Papua New Guinea Tax Secrets 2025: What the Next 5 Years Could Mean for Your Wallet

Table of Contents

• Executive Summary: Taxation Trends in Papua New Guinea (2025–2030)
• Current Tax Structure: Income, Corporate, and GST Overview
• Key Tax Reforms for 2025: New Laws and Regulations
• Who Pays What: Tax Rates for Individuals and Businesses
• Compliance Essentials: Filing, Reporting, and Penalties
• International Taxation: Cross-Border Rules and Double Tax Treaties
• Sector Spotlight: Mining, Oil & Gas, and Resource Taxation
• Digital Economy and Taxation: Upcoming Frameworks
• Statistics & Revenue Analysis: Collection Performance and Economic Impact
• Future Outlook: Forecasts, Government Initiatives, and Reform Roadmap
• Sources & References

Executive Summary: Taxation Trends in Papua New Guinea (2025–2030)

Papua New Guinea’s tax landscape is poised for significant evolution between 2025 and 2030, shaped by ongoing legislative reforms, enhanced compliance measures, and a growing emphasis on resource sector revenues. The government’s Medium Term Revenue Strategy (MTRS) continues to guide tax policy, focusing on broadening the tax base, increasing transparency, and modernizing administration. Key developments include the introduction of the Tax Administration Act 2022, which streamlines tax procedures, strengthens enforcement powers, and seeks to improve taxpayer compliance. This legislation consolidates earlier provisions and aligns with international best practices, marking a shift toward digitalization and risk-based audits.

Personal and corporate income tax rates remain foundational to state revenue. As of 2025, the corporate tax rate is 30% for resident companies, while individuals face progressive rates up to 42%. The resource sector faces higher rates, with mining and petroleum companies taxed at 30% and 45%, respectively. The Goods and Services Tax (GST) remains at 10%, with ongoing discussions about expanding its scope and efficiency. Recent reforms aim to reduce exemptions and strengthen collection, particularly in the extractive industry, as the state seeks to capture greater value from natural resources.

Tax compliance is a central challenge. The Internal Revenue Commission (IRC) has intensified audit activities and implemented electronic filing and payment systems to combat tax evasion and increase voluntary compliance. These initiatives are expected to gradually expand the tax net, especially among small and medium enterprises. According to the latest figures, tax compliance rates have improved marginally, but the informal sector still poses a substantial gap in overall revenue collection. The IRC’s ongoing capacity building and digital transformation are projected to yield further gains in compliance over the next five years.

Key statistics underscore the importance of tax reform. Tax revenue accounted for approximately 14–16% of GDP in recent years, with projections aiming for 18% by 2030. The government’s commitment to fiscal consolidation and debt sustainability hinges on these improvements. The outlook for 2025–2030 is cautiously optimistic: while commodity prices and global demand will influence revenue from the resource sector, sustained reform, digitalization, and enforcement are expected to enhance domestic resource mobilization. Papua New Guinea’s tax system will likely see incremental but meaningful progress, contributing to macroeconomic stability and development goals.

• Internal Revenue Commission
• Department of Treasury
• Tax Administration Act 2022
• Medium Term Revenue Strategy

Current Tax Structure: Income, Corporate, and GST Overview

Papua New Guinea’s tax structure in 2025 is characterized by a progressive personal income tax regime, a corporate income tax, and a broad-based Goods and Services Tax (GST). The system is administered by the Internal Revenue Commission (IRC) under the guidance of the Department of Treasury.

Personal Income Tax in Papua New Guinea is levied on residents and non-residents with PNG-sourced income. The rates are progressive, with thresholds and bands adjusted periodically. For 2025, resident individuals face marginal rates ranging from 0% for annual incomes below PGK 12,500, up to 42% for incomes above PGK 250,000. Non-residents are taxed at a flat rate of 22% from the first kina of income. Significant recent reforms have aimed to streamline compliance and improve collection efficiency, in line with the government’s Medium Term Revenue Strategy (Internal Revenue Commission).

