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Payroll & Tax in Papua New Guinea

Papua New Guinea payroll & taxation

There are specific rules for payroll and taxation in Papua New Guinea, depending upon whether your company employs foreign nationals or local PNG employees. The primary concerns for a foreign company that needs to comply with tax laws in PNG are: Individual income tax (IIT) for employees in PNG, social security costs, payroll tax, sales tax, withholding tax, business tax and the training levy. PNG is unique in that many of the benefits usually available through a government-established social security scheme are instead conducted through private insurers.

Your Payroll Options in Papua New Guinea

Remote payroll

A remote payroll in PNG is where a foreign company, i.e. a non-resident company, payrolls a resident employee in PNG. The best option for a non-resident company to payroll its employees (local and foreign) in PNG is to use a fully outsourced service like a GEO or FESCO which will employ and payroll the staff on their behalf.

Local Payroll Administration

In some cases, a company will register their business in PNGĀ under one of the forms available but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal payroll

Larger companies with a commitment to PNG may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Papua New Guinean payroll, and can fulfill all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with PNG employment laws.

Fully outsourced payroll and tax

Companies can outsource the employment and payroll of their staff in Papua New Guinea to a GEO, like Shield GEO. This is possible for both foreign workers and PNG nationals. This is the easiest, fastest and safest way to payroll staff in PNG.

Shield GEO manages all aspects of payroll for workers in PNG, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

 

 

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Setting up payroll in Papua New Guinea

Information Explanation
Currency ?

Papua New Guinean Kina (PGK)

Tax Figures

Information Explanation
Corporate Income Tax ?
  • 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%
Income Tax Rate ?
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
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%
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