PNG Parliament Approves Sweeping Tax Reform to Modernise Corporate Taxation
PORT MORESBY – Papua New Guinea's Parliament has passed a new Income Tax Bill that will overhaul the nation’s tax system, with a focus on corporate reforms while leaving personal income taxes unchanged.
The Income Tax Bill 2025 received full backing from all 79 Members of Parliament and is scheduled to take effect from January 1, 2026. The new legislation replaces the 1959 Income Tax Act, which had been in place for 66 years and was based on Australian tax law.
Treasurer Ian Ling-Stuckey described the bill as a major step in modernising PNG’s tax system, saying, “The fundamental aim was to modernise, simplify and consolidate our colonial legacy tax legislation, which was one of the oldest in the world.”
 |
| PNG Parliament Approves Sweeping Tax Reform to Modernise Corporate Taxation |
While individual taxpayers will see no change in their tax rates or obligations, companies across several sectors are expected to be significantly impacted by the updated law.
Corporate Sector to See Major Changes
One of the most notable changes is the simplification of depreciation rules. The previous law included 213 different depreciation categories; this has been reduced to just five. The revised system will allow faster depreciation for over 90 per cent of those categories, encouraging investment in new equipment.
“Incentives have been significantly increased for purchasing new equipment,” said Ling-Stuckey. “This will particularly benefit key industries such as manufacturing and agriculture.”
The manufacturing sector will be allowed an initial 20 per cent deduction for investments in the first year. Meanwhile, the agriculture industry, including fishing, will enjoy a full 100 per cent tax deduction on qualifying expenditure.
Other industries will also benefit from similar investment incentives, the Treasurer added.
Introduction of Capital Gains Tax on Resource Sector
A new capital gains tax has been introduced specifically for the resource sector. A 15 per cent tax will now apply to capital gains made on resource leases and assets. This will be enforced even when there is as little as a 10 per cent change in ownership of such assets.
Additionally, the new tax law mandates the establishment of a decommissioning fund. This fund will ensure that mining companies allocate resources to restore mine sites once operations have ceased, addressing past issues where land was left degraded.
“This comes at a cost to government revenue, but it is necessary to protect our people and environment from being left with desecrated land,” Ling-Stuckey said.
Stronger Measures Against Tax Avoidance
The new law also includes provisions aimed at preventing tax avoidance, particularly involving funds shifted to offshore tax havens.
“As PNG becomes increasingly integrated with the global economy, we have taken steps to clarify and strengthen international tax laws,” Ling-Stuckey explained. “This includes clearer rules on foreign exchange gains and losses, the treatment of foreign losses, repatriated profit taxes, and a standard 15 per cent tax on recharged technical fees and royalties.”
Bipartisan Support for Reform
The bill received support from both sides of Parliament. Opposition Leader Douglas Tomuriesa welcomed the changes, stating, “We must update our laws to close the loopholes that allow others to exploit our system.”
Prime Minister James Marape said the legislation was a critical part of his government's strategy to improve the tax regime and ensure it supports national development.
“The Income Tax Bill 2025 is focused on empowering our people by improving how we collect and use revenue,” he said.
Broader Economic Impact
Ling-Stuckey emphasized that while the new law maintains existing personal income tax rates and small business tax rules, it is expected to boost government revenue through better compliance, streamlined definitions, and the closure of tax loopholes.
“These reforms ensure that companies, especially in the resource sector and among non-residents, contribute their fair share,” he said. “More revenue means greater capacity for the government to invest in vital services like health, education, infrastructure, and law enforcement.”
The Treasurer confirmed that the new law encompasses all areas of income tax, including corporate and personal income, withholding tax on interest and dividends, and taxes on non-residents. All existing measures under these categories will be repealed and replaced.
“This is a better Income Tax Act for Papua New Guinea,” he said.
Also read
Post a Comment