Corporate Income Tax applies to companies operating in PNG. The general rate for resident companies in 2025 remains at 30%, with certain sectors, such as mining, petroleum, and gas, subject to special rates or fiscal regimes. Non-resident companies are taxed at 48% on their PNG-sourced income. The IRC continues to enforce transfer pricing rules and anti-avoidance provisions, particularly relevant for multinational entities in the extractive industries. The government has signaled continued attention to compliance and base erosion in the near term (Internal Revenue Commission).

Goods and Services Tax (GST) is set at a standard rate of 10% and applies to most goods and services supplied in PNG. Businesses with annual turnover above PGK 250,000 must register for GST. The IRC has recently digitized key GST processes, including e-filing and e-payments, to enhance compliance and reduce administrative burdens. Ongoing reforms are aimed at widening the GST net and reducing leakages (Internal Revenue Commission).

As of 2025, tax revenues constitute a critical component of PNG’s budget, accounting for over 70% of total government receipts. The authorities are committed to further modernization, including expanded digital tax services, enhanced taxpayer education, and targeted audits. With the economy forecast to grow moderately through 2027, tax policy will continue to evolve, balancing the need for revenue with the imperative to support investment and economic diversification (Department of Treasury).

Key Tax Reforms for 2025: New Laws and Regulations

Papua New Guinea (PNG) is undergoing significant tax reforms in 2025, reflecting the government’s ongoing efforts to modernize its tax regime, improve compliance, and stimulate economic growth. The 2025 tax year is marked by several legislative changes, regulatory updates, and digitalization initiatives that affect both individuals and businesses.

Key reforms for 2025 center around the implementation of the Tax Administration Act 2022, which began its staged roll-out in late 2022 and continues to shape the tax landscape. This Act streamlines tax administration, strengthens enforcement, and brings in measures to combat tax evasion and improve revenue collection. The Internal Revenue Commission (IRC) has prioritized full digitalization of tax processes, with compulsory electronic filing and payment systems now mandated for most entities. The IRC’s e-Tax platform, launched in 2023, will be the primary channel for filing income tax, GST, and salary & wages tax returns in 2025.

A pivotal change for 2025 is the introduction of updated corporate tax rates and new anti-avoidance provisions. The standard company tax rate remains at 30%, but new rules tighten transfer pricing regulations and target base erosion and profit shifting (BEPS), aligning PNG’s system more closely with international standards. The IRC has issued new guidance on documentation requirements for related-party transactions and enhanced penalties for non-compliance.

For individuals, the threshold for personal income tax remains unchanged at PGK 12,500 per annum, but the IRC has signaled increased audit activity and data matching to ensure accurate reporting and withholding by employers. The Goods and Services Tax (GST) rate is maintained at 10%, with expanded compliance checks and a crackdown on unregistered businesses. The IRC’s compliance campaigns have led to increased registration and filings, with total tax revenue collections reaching a record PGK 14.3 billion in 2023 and projected to grow further in 2025 (Internal Revenue Commission).

• Taxpayer registration: All businesses must obtain a Taxpayer Identification Number (TIN) and maintain up-to-date details on the IRC portal.
• Withholding tax changes: New withholding requirements for contractors and service providers are in effect, with stricter penalties for non-remittance.
• Sectoral focus: Resource sector taxation, particularly for mining and petroleum, is under review, with expected amendments to ring-fencing and royalty regimes following consultations (Department of Treasury).

The outlook for 2025 and beyond is increased enforcement, digitization, and alignment with global tax practices. The PNG government is committed to strengthening its fiscal position, with further reforms likely as part of its Medium Term Revenue Strategy 2023–2027 (Department of Treasury).

