A. Update
On behalf of the Papua New Guinea Government, HON. IAN LING-STUCKEY, CMG. presented the 2025 National Budget on November 29th2024. The key proposals relating to payroll are as under:
1 Increase in First-Time Homeowner Exemption Thresholds
The Government has raised the exemption threshold for the cost of a home under the First-Time Homebuyer Scheme, where repayable amounts are advanced from recreation leave and superannuation entitlements. The new housing cost threshold has increased from K400,000 to K700,000.
Additionally, the threshold for the citizen first-time homebuyer scheme exemption, which requires IRC approval, will be aligned with the new K700,000 limit.
2 Tax Exemption on Superannuation Withdrawals for Long-Serving Retirees
Currently, long-serving retirees with 15 or more years of service are subject to a 2% tax on superannuation withdrawals. For the 2025 Budget, the Government will exempt this 2% tax for long-serving retirees. This exemption acknowledges their significant contributions and encourages individuals to remain in the workforce longer.
In summary, superannuation payments that currently have a 2% tax rate will be completely tax-free in situations like:
1. Retiring after contributing for 15 years or more.
2. Contributing for 7 years, and either being over 50 or retiring early unexpectedly.
3. Payments due to death or permanent disability.
3 NRL Salary and Wages Tax Exemptions
To attract and retain quality players and staff in the National Rugby League, the Government will exempt personal income tax for all players (domestic and international) and international staff. This exemption will apply to tax residents of PNG but not to those with tax residency in other jurisdictions.
4 Alignment of Non-Resident with Resident Tax Tables
In the 2023 Budget, the personal income tax exempt threshold was temporarily increased to K20,000, a change that was made permanent in the 2024 Budget. As part of this update, the 22% tax bracket was removed for residents. However, this change was not reflected in the non-resident tax table, which still included the 22% tax bracket.
To correct this misalignment, the legislation has been amended to ensure the non-resident tax table mirrors the resident tax table, with the 22% tax bracket removed. This adjustment ensures consistency and fairness across the tax system for both residents and non-residents.
| Where annual income | Marginal Tax Bracket Rate (Non-residents) | Marginal Tax Bracket Rate (Residents) |
|---|---|---|
| does not exceed K33,000 | 30% | 30% |
| exceeds K33,000 but does not exceed K70,000 | 35% | 35% |
| exceeds K70,000 but does not exceed K250,000 | 40% | 40% |
| exceeds K250,000 | 42% | 42% |
5 Tax Clearance Certificate
The Government has raised the threshold for obtaining a Tax Clearance Certificate (TCC) from K500,000 to K1.5 million for non-tax haven countries. Taxpayers will now need to apply for a TCC if their total annual offshore transfers exceed K1.5 million.
B. Statutory Compliance Release Date: November 29, 2024
C. Effective Date: January 1, 2025
A. Update
In accordance with the National Executive Council Decision No.327/2023 dated November 21, 2023, and Income Tax (Salary or Wages Tax) (Rates) (2024 Budget) (Amendment) Bill 2023, the Government of Papua New Guinea has increased the tax-free threshold to PGK 20,000 effective from the January 1, 2024, onwards for the tax residents. Additionally, as a complementary measure, the Government has decided to repeal the dependent rebates.
This change has been made with the intention of simplifying the existing tax law and diminishing compliance costs for taxpayers. This was mainly intended to provide relief to low- and middle-income wage earners during times of inflation. The revised tax-free threshold eliminates the 22 percent rate bracket for tax residents. Consequently, individuals with an annual income surpassing PGK 20,000 will incur a tax rate of 30 toea for each Kina earned.
It is important to note that the prevailing tax slab remains unchanged, as outlined below:
Table 1: Resident Salary and Wages Tax Rates for the period January 1, 2024, and onwards:
| Parts of Taxable Income | Percentage (%) |
|---|---|
| The part of the taxable income that: | |
| Does not exceed K20,000 | 0 |
| exceeds K20,001 but does not exceed K33,000 | 30 |
| exceeds K33,001 but does not exceed K70,000 | 35 |
| exceeds K70,001 but does not exceed K250,000 | 40 |
| exceeds K250,001 | 42 |
Table 2: Non-Resident Salary and Wages Tax Rates for the period 1 January 2024 and onwards
| Parts of Taxable Income | Percentage (%) |
|---|---|
| The part of the taxable income that: | |
| Does not exceed K20,000 | 22 |
| exceeds K20,001 but does not exceed K33,000 | 30 |
| exceeds K33,001 but does not exceed K70,000 | 35 |
| exceeds K70,001 but does not exceed K250,000 | 40 |
| exceeds K250,001 | 42 |
B. Statutory Compliance Release Date: November 20, 2023
C. Effective Date: January 1, 2024
A. Update
Earlier this year, the Government passed an amendment to the Income Tax (Salary and Wages Tax) (Rates) Act No. 19 of 2022 (‘the Act’), temporarily increasing the salary and wages tax (SWT) tax-free threshold from K12,500 to K17,500 per annum.
In the recent 2023 Budget sitting, the tax-free threshold has further been increased to K20,000 per annum for a temporary period of January 1, 2023, to December 31, 2023. Further extension of this change is yet to be decided by the Government.
For detailed fortnight and annual tables, please refer to the link below.
Further, 22% tax rate bracket has effectively been removed. The measure does not have any impact on non- residential tax rates.
B. Statutory Compliance Release Date: December 22, 2022
C. Effective Date: January 1, 2023
A. Update
The government recently passed an amendment to the Income Tax (Salary and Wages Tax) (Rates) Act, temporarily increasing the salary and wages tax tax-free threshold from K12,500 to K17,500. With the temporary revision, all the workers earning at least K673 per fortnight will have tax bill reduced by K42 per fortnight.
For residents, The tax-free threshold increase is effective only from 1 June 2022 to 31 December 2022. From 1 January 2023 onwards, the tax-free threshold will revert back to K12,500.
There are no other changes to the other tax brackets in terms of thresholds or rates. The above measure does not have any impact on the rates for non-residents.
