Papua New Guinea Personal Income Tax Guide 2026

Overview — Internal Revenue Commission (IRC)

The Internal Revenue Commission (IRC) administers all domestic tax collection including personal income tax, corporate tax, GST, and other levies. Tax residents are taxed on worldwide income; non-residents are taxed only on Papua New Guinea-source income. Residency is determined by physical presence of 183 days or more in a calendar year, or having a permanent home in PNG. Employees have tax withheld at source under the PAYE (Pay As You Earn) system. Self-employed individuals and business owners file annual returns directly with IRC. The currency is the Papua New Guinea Kina (PGK).

IIT Tax Brackets 2026 — Annual Rates

Papua New Guinea uses a progressive annual bracket system with 4 bands and a top marginal rate of 40%. For 2026, the annual IIT brackets are:

• 0% — on annual income up to PGK 20,000 (tax-free threshold)
• 30% — on income from PGK 20,001 to PGK 53,000
• 35% — on income from PGK 53,001 to PGK 180,000
• 40% — on annual income above PGK 180,000

In addition to the bracket tax, a medical levy of 2% is charged on taxable income. A personal tax credit of PGK 1,000 is available to resident individuals, reducing the total tax liability. A taxpayer earning PGK 100,000/year pays approximately PGK 23,500 in IIT plus PGK 2,000 medical levy, less PGK 1,000 credit — an effective rate of ~24.5%.

Medical Levy — 2%

The medical levy is an additional 2% charge on taxable income, applied on top of the progressive IIT rates. The levy is calculated on the same taxable income used for the bracket calculations. It is withheld at source for employees through PAYE and paid by self-employed individuals through the self-assessment system. The medical levy funds Papua New Guinea's public healthcare system. Unlike the bracket tax, the medical levy is not reduced by the personal tax credit. The effective total marginal rate (including medical levy) ranges from 2% to 42% depending on the income bracket.

Personal Tax Credit — PGK 1,000

All resident individual taxpayers in Papua New Guinea are entitled to a personal tax credit of PGK 1,000 per year. This credit directly reduces the income tax liability (including bracket tax and medical levy). If the tax liability is less than PGK 1,000, the credit is limited to the amount of tax payable (non-refundable). The credit is applied automatically through the PAYE system for employees or claimed in the annual return for self-employed individuals. The personal tax credit was introduced as part of tax reform to provide relief for low and middle-income earners.

PAYE Withholding

Employers must register for PAYE with IRC and deduct tax fortnightly or monthly from employee salaries. The employer calculates tax on gross salary using the annual brackets, applies the personal tax credit, deducts the medical levy, and remits the net tax to IRC by the prescribed date. Employers file periodic PAYE returns via IRC's online portal. Employees receive annual tax deduction summaries for their records. Failure to remit PAYE attracts penalties and interest on overdue amounts.

Self-Employed Individuals

Self-employed individuals and sole proprietors are taxed under the same progressive rates as employees, but must file self-assessment returns. Estimated tax is payable in quarterly instalments. The annual return must be filed by 31 October of the following year. Self-employed individuals can deduct allowable business expenses (rent, utilities, raw materials, salaries) to arrive at taxable profit. Proper books of account must be maintained. The personal tax credit is available to self-employed individuals filing annual returns.

FAQs

Do I need to file a return if I pay PAYE through my employer?

Yes, all resident individuals must file an annual income tax return with IRC by 31 October, even if all tax was withheld at source. The process is simplified for PAYE-only employees.

Is overtime pay taxable?

Yes, all remuneration including basic salary, overtime, bonuses, commissions, and allowances are taxable as employment income.

Can married couples split income?

No, each individual is taxed separately on their own income. There is no income splitting or joint filing for married couples in PNG.

What happens if my employer does not remit PAYE?

The employer is liable for the unpaid tax plus penalties. Employees should verify their tax compliance through IRC's portal and request a Tax Clearance Certificate.

Disclaimer

This guide provides general information about Papua New Guinea personal income tax for the 2026 tax year. Tax laws, rates, and regulations may change. Always consult with a qualified PNG tax advisor or the Internal Revenue Commission for advice specific to your situation. InvestmentKit does not provide tax advice.