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Papua New Guinea Cross-Border Tax Guide 2026

Papua New Guinea has a developing cross-border tax framework with four double tax treaties in effect (Australia, New Zealand, Singapore, UK). Transfer pricing rules require arm's length pricing for related-party transactions. Withholding taxes on dividends, interest, and royalties apply to non-residents at standard rates of 15%, which may be reduced under applicable treaties. PNG is not a member of the OECD but follows international tax standards.

Overview — Cross-Border Taxation in PNG

PNG cross-border tax rules are governed by the Income Tax Act and its double tax treaties. The Internal Revenue Commission (IRC) administers international tax matters. Multinational enterprises operating in PNG must comply with transfer pricing documentation requirements and withholding tax obligations. Non-residents earning PNG-source income are generally subject to withholding taxes at statutory rates, which may be reduced under applicable treaties. PNG participates in international tax information exchange initiatives.

Withholding Taxes to Non-Residents

Payments to non-residents from PNG-source income are subject to withholding tax at the following standard rates (treaty rates may apply):

  • Dividends — 15% (reduced under DTTs to 15%)
  • Interest — 15% (reduced under DTTs to 10%)
  • Royalties — 15% (reduced under DTTs to 10%)
  • Management and technical fees — 15%

The person making the payment must withhold the tax and remit it to IRC within the prescribed period. A withholding tax certificate must be issued to the non-resident. Treaty relief requires the non-resident to provide a Certificate of Tax Residency from their home country.

Double Tax Treaties

PNG has comprehensive double tax treaties with four countries:

  • Australia — dividends 15%, interest 10%, royalties 10%
  • New Zealand — dividends 15%, interest 10%, royalties 10%
  • Singapore — dividends 15%, interest 10%, royalties 10%
  • United Kingdom — dividends 15%, interest 10%, royalties 10%

To claim treaty benefits, the non-resident must obtain a Certificate of Tax Residency from their home country tax authority and submit it to the PNG withholding agent or IRC. The treaties follow the OECD Model Convention and include exchange of information provisions. PNG is actively negotiating additional treaties with other trading partners.

Transfer Pricing

PNG has transfer pricing rules that require related-party transactions to be conducted at arm's length. Related parties include companies under common control, parent-subsidiary relationships, and individuals with significant influence. Documentation requirements apply for transactions exceeding specified thresholds. Acceptable transfer pricing methods include the Comparable Uncontrolled Price (CUP) method, Cost Plus method, Resale Price method, and Transactional Net Margin Method (TNMM). Taxpayers should maintain contemporaneous documentation to support their transfer pricing positions.

Thin Capitalisation

PNG thin capitalisation rules limit interest deductions on related-party debt. The maximum allowable debt-to-equity ratio is 3:1 for most companies. Interest on debt exceeding this ratio may be disallowed as a deduction and treated as a dividend for withholding tax purposes. The rules apply to related-party debt from foreign and domestic related entities. Certain long-term financing from approved financial institutions may be exempt from thin capitalisation restrictions.

FAQs

Do I need to register for tax in PNG as a non-resident investor?

Non-residents earning PNG-source income subject to final withholding tax generally do not need to register for tax. However, a non-resident with a permanent establishment in PNG must register and file corporate tax returns.

How do I claim a refund of excess WHT?

A non-resident may claim a refund if WHT was deducted at the full statutory rate when a reduced treaty rate should have applied. The refund claim is submitted to IRC with supporting documents including proof of residency and treaty relief application.

Does PNG have a General Anti-Avoidance Rule?

Yes, the Income Tax Act includes a general anti-avoidance rule that allows IRC to recharacterise transactions entered into for tax avoidance purposes.

Disclaimer

This guide provides general information about cross-border taxation in Papua New Guinea for the 2026 tax year. Tax laws and treaty provisions may change. Always consult with a qualified PNG international tax advisor or the Internal Revenue Commission for advice specific to your situation. InvestmentKit does not provide tax advice.