Income Tax Act 2025

The introduction of the new Income Tax Act 2025 (the New Act) sees what is arguably the most significant tax legislative change in PNG in more than 60 years. The New Act traces its origins to the Bogan Review of taxation in PNG that reported its findings in 2015. The findings of the report were extensive and sought to chart the new course for tax policy in PNG. However, despite the acknowledgement of the need for reform of the tax system in the 2017 Medium Term Revenue Strategy (MTRS), the path through to the New Act of 2025 has been long and has arguably not lived up to the initial expectations of sweeping policy reforms.

The first indication that change was on the way was in 2017 with the passing of the Tax Administration Act (TAA). The plan appears to have been to incorporate the administrative provisions of the “old” Act into a new piece of legislation, while at the same time introduce a New Act containing the taxing provisions in a simplified and modernised way. Nevertheless, no new Act was presented and the date of effect of the TAA was deferred.

It was not until April 2019 that broad consultation on the rewrite commenced, with consideration of introducing a Capital Gains Tax (CGT) and a new regime for Small Business Taxation (SBT). SBT was then introduced in 2020 within the framework of the old Act.