Employers have several tax responsibilities, including Salary and Wage Tax (SWT), superannuation contributions, and other taxes such as the Training Levy and Community Development Levy.

Salary and Wage Tax (SWT)

Employers are responsible for withholding SWT from employee pay and remitting it to the Internal Revenue Commission (IRC). Graduated tax rates apply to employee income. SWT is usually due on a monthly basis.

Superannuation Contributions

Employers must contribute 8.4% of a citizen employee's gross salary to an authorized superannuation fund. Employers are responsible for deducting employee contributions and remitting both their own and the employee's contributions to the superannuation fund. Superannuation contributions are typically paid monthly or quarterly, depending on the fund's requirements.

Other Employer Taxes

Businesses with a payroll over K200,000 are subject to a 2% Training Levy on payroll to fund skills training. Companies in the mining and petroleum sectors may have additional tax obligations in the form of a Community Development Levy.

Important Notes

Employers must register with the IRC and maintain detailed payroll records for tax calculation and auditing purposes. Failure to comply with tax obligations can result in penalties and interest charges.

In Papua New Guinea, the Salary and Wage Tax (SWT) is an income tax applied to all employment income. The tax rates are graduated, meaning they increase progressively with the amount of income earned.

Employees are also required to make a mandatory contribution to an authorized superannuation fund. This contribution is calculated as 6% of the employee's after-tax salary.

Employees can claim a 25% rebate against their SWT for allowable deductions. These deductions can include work-related expenses such as tools, uniforms, and professional memberships, donations to approved charities, and limited medical expenses.

It's important to note that employees must keep records of these eligible deductions in order to claim them. The 25% rebate for deductions is claimed on the annual tax return.

Salary and Wage Tax (SWT)

• Type: Income tax on employment income.
• Eligibility: All employees earning income in Papua New Guinea.
• Calculation: Graduated tax rates apply.

Superannuation Contributions

• Type: Mandatory contribution to an authorized superannuation fund.
• Eligibility: Citizen employees
• Calculation: 6% of the employee's after-tax salary is deducted.

Allowable Deductions

Salary and wage earners are entitled to a 25% rebate against SWT for allowable deductions. These deductions may include:

• Work-related expenses: Tools, uniforms, professional memberships, etc.
• Donations to approved charities
• Medical expenses (Limited)

Important Notes

• Record Keeping: Employees must keep records of eligible deductions to claim them.
• Claiming Rebates: The 25% rebate for deductions is claimed on the annual tax return.

In Papua New Guinea, VAT is referred to as the Goods and Services Tax (GST).

GST Rates

The standard GST rate in Papua New Guinea is 10%, which applies to most services.

Exemptions

Several services are exempt from GST in Papua New Guinea. These include:

• Financial Services such as banking and insurance
• Medical and Health Services including hospitals, clinics, and doctors' services
• Educational Services such as schools, universities, and related services
• Basic Food Items, specifically certain unprocessed foodstuffs

Filing Procedures

Businesses providing taxable services in Papua New Guinea must adhere to the following procedures:

1. Registration: Register for GST with the Internal Revenue Commission (IRC) if your annual turnover exceeds a specific threshold
2. Invoicing: Issue tax invoices that comply with GST regulations, detailing the GST charged
3. Periodic Filings: File regular GST returns (usually monthly), reporting collected GST and claiming any eligible GST credits
4. Payment: Remit the net GST owed to the IRC

Important Considerations

• Complexity: GST regulations in Papua New Guinea can be complex and detailed
• Changes: The Papuan New Guinean government may update GST laws and procedures, so it's important to stay informed of the latest developments

Tax incentives are a crucial tool for stimulating economic growth and attracting investments. They come in various forms, each with its unique eligibility criteria and application process.

Income Tax Exemption

This is a full or partial exemption from corporate income tax for a set period. It's typically available to new businesses in designated rural development areas involved in specified industries like agriculture, manufacturing, or tourism. Also, businesses operating in specific sectors deemed crucial for economic growth, such as resource processing, may be eligible. To apply, you need to contact the Investment Promotion Authority (IPA) of Papua New Guinea for details and application procedures.

Accelerated Depreciation

This incentive allows businesses to deduct a higher percentage of the cost of capital assets in the first year they are used. It's generally applicable to most businesses, but specific details may vary. To claim this deduction, consult a tax advisor for guidance during tax filing.

Import Duty Exemptions

Businesses can import specific equipment and materials duty-free under this incentive. Eligibility depends on the type of equipment and its intended use. It may be relevant for businesses operating in priority sectors or establishing new operations. For information on eligibility and application procedures, contact the PNG Customs Service.

Market Development Cost Deduction

This incentive allows businesses to double-deduct expenses incurred in promoting exports. It's available to businesses involved in exporting goods manufactured in Papua New Guinea. Guidance on claiming this deduction is available from the Internal Revenue Commission (IRC) of Papua New Guinea.