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Employing in Papua New Guinea

At a glance

Employment in Papua New Guinea

Foreign companies that employ workers in PNG face several challenges and must adhere to the legal and regulatory framework that is in place. PNG’s employment law is at times complex and confusing as it is constantly being developed as the nation becomes more advanced. For example, there are no definite laws surrounding probationary work periods. In some cases, using an outsourced employer will make the process smoother, and it is recommended to use professional legal services as well. Our guide explains PNG policies on leave, termination and payment of benefits.

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Payroll & Tax in Papua New Guinea

Complying with local payroll and tax requirements is essential for a company doing business in PNG. Issues such as tax rates and withholding and social security are all essential in ensuring a seamless human resources operation, and are strictly overseen by the country’s Internal Revenue Commission. Many companies will consider outsourcing these administrative tasks to a GEO (Global Employment Organization).

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Immigration / Work Permits in Papua New Guinea

Foreign workers are required to have the proper visas and work permits in PNG, as established by immigration laws. This often requires incorporation and licensing prior to sponsoring work permits for employees, which can be a problem if your company is trying to enter the country quickly. The most common work permits are the short term and long term work permits.

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Incorporation

There are several business structures available for incorporation in PNG, and each has advantages and disadvantages. In some cases it will depend upon the type of industry that you are in, and the scope of planned business activity. Generally, the limited liability company is preferred. Our guide has a comparison of the time and cost for incorporating standard company structures.

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GEO Solutions or DIY Employment in Papua New Guinea?

Papua New Guinea is one of the world’s fastest developing economy, largely thanks to rapid growth in the mining and resources sector. As the PNG Government implements initiatives to continue growth, it has also introduced measures to assist foreigners set up businesses in PNG.

Companies entering Papua New Guinea must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities. A GEO or Papua New Guinea Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a PNG entity established that can run payroll.

Using Shield GEO Employer of Record Services in Papua New Guinea

Payroll Papua New Guinea
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote

Notes

Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.

 
Grossed income Tax Rate (%)
0-10,000 22
10,001-18,000 30
18,001-33,000 35
33,0001-70,000 40
70,001-250,000 42
Tax Returns Supplied

Yes

Corporate Income Tax Rate
  • Resident companies not engaged in mining or petroleum operations: 25%
  • Non-resident companies, including those engaged in mining operations: 48%
  • Resident mining companies: 35%
  • Petroleum companies, resident or non-resident: 50%
Payroll Tax

N/A

Sales Tax

Sales and services tax are levied by provincial governments, averaging 3%.

Withholding Tax
  • 17% dividend and royalties withholding tax, which can be reduced typically to 15% under a tax treaty.
  • Foreign contractors are subjected to withholding tax of 12%
  • Overseas shipping incurs a withholding tax of 2.4%
Other Tax

All businesses whose annual payroll exceeds PNK100,000 are subject to a 2% training levy. Mining operations are required to pay a 1.25% levy on export sales value of mined products.

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