Papua New Guinea Rental Income Guide 2026

Overview — Rental Income Tax in PNG

Rental income from property (land and buildings) is taxed as part of the owner's overall income under the progressive IIT rates. Unlike some jurisdictions, PNG does not impose a separate withholding tax on rent. The landlord includes net rental income (gross rent less allowable expenses) in their annual tax return and pays tax at their marginal rate. Resident landlords are taxed on worldwide rental income; non-residents are taxed only on PNG-source rental income. The Internal Revenue Commission (IRC) administers rental income tax under the Income Tax Act.

Tax Rates — Progressive IIT (0–40% Plus Medical Levy)

Rental income is added to the landlord's other income and taxed at the progressive rates:

• 0% — on first PGK 20,000 of total annual income (including rent)
• 30% — on income from PGK 20,001 to PGK 53,000
• 35% — on income from PGK 53,001 to PGK 180,000
• 40% — on income above PGK 180,000
• Medical levy — 2% of taxable income

The personal tax credit of PGK 1,000 is available to offset the total tax liability. For a landlord earning PGK 50,000 in rental income with no other income, the tax would be computed using the standard bracket rates, medical levy, and personal credit.

Allowable Deductions

Landlords may deduct the following expenses from gross rental income:

• Repairs & maintenance — not capital improvements
• Property management fees — paid to licensed agents
• Insurance premiums — building and fire insurance
• Mortgage interest — interest on loans used to acquire or improve the property
• Municipal rates — paid to local government
• Agency & legal fees — for tenant acquisition and lease agreements
• Depreciation — capital allowances on the building (5% straight-line)

Expenses must be wholly and exclusively incurred for the purpose of generating rental income. Capital improvements are not deductible but may be subject to capital allowances.

Vacant Property Rules

Rental income is only taxable when the property is actually let. There is no deemed rental income for vacant or owner-occupied properties. Municipal rates continue to apply regardless of occupancy. Expenses incurred during vacant periods (e.g., security, maintenance) may be deducted if the property is available for rent and genuinely seeking tenants. Short-term letting (e.g., Airbnb, holiday rentals) is also subject to rental income tax at the owner's marginal IIT rate.

Non-Resident Landlords

Non-residents earning rental income from PNG property are subject to tax on the net rental income at the standard progressive IIT rates. Non-residents must register with IRC and file annual tax returns. The tenant or property manager should ensure that tax is properly withheld or that the non-resident landlord complies with their filing obligations. Double tax treaties may provide relief from double taxation.

FAQs

Who is responsible for reporting rental income?

The landlord is responsible for declaring rental income in their annual tax return. There is no withholding tax on rent in PNG, so the landlord must ensure compliance directly with IRC.

What if I rent my property through an agency?

The agency may provide a summary of rent collected and expenses incurred. The landlord remains responsible for reporting the net rental income in their tax return. The agency does not withhold tax on behalf of the landlord.

Are advance rent payments taxable in one year?

Yes, rental income is taxable in the year it is received, regardless of the period it covers. If you receive 2 years' rent in a single payment, the full amount is taxable in that year.

Disclaimer

This guide provides general information about rental income taxation in Papua New Guinea for the 2026 tax year. Tax laws and rates 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.