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Papua N Guinea

9 December 2019

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Papua New Guinea Budget for 2020 Delivered

On 28 November 2018, Papua New Guinea's Minister for Treasury delivered the National Budget for 2020 in parliament. Some of the main tax-related measures of the budget taxation bills include:

  • The introduction of a small business tax regime that includes a 2% flat tax on turnover on a quarterly basis for small businesses with annual turnover below PGK 250,000, excluding professional services businesses (flat tax of PGK 400 annually if below PGK 50,000);
  • A change in the 3:1 debt-equity ratio for resources companies for thin-capitalization purposes to 2:1 (ratio for resources companies aligned with the ratio for all other companies);
  • A change in the requirement to pay disputed tax and additional tax prior to making an appeal with the Review Tribunal or in a National Court so that 50% of the disputed amount must be paid instead of the full amount; and
  • A change in the deadlines for provisional tax payment to 90 days, 180 days, and 270 days after the end of the previous tax year instead of fixed dates of 30 April, 31 July, and 31 October.

Further to the above, a provision is also included that no loss incurred on or before 31 December 2018 is deductible, that, under the provisions in force prior to 1 January 2019, would have been deductible from income derived in the year ended 31 December 2018 or a later year. This is in relation to changes in the loss carryforward rules from 1 December that limit loss carryforward to 7 years in general and 20 years for resource companies. As worded in the draft bill, the provision would effectively disallow the deduction of any losses incurred before 1 January 2019 that would be deductible under prior rules, which is reportedly not the intent of the Internal Revenue Commission and is expected to be amended further before the bill is approved.

Click the following link for the 2020 budget webpage.

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