Who Pays What: Tax Rates for Individuals and Businesses

Papua New Guinea’s tax system for 2025 continues to be governed primarily by the Income Tax Act 1959 and subsequent amendments, with oversight from the Internal Revenue Commission of Papua New Guinea. Taxation is divided among individuals, corporations, and sector-specific arrangements, particularly in extractive industries.

• Individual Income Tax: For the 2025 tax year, resident individuals are taxed on a progressive scale. The first PGK 12,500 of annual income is tax-free. Thereafter, rates begin at 22% for income above PGK 12,500, rising to a top marginal rate of 42% for income exceeding PGK 250,000. Non-residents are taxed at a flat rate of 22% from the first Kina earned, with no tax-free threshold. Fringe benefits are taxable, and salary/wage earners are subject to Pay As You Earn (PAYE) withholding by employers. These rates and rules are confirmed in the most recent schedules published by the Internal Revenue Commission of Papua New Guinea.
• Corporate Income Tax: Resident companies face a standard corporate tax rate of 30%. Non-resident companies are taxed at 48%. Special rates apply to certain sectors—mining and petroleum companies often face varying rates (typically between 30% and 50%) depending on project agreements and resource type. Branch profits of non-resident companies are subject to an additional 17% branch profits tax. The Internal Revenue Commission of Papua New Guinea provides official tables and sector-specific rules.
• Other Taxes: Value Added Tax (VAT), known locally as Goods and Services Tax (GST), remains at 10% and is charged on the supply of most goods and services. Dividend, interest, and royalty payments to non-residents are generally subject to withholding taxes at rates of 15%, subject to treaty relief where applicable. These are verified by the Internal Revenue Commission of Papua New Guinea.
• Compliance and Enforcement: Employers must register and remit PAYE and GST. Companies file annual returns, with penalties for late payment or non-compliance. The Internal Revenue Commission of Papua New Guinea has enhanced digital filing requirements and continues to modernize compliance enforcement.
• Outlook for 2025 and Beyond: The government has signaled ongoing reforms focused on improving compliance, broadening the tax base, and enhancing digital tax administration. Modernization is expected to continue, with the IRC aiming for increased tax-to-GDP ratios and better integration with customs and financial intelligence systems.

Compliance Essentials: Filing, Reporting, and Penalties

Compliance with tax obligations in Papua New Guinea (PNG) is governed primarily by the Income Tax Act 1959 and administered by the Internal Revenue Commission (IRC). As of 2025, the tax system encompasses individual income tax, corporate income tax, goods and services tax (GST), and various other levies. Understanding filing requirements, reporting standards, and associated penalties is essential for both residents and businesses operating in PNG.

• Filing and Reporting Deadlines: For individuals, annual income tax returns must typically be filed by 30 June of the year following the assessment year. Companies are generally required to lodge their returns by 30 April, although extensions can be requested in certain circumstances. Employers must file monthly salary and wages tax (SWT) remittances by the 7th day of the following month, and GST returns are due on the 21st of the month after the end of each taxable period (Internal Revenue Commission).
• Electronic Filing: The IRC has advanced its tax administration with the introduction of the Online Taxpayer Portal, accessible through the myIRC platform. As of 2025, most major taxes—including corporate income tax, GST, and SWT—are required to be filed online. This digital transition aims to improve compliance rates, streamline processing, and reduce errors (Internal Revenue Commission).
• Key Compliance Statistics: In its 2023 annual report, the IRC noted a continual increase in electronic filings, with over 70% of corporate taxpayers now using the myIRC system. Tax revenue collection reached PGK 13.1 billion in 2023, with compliance rates, especially for GST and SWT, improving year-on-year (Internal Revenue Commission).
• Penalties and Enforcement: Failure to file returns or remit taxes on time can result in substantial penalties. Late filing of returns generally incurs a penalty of PGK 500 per month for companies and PGK 250 per month for individuals. Interest on overdue taxes is charged at 20% per annum, compounded monthly. The IRC also has powers to garnish bank accounts, impose travel bans, and prosecute serious cases of tax evasion (Internal Revenue Commission).
• Future Outlook: Looking ahead, the PNG government plans further digitalization and increased enforcement. The IRC is expected to expand data-matching activities and strengthen collaboration with financial institutions to detect non-compliance. Legislative amendments are also anticipated to simplify compliance and broaden the tax base, supporting fiscal sustainability in the coming years (Internal Revenue Commission).

