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Papua N Guinea

9 November 2016

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Papua New Guinea Budget for 2017 Includes Standardized Tax Rate Changes and Introduction of CbC Reporting

On 1 November 2016, the Papua New Guinea Treasurer Patrick Pruaitch delivered the 2017 National Budget to parliament. The Budget includes a number of tax-related measures, including:

  • The standardization of the corporate income tax rate at 30% across all sectors;
  • The standardization of the dividend withholding tax rate at 15% across all sectors;
  • The removal of the 15% interest withholding tax exemption for foreign lenders lending to resource companies;
  • The introduction of a flat 15% foreign contractors withholding tax rate (currently a 48% rate applies on 25% of contract value); and
  • The introduction of Country-by-Country (CbC) reporting requirements in line with BEPS Action 13, including:
    • A group revenue threshold of  PGK 2 billion in the year preceding the reporting fiscal year (current draft legislation actually states "2 million", which is assumed to be a typo);
    • A primary requirement for ultimate parent entities resident in Papua New Guinea to file the report, with standard secondary filing requirements for local non-parent constituent entities where the ultimate parent is not required to file or Papua New Guinea is unable to obtain the report through exchange;
    • A CbC reporting notification deadline of the last day of the reporting fiscal year for all constituent entities resident in Papua New Guinea on whether they are the ultimate parent or surrogate parent, or if neither, the identity and tax residence of the reporting entity; and
    • A CbC report filing deadline of 12 months following the close of the reporting fiscal year.

The measures are to apply from 1 January 2017.

Click the following links for the 2017 National Budget and the Budget Appropriation and Tax Bills.

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