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Papua N Guinea

25 November 2020

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Papua New Guinea Taxation Bills for 2021 Budget

Papua New Guinea's Department of Treasury has published the taxation bills for 2021. The bills provide measures for the 2021 Budget, which was delivered by the Minister of Treasury on 17 November 2020. As provided in the explanatory memorandum, the Income Tax (2021 Budget) (Amendment) Bill 2020 include proposed amendments to:

  • Clarify the intent of past changes in the allowed loss carry forward period to 7 years as follows:
    • the tax loss carry forward period is reduced to 7 years for all taxpayers;
    • the new 7-year tax loss carry forward period applies from the year ending 31 December 2019 (i.e., starting 1 January 2019); and
    • all carry forward tax losses previously subject to the 20-year or indefinite year loss rule, being losses from the year ended 31 December 2006 onwards, will be limited to 7 years from 31 December 2018 and tax losses incurred in the year of income ended 31 December 2005 and prior years will expire;
  • Change the due dates for advance and provisional tax payments to 120 days, 210 days, and 300 days after the end of the previous tax year so that the due dates do not clash with the deadline for resource companies to provided estimates of taxable income, which is 31 March;
  • Amend the Small Business Tax regime to reflect true policy intent, including the following thresholds:
    • a business with annual turnover of less than PGK 60,000 is categorized as a micro-business and liable to pay a fixed tax amount of PGK 250.00 per year;
    • a business with an annual turnover of more than PGK 60,000 and less than PGK 250,000 is defined as a small business and is liable to pay business tax of PGK 62.50 plus 2.0% of turnover above PGK 15,000 per quarter;
  • Introduce an anti-avoidance measure to discourage employees and employers from converting employment relationships into independent contractor arrangements to pay Small Business Tax (SBT) rather than Salary and Wages Tax (SWT); and
  • Amend the requirements for the payment of the 5% royalty withholding tax (PRWT) by developers so that developers are required to directly deduct and remit PRWT on payments to landowners.

Further to the income tax measures, several other changes are made regarding customs and excise tax. Click the following link for the Department of Treasury budget webpage for more information.

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