Tax facts and f igures 2018 - PwC

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Tax facts and figures 2018 Papua New Guinea

Port Moresby

PO Box 484 PwC Haus, Level 6 Harbour City, Konedobu Ph: (675) 321 1500 Fax: (675) 321 1428

Lae

PO Box 451 BSP Lae Commercial Centre, Level 1 Markham Road Ph: (675) 472 2644

Website

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Contents

1 Liability to income tax

1

Residence

1

Gross income

1

Exempt income

1

Allowable deductions

1

2 Taxation of individuals

4

Financial period

4

Personal income tax rates 2018

4

Assessable income

4

Exempt income

4

Advances of leave or superannuation

5

Principal allowable deductions

5

Dependant rebates

5

Education expenses rebate

6

Private expenditure

6

Salary or wages tax

6

Fringe benefits

7

Social security payments

9

Superannuation

9

Retirement savings accounts

9

Redundancy scheme

9

Provisional tax

10

Responsibility for paying salary or wages tax

10

3 Taxation of companies

13

Financial period

13

Company tax rates

13

Calculation of taxable income

13

Exempt income

14

Losses

14

Overseas losses

14

Absence of grouping provisions

14

Company amalgamations

14

Dividend payments and deemed dividends

15

Dividend rebate

15

Provisional tax

15

4 Mining, petroleum and gas operations

19

Income tax rates ? Mining companies

19

Income tax rates ? Petroleum companies

19

Income tax rates ? Gas companies

19

Gas companies versus petroleum companies

19

Advance payment tax

20

Additional profits tax

20

Notional tax

20

Deductions for mining, petroleum and gas

operations

20

5 Taxation of other entities

24

Partnerships

24

Joint ventures

24

Trusts

24

Unit trusts

24

Property unit trusts

25

Landowner resources trusts

25

Superannuation funds

25

6 Manufacturing industry incentives

28

Accelerated depreciation for manufacturers

28

Double deduction for export market development

costs

28

Export incentives for manufacturers

28

Wages subsidy for manufacturers

29

7 Agriculture, fishing and tourism

33

Accelerated depreciation

33

Primary production

33

Investment in primary production

33

Investment in tourism

34

Double deduction for export market development

costs

34

8 Infrastructure credits

37

Prescribed infrastructure development credits

37

Bank community service obligations

37

9 Regional incentives

40

Rural development incentive

40

10 Other incentives

43

Solar heating

43

Exemption of certain interest income

43

11 Special deductions and restrictions

46

Entertainment

46

Management fees

46

Exchange gains and losses

46

Gifts and charitable donations

47

Preliminary expenditure in connection with assets

47

Profits on leased assets

47

Interest and thin capitalisation rules

47

Timber operations

47

Environmental protection and clean-up costs

47

12 Compliance reporting system

51

13 Tax compliance ? key dates

54

14 Payments to non-residents

57

Dividends

57

Interest

57

Royalties

57

Management fees

57

Foreign contractors

58

Leases to non-resident associates

58

Non-resident insurers

58

Overseas shipping

58

Tax clearance and foreign exchange procedures

59

Transfer pricing

59

15 Double tax treaties

62

Foreign contractor withholding tax

62

Management fee withholding tax

62

16 Goods and services tax

66

Rate of GST

66

Registration

66

Output GST (GST on sales)

66

Input GST (GST on purchases)

67

Import GST deferral scheme

67

Accounting for GST

67

Agriculture and second-hand goods

68

Goods and services tax ? Director liability

68

17 Other taxes

72

Interest withholding tax

72

Customs duties

72

Excise duties

72

Stamp duty

72

Timber export duty

73

Spice levies

73

Gift duty

73

Probate duty

73

Land tax

74

Capital gains tax

74

Gaming machine tax

74

This booklet outlines PNG's taxation laws for the fiscal year ending 31 December 2018 based on laws passed or announced.

The information represents a summary of significant features and should be used as a guide only. Further information or assistance may be obtained from either of the offices of PwC in PNG listed at the back of this publication.

Changes in tax law and practice are advised to clients and others on request through our regular tax updates included in PNG Pulse. If you would like to receive these and other publications of PwC, or would like information on our services to business in PNG, please contact either of our offices.

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