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Papua New Guinea: Tax measures in 2020 budget

Papua New Guinea: Tax measures in 2020 budget

The 2020 budget, presented in late November 2019, introduces a range of tax proposals. The focus of certain proposals targets industry sectors, such as the banking and telecommunications sectors (instead of focusing on individual taxpayers).

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Anticipated income tax and goods and services tax (GST) increases—measures that would have affected ordinary citizens—did not materialize. Instead, in 2020, there will be consultation processes in relation to banking and telecommunications license fees and levies as well as a significant increase in excise tax on unprocessed exported logs.

Among the tax proposals in the 2020 budget are the following items (many of which would have an effective date of 1 January 2020):

  • Changes to the provisional (estimated) tax payment schedule and due dates
  • A change to the thin capitalization rules for interest deductions, and a change to the debt-to-equity ratio to 2:1 (instead of 3:1) for all companies
  • A change to the rules for the carryforward of losses
  • A new small business tax regime with an annual flat tax of K400 when turnover is less than K50,000, and tax at a rate of 2% for turnover between K50,000 and K250,000
  • An increase in the excise tax rate on alcohol and tobacco products
  • A reduction in the customs duty rate on imports of new and used motor vehicles
  • An increase in the average progressive export duty rate on unprocessed old growth logs to 50%
  • An increase license fees on banks and financial service operators in 2020


Read a November 2019 report [PDF 532 KB] prepared by the KPMG member firm in Papua New Guinea

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