International Taxation: Cross-Border Rules and Double Tax Treaties

Papua New Guinea (PNG) operates an income tax regime that is predominantly source-based, meaning income derived from sources within PNG is generally taxable, regardless of the taxpayer’s residency. However, cross-border taxation rules, transfer pricing, and double tax agreements (DTAs) are increasingly relevant as PNG seeks to modernize its tax system and attract foreign investment.

In 2024, PNG enacted amendments to its Income Tax Act to strengthen rules on the taxation of non-residents and clarify the treatment of cross-border payments. Non-residents are subject to withholding taxes on dividends (17%), interest (15%), and royalties (10%), unless a relevant DTA provides for reduced rates. These rates are enforced by the Internal Revenue Commission, which is responsible for tax compliance and administration.

A significant development in recent years is PNG’s commitment to international tax reform, particularly the OECD’s Base Erosion and Profit Shifting (BEPS) initiative. PNG has introduced transfer pricing regulations requiring related-party cross-border transactions to be conducted at arm’s length. Taxpayers engaging in international dealings must prepare and maintain adequate transfer pricing documentation to avoid penalties, in line with standards promoted by the Internal Revenue Commission.

Double tax treaties play an essential role in PNG’s international tax landscape. Currently, PNG has ratified DTAs with Australia, Canada, China, Fiji, Germany, Indonesia, Malaysia, Singapore, and the United Kingdom. These treaties are designed to prevent double taxation and offer mechanisms for dispute resolution, exchange of information, and mutual agreement procedures. For example, the PNG–Australia DTA provides relief from double taxation for both PNG and Australian residents and sets out reduced withholding tax rates on cross-border payments (Australian Taxation Office).

Looking ahead to 2025 and beyond, PNG is prioritizing the negotiation of additional DTAs, particularly with key regional partners. The government has also signaled an intention to further align its transfer pricing and anti-avoidance rules with international best practice, as part of its broader strategy to enhance tax transparency and compliance. The Internal Revenue Commission and the Department of Treasury are actively engaged in public consultations on these reforms.

As of the latest published figures, international tax revenue—primarily from resource projects and cross-border transactions—remains a significant contributor to PNG’s overall tax base. However, compliance challenges persist, especially in sectors involving complex multinational operations. Ongoing reforms are expected to improve enforcement, minimize tax avoidance, and foster a more predictable environment for cross-border investment in the coming years.

Sector Spotlight: Mining, Oil & Gas, and Resource Taxation

The extractive sector—particularly mining, oil, and gas—remains central to Papua New Guinea’s (PNG) economy and is a primary focus of the country’s tax regime. In 2025, the government continues its efforts to balance attracting foreign investment with ensuring fair revenue for national development. The sector is governed by specialized tax arrangements, including royalties, additional profits tax, and special project agreements.

The Internal Revenue Commission (IRC) of Papua New Guinea administers taxation for mining and petroleum operations under the Income Tax Act, as well as sector-specific statutes. Corporate income tax for resource projects stands at 30%, though some legacy projects operate under different rates due to stability agreements. Royalties are typically levied at 2% of the net smelter return for mining and 2% of wellhead value for petroleum, paid to the state and, in some cases, distributed to landowners and local governments.

A key development in recent years is the government’s review and amendment of resource tax laws. The IRC Annual Report 2022 notes that the administration has been enhancing compliance through digital lodgment systems and targeted audits, aiming to close gaps in transfer pricing and ring-fencing of project profits. The government has also moved to renegotiate and standardize certain fiscal terms for new projects, reducing the prevalence of ad hoc tax holidays and exemptions.

