With a theme of “Consolidation for Growth”, on 17 November 2020, the government of Papua New Guinea has presented Budget 2021 that focuses on fiscal consolidation and stimulating economic growth with the aim of rebuilding the living standards for Papua New Guineans.
The budget offers following tax measures:
- The 2021 Budget increased the expenditure to stimulate sectors, including agriculture, tourism and SMEs – those most affected by the COVID-19 pandemic.
- 7-year corporate tax loss carry forward period provisions have been clarified to apply from 1 January 2019, such that losses available at that date may be carried forward up to seven years from 1 January 2019. Losses can continue to expire under the old 20-year rule during that period.
- In the 2020 Budget provisional tax payment dates were amended to change the dates to 90 days, 180 days and 270 days from the year end so that the due dates do not clash with the deadline for resource companies to provided estimates of taxable income, which is 31 March;
- The 2021 Budget introduces anti-avoidances measures which seeks to prevent employees converting to independent contractors in order to be classified as an SME, and subject to concessional tax arrangements.
- The measures introduced in the 2020 Budget to implement a new SME taxation regime with changes to thresholds and tax amounts
- The Budget amends the withholding tax collection mechanism for the prescribed royalties withholding tax. At present payments are directly paid by the developer to the relevant regulator, who then makes the payments to landowners and the PRWT to the IRC. The budget suggests to mandate developers to directly pay the 5% PRWT to IRC.
