A guide to goods and services tax (GST) in Papua New Guinea, including zero-rated products and exemptions. Provided by KPMG’s Port Moresby office.

The PNG tax system includes a goods and services tax (GST) that is imposed at the rate of 10%. It operates as a GST does in most part of the world, where GST is imposed on taxable sales or supplies made by a registered business, and a credit is allowed for any GST paid by that business for its inputs.

All entities, including foreign contractors, whose taxable supplies exceed K250,000 in any 12 month period must be registered for GST, regardless of whether they are required to lodge an income tax return or not.

The following supplies may presently be zero rated, or GST free, under the GST laws:

• The sale of a business as a going concern
• Medical supplies, including prescription drugs
• Supply of new fine metal
• Goods and services provided to a prescribed foreign aid provider
• Goods and services, other than cars, provided to resource companies
• Goods and services supplied to an approved charitable body
• Sales of exported goods
• Certain exported services
• Travel or accommodation within PNG purchased by a person outside PNG.

The following services may be exempt from GST, or input taxed, under the law:

• Financial services
• Medical services
• Educational services
• Public road transport
• Accommodation and motor vehicles supplied by an employer to their staff
• Retail supply of newspapers
• Lotteries and other games of chance plus postage stamps.

GST returns must be lodged monthly by registered persons.

The Internal Revenue Commission has allowed in the past for business entities that are in refund positions to apply relevant GST credits to offset other tax liabilities of the business, such as income tax or salary and wages tax.  However, in 2019, the IRC announced it would end a long standing arrangement whereby it would offset GST refunds against amounts owed by employers for salary and wages tax deducted from employees.  Such offsets are no longer permitted.

Import GST, also at 10%, is payable on the majority of items imported commercially into PNG, subject to relevant exceptions as noted above. It is also noted that the PNG legislation contains reverse charge provisions whereby GST may be imposed on certain supplies made to a PNG resident from outside PNG.

This guide to Papua New Guinea’s tax system is produced by KPMG’s Papua New Guinea office and is reproduced here with permission.