improvement of assets is not deductible, but depreciation deductions may be claimed.
Rates. Personal income tax rates from 1 January 2024 are shown in the following tables:
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exploratory business visit or participate in a business negotiation).
Multiple-entry business visa. Multiple-entry business visas allow for multiple visits of up to 60 days from the date of arrival and are valid for 12 months. They allow for similar activities described in the previous visa category.
Business visa on arrival. Business visas on arrival are available for certain passport holders. They allow for a single visit of up to 30 days from the date of arrival at designated port of entries.
Employment is prohibited for these visas. For eligible country passport holders, this visa can be applied for online or through a PNG consulate prior to travel. Nationals from high-risk jurisdictions must seek approval from the PNG Immigration and Citizenship Services Authority (PNGICSA) before they can apply through a PNG consulate prior to travel.
Asia-Pacific Economic Cooperation Card. Individuals from fully participating Asia-Pacific Economic Cooperation (APEC) economies can be issued a five-year travel card that serves as the entry authority to other fully participating economies that have granted pre-clearance for short-term business travel of up to 60 or 90 days.
Work. The three types of work visas are the following:
• Journalist
• Restricted Employment Visa (REV)
• Employment
The two primary work visas that allow employment activity are described below.
Restricted Employment Visa. A Restricted Employment Visa (REV) is a temporary visa for foreign specialists or experts urgently required if no such specialist is immediately available in the country to perform short-term, highly specialized work that is not ongoing or to assist in a national emergency relief situation.
A REV can be used in the following sectors:
• Mining
• Gas
• Petroleum
• Agriculture
• Fisheries
• Forestry
• Building infrastructure
• Aviation
The REV has the following restrictions:
• Limited to a single-entry visa for a stay of up to 30 days per visit
• Permits a maximum of four entries in a 12-month period
• Extensions permitted in limited circumstances
• Requires a PNG entity as a visa sponsor (with employment only for the sponsoring PNG entity specified)
The REV can be obtained online or through a PNG consulate prior to travel.
Employment. Noncitizens seeking to enter PNG for employment in the private sector may apply for a work and employment permit. The work permit can be issued for short- or long-term periods from six months and up to five years.
The work and employment permit process consists of the following three steps, which are completed sequentially:
• A work permit application must be submitted to the PNGICSA.
• Once the work permit is approved, an entry permit application must be submitted to the PNGICSA.
• Once the work permit and entry permit are approved, the visa will be telexed to the nearest PNG embassy or consulate (or Australian mission if there is no PNG mission) for the consular visa issuance.
Long-term work permits can be renewed in the country or out of the country three months prior to the expiration of the work permit. However, any changes to the applicant’s employer or occupation (including promotion) will require the individual to apply for a new work permit. If individuals repatriate prior to the expiration of their work permits, they will be required to submit a work permit cancellation application with PNGICSA within 14 days of exiting PNG.
Failure to provide the required original documents and information can lead to financial penalties and other sanctions.
Applicants may be required to apply for membership and registration with professional bodies in PNG prior to the submission of their work permit application. For example, engineers are required to apply for membership with the Institution of Engineers Papua New Guinea (IEPNG), and accountants are required to apply for membership with Certified Practising Accountants Papua New Guinea (CPA PNG). Spouses (including de facto spouses) and dependents can apply for a dependent entry permit with PNGICSA. Family members who are not included in a temporary resident’s initial visa application may generally apply for a visa at a later date.
F. Permanent residence
To qualify for permanent residence, an individual must have lived in PNG on a valid visa for at least five years and must meet the criteria of one of the following classes of visa (subject to change at any time):
• Chief executive officer of a large company
• Majority owner of a business
• Skilled professional
• Missionary and religious worker
• Retired persons
• Spouses and children of PNG citizen aged 19 years or more
G. Family and personal considerations
Spouses (including de facto spouses) and dependents of temporary and permanent visa applicants can be included in the same
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visa application as the primary applicant and are granted visas for the purpose of residing in PNG with the primary applicant. Family members who are not included in a temporary resident’s initial visa application may generally apply for a visa at a later date.