Tax 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.
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.
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.
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.
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!
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.
- 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)
For non-residents, a tax-free threshold does not apply. The first PGK 18,000 is taxed at 22%.
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
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.