A guide to tax clearance requirements in Papua New Guinea, including for the payment of dividends, loan repayments and capital transfers. Provided by KPMG’s Port Moresby office.

Current requirements for Tax Clearance by the Internal Revenue Commission (IRC) on the limited range of transactions caught by this regime are less rigid and cumbersome than those existing prior to September 2007. This is due in part to major deregulation of foreign exchange controls by the Bank of Papua New Guinea (BPNG), PNG’s central bank, at that time.

Trade related payments to non-resident entities for the purchase of physical goods, goods, such as trading stock or capital equipment, are generally not subject to Tax Clearance requirements. Many types of overseas remittances however do still require Tax Clearance approval by IRC in advance include:

• Payment of dividends, royalties, licence fees, management fees
• Repayments on loans, both interest and principal
• Transfer of capital funds such as accumulated savings
• Payments for the sale or purchase of land, property or securities, including the transfer of shares on a PNG Register

Even here, clearance for remittances to the majority of overseas destinations is only required when such payment types exceed K500,000 annually. For payments to one of the IRC listed ‘tax havens’ however that threshold is not available and all remittances require Tax Clearance.

It should be noted, however, that PNG is currently experiencing a shortage of foreign exchange and remittances of foreign exchange can take some time.

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