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Papua New Guinea – indirect tax guide

Papua New Guinea – indirect tax guide

Explore the requirements and rules that apply to indirect taxes in Papua New Guinea.

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General

Type of indirect tax:

GST.

Standard rate:

10 percent.

What supplies are liable to the standard rate?

All supplies of goods or services unless zero rating or exemption applies to the particular supply.

Are there any reduced rates, zero- rates or exemptions and if so, what do they apply to?

Zero-rated supplies include exports; international transport; most medical supplies; certain fine metals; certain supplies of unprocessed petroleum; supplies to religious, charitable or educational institutions; supplies to prescribed foreign aid providers; and sales of businesses as going concerns.

Exempt supplies include most financial services; educational services; medical services; most fine metals; public road transport; newspapers; betting; lotteries and games of chance; postage stamps; and housing or motor vehicles provided by the employer.

VAT/GST registration

Who is required to register and what is the threshold?

Any person who carries on a taxable activity and the total value of supplies (excluding exempt supplies) has exceeded 250,000 Papua New Guinean kina (PGK) in the last 12 months or is expected to exceed PGK250,000 in a 12 month period.

Is voluntary registration possible?

Yes.

Is voluntary registration available for an overseas company or a fiscal representative?

Yes.

VAT/GST compliance

What is the typical frequency of returns?

Monthly (returns are due by the 21st day of the following month).

VAT/GST recovery

Are there any items that a registered business cannot recover GST on?

Yes, supplies of motor vehicles and accommodation to employees and other inputs for making exempt supplies.

In addition, items that are not deductible for income tax purposes to employers when provided to employees (such as club subscriptions or fees, payment of domestic services or expenditure on electricity, gas or security relating to an employee and entertainment expenses).

GST incurred on goods and services for a personal or private purpose is not refundable.

Can an overseas company recover GST if it is not registered?

No.

How long does it typically take to obtain a GST refund following a return filing?

Refunds of GST are subject to a desk review by the Internal Revenue Commission and can take 1 to 6 months or more. An application form for a refund must be lodged with the Internal Revenue Commission and accompanying documentation such as supplier listings, invoices and/or bank statements may be required.

Invoices

Are there specific requirements for the content of invoices to be considered valid for GST purposes?

Yes, requirements include:

  • the words ‘tax invoice’ in a prominent place
  • the name, address and registration number of the supplier
  • the name and address of the recipient
  • the date upon which the tax invoice is issued
  • a description of the goods and services supplied
  • the quantity or volume of the goods and services supplied and the total amount of the tax charged, the amount payable (excluding tax) and the consideration (inclusive of tax) for the supply.

Special indirect tax rules

Does a reverse charge or indirect tax withholding mechanism apply?

Yes, a reverse charge applies.

Rulings

Is it possible to apply for formal or informal advance rulings from the tax authority?

There is currently no binding system in Papua New Guinea. However, the tax office does, as a matter of practice, issue opinions on issues where requested by a taxpayer. The opinions are non-binding.

Other indirect taxes

Are there any other indirect taxes that apply in the jurisdiction?

Other indirect taxes include the following:

  • stamp duty
  • customs duty
  • excise duty
  • royalty, mining and development levy.

Contacts

Karen McEntee
Partner
KPMG Papua New Guinea
E: kmcentee@kpmg.com.au

Disclaimer

All information within this guide is provided by KPMG professionals in Papua New Guinea and based on information available as of September 2019.

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