For tax purposes there are two types of business entities that operate in PNG.
- Resident taxpayer
- Non-resident taxpayer.
RESIDENT TAXPAYER OR LOCAL COMPANY
Generally for resident taxpayer (i.e. local company) all incomes of any sort are taxable or assessable regardless of where they are derived.
Trading profit at the rate of 30%, tax on interests and dividends at 10, 15, 17 and 20% depending on the type of income and where it is derived.
For resident companies there may be tax incentives depending on where (location) the company is operating or type activities is undertaking.
For instance income generated from agriculture is 100% exempted.
NONRESIDENT OR FOREIGN COMPANY
Nonresident taxpayers are taxed only on the income derived in PNG.
A foreign company can generally pay up to 47%.
There are incentives like double deduction on certain expenses like educational expense, tax losses carrying period of 20 years.
Foreign companies involved in manufacturing activities are given specific tax considerations as seen fit by tax office as well as 100% depreciation on prescribed manufacturing plants.
Foreign companies involved in exploration (whether it be oil, gas,minerals) get their exploration expenditures built over the exploration period and amortized over the development period.
In broad terms a company incorporated in PNG is seen as a resident company.
There is still possibility that the locally incorporated company can be taken as foreign company in rare case for tax purpose.