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