Statistical data show that resource taxes and royalties accounted for over PGK 4 billion in government revenue in 2022, representing roughly 25% of total receipts, with expectations of further growth as new projects—such as the Papua LNG and Wafi-Golpu—commence production in the coming years (Department of Treasury). The government’s Medium Term Fiscal Strategy (2023–2027) outlines goals to increase the sector’s tax contribution and improve transparency, partly by joining the Extractive Industries Transparency Initiative.

Looking ahead to 2025 and beyond, PNG is expected to introduce more robust transfer pricing regulations and possibly implement a resource rent tax to capture windfall profits from high commodity prices. Compliance pressures will rise, with greater scrutiny of multinational operators and expanded information exchange with international tax authorities. The state’s evolving approach seeks to ensure sustainable resource taxation, fiscal stability, and equitable benefit sharing with affected communities.

Digital Economy and Taxation: Upcoming Frameworks

Papua New Guinea (PNG) is in the midst of a significant transformation of its tax framework to address the challenges and opportunities presented by the digital economy. With the global expansion of digital services, e-commerce, and cross-border digital transactions, the PNG government has recognized the need to modernize its tax laws to protect revenue, ensure fairness, and foster compliance among both domestic and international digital businesses.

In 2023 and 2024, the Internal Revenue Commission (IRC) initiated public consultations and released discussion papers on digital economy taxation. These highlighted concerns about profit shifting, the tax base erosion from multinational digital platforms, and the absence of mechanisms to tax non-resident entities earning substantial income from PNG consumers. The IRC also acknowledged the recommendations of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), to which PNG is a participant, particularly in relation to Pillar One (taxing rights over profits of multinational enterprises) and Pillar Two (global minimum tax) measures.

By mid-2024, the government signaled its intent to introduce a Digital Services Tax (DST), targeting revenues generated by large digital companies that have a significant economic presence in PNG, even without a physical presence. Proposed features, as outlined in IRC consultations, include a threshold of annual gross revenues (likely between PGK 5 million and PGK 10 million) and coverage of services such as online advertising, e-commerce marketplaces, streaming, and digital intermediation platforms. Final legislation and technical details are expected to be tabled in Parliament in late 2024 or early 2025, with a view to implementation during the 2025 fiscal year.

These changes are part of a broader modernization strategy that includes strengthening electronic tax administration systems, improving taxpayer registration for digital business operators, and aligning local law with international tax standards. The IRC is also enhancing its audit capabilities and cross-border information sharing through participation in the OECD framework and regional forums.

• Compliance: Digital businesses—both local and foreign—will be required to register with the IRC, file digital service tax returns, and remit taxes electronically. The IRC plans to deploy new e-tax platforms to facilitate compliance and improve monitoring.
• Key Statistics: The digital economy, though a small share of PNG’s overall GDP, is projected to grow by 10–15% annually through 2025–2027, increasing the urgency for an effective tax policy (Internal Revenue Commission).
• Outlook: The upcoming frameworks are expected to broaden the tax base, improve revenue collection, and ensure a level playing field between traditional and digital businesses. Stakeholders anticipate further guidance and transitional measures to ease compliance burdens, especially for small and medium enterprises.

In summary, 2025 will mark a pivotal year as PNG moves to implement a comprehensive digital economy tax regime, aligning its tax system with evolving international standards and domestic economic realities.

Statistics & Revenue Analysis: Collection Performance and Economic Impact

Papua New Guinea’s tax collection performance has seen significant developments in recent years, shaping fiscal stability and government capacity for public investment. The Internal Revenue Commission (IRC) is the central authority responsible for tax administration and revenue collection. In its 2023 annual report, the IRC reported total revenue collections of PGK 14.1 billion, a record high at the time, reflecting increased compliance initiatives and tax base expansion. This figure represented around 19% of estimated GDP and was predominantly composed of personal income tax, company tax, and Goods and Services Tax (GST) Internal Revenue Commission.

