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Papua New Guinea

18 January 2022

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Papua New Guinea Parliament Passes Amendment Legislation for 2022 Budget

According to recent reports, the National Parliament of Papua New Guinea passed the Income Tax (2022 Budget)(Amendment) Bill 2021 and other amendment legislation for the 2022 Budget on 30 November 2021. One of the key measures provides for the introduction of a new Market Concentration Levy (or Dominant Industry Player Levy), which is levied on financial institutions and licensed telecommunication companies that hold 40% market share in their respective sectors. For financial institutions, the levy is equal to PGK 190 million per year commencing from 2022, and for telecommunication companies, the levy is equal to PGK 95 million per year.

Another important measure provides that the tax credit for prescribed infrastructure development for qualifying taxpayers engaged in mining, petroleum, or gas operations (0.75%), primary production (agriculture) (1.50%); or tourism (1.50%) is increased so that that the credit is equal to 2.0% for all such qualifying taxpayers. Further, new provisions are introduced providing that excess (unused) expenditure for credit purposes may be carried forward up to 7 years, with any unutilized credits as of 31 December 2021 allowed to be carried forward 7 years from 2022. This is in line with the allowed loss carry forward period.

Other measures include:

  • Rules regarding provisional tax are amended, including:
    • it is clarified that the notice of provisional tax payable issued by the Commissioner General will set out the amount payable in three installments due 120 days from the end of the preceding year, 210 days from the end of the preceding year, and 300 days from the end of the preceding year; and
    • rules regarding excess provisional tax are repealed and replaced, providing for a refund of overpaid provisional tax provided certain conditions are met, instead of providing for a credit against income tax or other taxes and duties;
  • Provisions for the general 20% per annum penalty for late payment are replaced to instead provide that the late payment interest under the Tax Administration Act 2017 applies, which is equal to the Central Bank rediscount rate increased by 5 percentage points; and
  • Various provisions of the Income Tax Act 1959 are repealed to resolve conflicts with provisions of the Tax Administration Act 2017.

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