The Port Moresby Chamber of Commerce and Industry (POMCCI) hosted a Business Breakfast at the Lamana Hotel on Wednesday, 1 October 2025, featuring PricewaterhouseCoopers (PwC) Papua New Guinea Tax Partners Peter Burnie and Shanol Jokhan, who presented detailed insights on the New Income Tax Act 2025 and shared their professional expertise on the key changes introduced under the new tax legislation.
The two-hour event brought together members of the business community seeking valuable insights into the new tax regime.
According to PwC, the New Act represents a complete overhaul of the country’s tax system, tracing its roots to the Bogan Review of 2015 and subsequent reform commitments under the 2017 Medium Term Revenue Strategy (MTRS).
The new Act is described as the most significant tax legislative change in Papua New Guinea in more than six decades.
Passed by Parliament in March 2025, the Act will take effect for tax years commencing after 1 January 2026. It replaces an outdated framework that has evolved through decades of amendments, aiming to simplify, modernise and consolidate tax provisions.
PwC noted that the Act’s objectives include:
• Simplification and consolidation of existing provisions
• Greater emphasis on self-assessment rather than full assessment
• Alignment with the Tax Administration Act (TAA) for efficiency and consistency
However, PwC cautioned that taxpayers should expect transitional challenges as businesses adjust to the new rules.
Introduction of Capital Gains Tax (CGT)
For the first time in PNG’s history, the New Act introduces a Capital Gains Tax (CGT), effective 1 January 2026.
The 15% CGT applies to gains made on the disposal of taxable assets such as resource rights, related information, membership interests, and acquisition rights.
PwC presenters explained that taxpayers can choose between using the historic cost or market value as of 1 January 2026 as the cost base for these assets.
Capital losses may be carried forward indefinitely to offset future gains. PwC described this as a major structural shift, particularly for investors in PNG’s resource sector, and urged businesses to evaluate how this change will affect their investment strategies.
Changes for Non-Residents
The new Act also introduces major updates for non-resident businesses operating in PNG.
Under the reforms, income earned by non-residents through a Permanent Establishment (PE) will be taxed at 30% on net income, while those without a PE will continue to be subject to Non-Resident Tax (NRT) via withholding.
NRT will apply to income such as dividends, interest, royalties, annuities, insurance premiums and technical fees, with a 15% withholding rate on technical services.
The Act also provides clearer definitions of permanent establishment categories, including consulting, construction and agent-based operations, setting time thresholds for determining tax residency.
Employment and Individual Taxation
PwC highlighted that while tax rates and thresholds remain unchanged, the Act refines the taxation of employment income and employer-provided benefits.
It maintains concessional treatment for housing, motor vehicles, school fees and leave fares but updates valuation methods. For example, vehicle benefits are now based on acquisition cost rather than prescribed value.
The concept of salary packaging is formalised, requiring approval for arrangements exceeding the 40% benefits threshold. Individuals with employment income subject to withholding are not required to file tax returns, although assessments may be raised if employer withholdings fall short.
Corporate and Group Transactions
The Act introduces new provisions for intra-group reorganisations, including rollover relief for asset transfers within corporate groups that have at least 95% ownership, subject to approval by the Commissioner General.
It also allows group loss transfers, aligning PNG more closely with international tax practices.
Dividends between resident companies remain exempt, while dividends from non-resident sources are exempt if the recipient owns at least 10% of the foreign entity.
Depreciation and Fixed Assets
One of the key simplifications under the new Act is the reform of tax depreciation rules. The Act introduces five asset classes with prescribed depreciation rates and allows immediate deductions for assets valued under K1,000.
Pooling is permitted for certain asset classes, and for the first time, taxpayers may claim depreciation on business intangibles such as patents, copyrights and marketing intangibles, typically over ten years.
The Act removes outdated accelerated depreciation incentives but retains some concessions for manufacturing and primary production assets.
Preparing for Implementation
Burnie and Jokhan described the passage of the Act as a “significant milestone for tax reform,” urging businesses to prepare for implementation by reviewing:
• Fixed asset management
• Employment arrangements
• Cross-border contracts
• Operating models for non-resident entities
Although the law takes effect in 2026, PwC noted that complementary regulations, including a revised Tax Administration Act and Income Tax Regulations, are expected before enforcement.
The Internal Revenue Commission (IRC) will also play a key role in ensuring a smooth transition through updated processes and taxpayer guidance.
The POMCCI continues to facilitate such engagements to keep the business community informed about key economic and legislative developments affecting the private sector in PNG.
The breakfast provided an opportunity for business leaders and tax professionals to engage directly with PwC’s tax experts on the implications of the New Income Tax Act and its expected impact on business operations and compliance in the country.