Looking ahead to 2025, the IRC has set a target to further increase tax revenue collections to PGK 15.5 billion, in line with the national budget projections and broader economic recovery following the pandemic. The 2024 National Budget, released by the Department of Treasury, projects that tax revenue will remain the government’s primary source of funds, accounting for over 80% of total government revenue. The government also expects a moderate rise in non-mineral tax receipts as new compliance measures take effect and economic activity rebounds, particularly in the non-resource sector Department of Treasury.

• Personal Income Tax: Continues to be the largest single source of government revenue, contributing approximately 39% of total tax collections in 2023. The number of registered taxpayers has also grown, reflecting efforts to formalize employment and improve payroll compliance.
• Company Tax: Accounted for about 26% of tax revenue in 2023, with the mining and petroleum sectors remaining key contributors. However, the government has signaled intentions to review sector-specific tax incentives to ensure equitable contributions from resource projects.
• GST: Collection efficiency improved with the launch of the IRC’s online tax system, with GST receipts reaching PGK 2.8 billion in 2023. This trend is expected to continue into 2025 as digital compliance systems mature.

Despite these gains, Papua New Guinea faces persistent challenges in expanding its tax net, combating informality, and addressing compliance gaps, particularly among small and medium-sized enterprises. The IRC’s Medium-Term Revenue Strategy 2023-2027 sets out an ambitious agenda for broadening the tax base, digitizing tax administration, and strengthening enforcement Internal Revenue Commission.

The economic impact of improved tax collection is expected to be positive, with higher public revenues supporting infrastructure, health, and education. However, the outlook hinges on sustained economic growth, policy consistency, and further progress in tax administration reforms as Papua New Guinea moves through 2025 and beyond.

Future Outlook: Forecasts, Government Initiatives, and Reform Roadmap

The future outlook for taxes in Papua New Guinea (PNG) is shaped by an ambitious reform agenda, government initiatives to broaden the tax base, and ongoing efforts to strengthen compliance and administration. As the country seeks to boost economic resilience and improve fiscal sustainability, tax policy remains central to its development strategy.

Following the recommendations of the Taxation Review Committee and the government’s own Medium-Term Fiscal Strategy 2023-2027, PNG is committed to modernizing its tax system. The focus for 2025 and the coming years is on enhancing revenue mobilization, simplifying the tax system, and improving compliance. Key initiatives underway include the progressive rollout of the Standard Integrated Government Tax Administration System (SIGTAS), which is designed to digitalize and automate tax processes, increasing efficiency and transparency within the Internal Revenue Commission.

Recent legislative changes have included updates to income tax thresholds, adjustments to the Goods and Services Tax (GST) regime, and the introduction of new measures to tackle tax evasion and base erosion. The 2024 National Budget sets a revenue target of PGK 18.2 billion, of which tax revenue is expected to account for approximately 78% (Department of Treasury). The government is also preparing to implement a Capital Gains Tax, with legislative groundwork laid in recent years, and full enforcement targeted for 2025.

• Continuing the transition to e-filing and digital tax payments, aiming for near-universal coverage by 2026.
• Expanding taxpayer education to improve voluntary compliance and reduce administrative burdens.
• Strengthening audit and enforcement capabilities, particularly in extractive industries and the informal sector.
• Exploring the introduction of environmental and digital economy taxes, with studies underway by the Internal Revenue Commission and Department of Treasury.

Looking ahead, PNG faces challenges such as a narrow tax base, high informality, and administrative capacity constraints. However, the government’s reform roadmap and international technical support—particularly from the International Monetary Fund—are expected to yield gradual improvements. If reforms are implemented as planned, tax-to-GDP ratios could rise from the current 13.5% toward the 15% target by 2027, enhancing fiscal space for infrastructure and social spending (Department of Treasury).

Sources & References

• Department of Treasury
• Department of Treasury