How can an Umbrella Company Help with Contracting in Papua New Guinea?
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Papua New Guinea. Even better, most are experts in Papua New Guinea and expat tax law, meaning they’ll also help you optimise your earnings in Papua New Guinea.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Papua New Guinea.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Papua New Guinea, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Papua New Guinea and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in Papua New Guinea
One of the most consistently challenging aspects of contracting in Papua New Guinea is complying with the country’s tax system. As well as paying tax in Papua New Guinea, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in Papua New Guinea
If you’re working in Papua New Guinea under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Papua New Guinea for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Papua New Guinea, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Papua New Guinea through PAYE is left with the prospect of doing everything themselves.
Do you know much about Papua New Guinean Tax Law? Does Papua New Guinea have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Papua New Guinea can range from 0 to 42 percent, and you need to be sure you are placed in the correct tax brackets.
Tax Filing as a Contractor in Papua New Guinea
| When Do You Need to Lodge Your Tax Return? | Tax year is the calendar year. Tax returns may be filed after the end of the calendar year. |
| Tax Filing Deadline | 28 February |
| Can you file it online? | No. |
How to File Taxes in Papua New Guinea as a Contractor
Salaries and wage earners are not required to submit tax returns as tax withheld by the employer is a final tax. If you have income from other sources or deductions that you would like to claim, you may file a tax return. The process for filing tax returns in Papua New Guinea involves:
Step 1: Apply for a Tax Identification Number (TIN) by completing Form TIN2(link is external). You will be required to fill in your residency details, personal details and also one form of identification (either Passport, ID card, Driver’s License or Birth Certificate).
Step 2: Complete Form I which is the Income Tax Return form for individuals. Click here(link is external) to view the tax return form for 2022. The forms for all other years may be found in the link below. A guide to completing this form may be found here(link is external). You will be required to have the following:
- Your TIN
- TIN of employer(s)
- Gross income received from each employer
- Income from other sources
- Amount of any allowances including housing, motor vehicle, telephone, entertainment, public utilities and domestic services.
- Value of any tax benefits received.
Step 3: Submit the completed Form I to your nearest IRC office(link is external).
Step 4: The IRC issues a tax assessment after the return is filed and you must pay any outstanding taxes due within 30 days.
Additional Information
- Guide to completing form I: https://static.irc.gov.pg/2021/December/coaFAT-media-Form-C-Corporate-Income-Tax-Return-Taxpayer-Guide.pdf (link is external)
- List of tax forms: https://irc.gov.pg/tax-forms/(link is external)
Tax Figures in Papua New Guinea
| Currency | Papua New Guinean Kina | ||||||||||||||
| Tax-free Threshold in Papua New Guinea | PGK 10,000 | ||||||||||||||
| Income Tax Rates |
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| Notes | For non-residents, a tax-free threshold does not apply. The first PGK 18,000 is taxed at 22%. |
Tax Residency in Papua New Guinea
When do you become a tax resident in Papua New Guinea
You become a tax resident in Papua New Guinea when:
PNG’s domestic law defines “resident” as a person who resides in PNG, and includes a person
- whose domicile is in PNG, unless the Chief Collector is satisfied that his permanent place of abode is outside PNG;
- who has actually been in PNG, continuously or intermittently more than one half of the year of income, unless the Chief Collector is satisfied that his usual place of abode is outside PNG, and that he does not intend to take up residence in PNG; or
- who is a contributor to a prescribed superannuation fund or is the spouse, or a child under 16 years of age, or such a contributor
Does the 183 day rule apply in Papua New Guinea
Yes
Am I taxed on my global income in Papua New Guinea
Residents of Papua New Guinea (PNG) are subject to PNG Salary and Wages Tax (SWT) on worldwide income. Non-residents are subject to SWT on PNG-source income only.
Can you set up your own Limited Company in Papua New Guinea?
| How long does it take to set up | 41 days |
| How much does it cost | PGK 910 |
| Is it easy? | Starting a Business Rank: 129, https://www.doingbusiness.org/en/data/exploreeconomies/papua-new-guinea |
Tax Calculator in Papua New Guinea
If you are a contractor and want a calculation on your tax and net retention in Papua New Guinea, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax in Papua New Guinea
Contractors in Papua New Guinea are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Papua New Guinean umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Papua New Guinean taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Papua New Guinean tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Papua New Guinea
We work with numerous umbrella companies in Papua New Guinea, many of whom are experts in tax and immigration laws. If you have any questions about tax in Papua New Guinea, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Papua New Guinean work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Papua New Guinea but without the overhead of directly dealing with the Papua New Guinean tax authorities. Get in touch with us today for some reliable advice on tax in Papua New Guinea!
A Contractor’s Guide to Work Permits in Papua New Guinea
Immigration is one of the primary concerns for any contractor hoping to start working in Papua New Guinea. Permanent employees will find it easy to get their Papua New Guinean work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
The Papua New Guinean work permit is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Papua New Guinea is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Papua New Guinea (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in Papua New Guinea. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Papua New Guinea and match contractors with the right company for them. If you’ve already secured a contract in Papua New Guinea, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).
