Papua New Guinea’s Department of the Treasury has presented the 2025 Annual Budget to the Parliament on 29 November 2024. The budget totals PGK 28,357 million, which is PGK 980 million larger than the 2024 budget of PGK 27,377 million.
Treasurer Ian Ling-Stuckey stated the country’s economy is expected to exceed K136 billion in 2025.
One of the main highlights of the 2025 budget is the proposed reduction in the corporate tax rate for commercial banks and the elimination of Goods and Sales Tax (GST) on essential household goods.
Reduced corporate tax on banks
The corporate tax rate for commercial banks will be reduced from 45% to 40% on taxable income below PGK 300 million starting 1 January 2025 and to 35% from 1 January 2026.
The reduction of the income tax rate for taxable income above PGK 300 million from 45% to:
- 44% starting 1 January 2025;
- 43% starting 1 January 2026;
- 42% starting 1 January 2027;
- 41% starting 1 January 2028;
- 40% starting 1 January 2029;
- 39% starting 1 January 2030;
- 38% starting 1 January 2031;
- 37% starting 1 January 2032;
- 36% starting 1 January 2033;
- 35% starting 1 January 2034.
GST exemption on household goods
From 1 July 2025 to 30 June 2026, household goods such as chicken, tinned fish, meat, rice, noodles, flour, biscuits, soap, cooking oil, tea, coffee, sanitary pads, and tampons will be exempt from GST.
This exemption may be extended further, subject to the 2026 Budget review.
GST refund timeframes to be reduced
The timeframe for claiming GST refunds will be progressively reduced from eight years to:
- seven years for claims filed by 31 December 2026
- six years for claims filed by 31 December 2027
- five years for claims filed by 31 December 2028
- four years for claims filed by 31 December 2029 and onwards.
Increase in VAT threshold
The VAT taxable period threshold has increased from PGK 625,000 to PGK 1.5 million, allowing eligible taxpayers up to three months for filing purposes.
New penalty for failing to submit CbC reports
The 2025 budget introduced a new penalty of up to PGK 10 million for failing to submit a Country-by-Country (CbC) report after request.
Excise duty
Excise duty on electric vehicles will be set at 0% for fully electric and 10% for hybrids, while a new excise duty will be introduced for e-cigarettes.
Increased tax clearance threshold
The tax clearance certificate threshold will increase from TGK 500,000 to TGK 1,500,000.
Stamp Duty exemption for first home buyers
First-home buyers can benefit from a stamp duty exemption and income tax concession on properties valued at up to PGK 700,000.
Revised personal income tax brackets/rates
An amendment has been introduced to revise the income tax table for non-resident individuals by eliminating the 22% tax bracket. The updated tax brackets and rates are as follows:
- Income up to PGK 33,000: 30%
- Income over PGK 33,000 and up to PGK 70,000: 35%
- Income over PGK 70,000 and up to PGK 250,000: 40%
- Income exceeding PGK 250,000: 42%.
The budget measures will take effect from 1 January 2025.
