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PAPUA NEW GUINEA
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WHY PAPUA NEW GUINEA?
Papua New Guinea (PNG), officially the Independent State of Papua New Guinea, is an island country in Oceania that comprises the eastern half of the island of New Guinea and offshore islands in Melanesia, a region of the southwestern Pacific Ocean north of Australia. It has a land border with Indonesia to the west and maritime borders with Australia to the south and the Solomon Islands to the east. Its capital is Port Moresby. The country's 462,840 km2 (178,700 mi2) includes a large mainland and hundreds of islands. The country has a large Christian majority population, of several different denominations, and in March 2025 its constitution was amended to adopt Christianity as the official state religion.
The land supports around 5% of all known species, and the export-driven economy is also dependent on natural resources. Papua New Guinea is a developing economy where nearly 40% of the population are subsistence farmers living relatively independently of the cash economy. The country retains close ties to Australia, and has enhanced ties with both Asia and the Pacific. Papua New Guinea is classified as a developing economy by the International Monetary Fund. The economy is largely dependent on natural resources, with capital investment concentrated in mining and oil, while most labour is employed in agriculture.
ADVANTAGES
Abundant Natural Resources:
PNG possesses significant natural resources with potential for development across various sectors, including:
- Mining
- Fisheries
- Agriculture
- Tourism
- Energy
Strategic Regional Hub:
Situated as an emerging business hub in the Pacific, PNG offers trade connectivity with Asia-Pacific countries, making it an ideal destination for companies looking to expand regionally.
Favourable Foreign Investment Policies:
• 100% Foreign Ownership: Foreign investors can benefit from policies allowing complete foreign ownership of companies.
• Investment Incentives Investment Promotion Authority (IPA): provides incentives for qualifying projects, such as tax holidays and reduced tax rates, to attract foreign direct investment.
• Safeguarded Investments: The country's regulatory framework is designed to ensure ease of doing business while safeguarding investments.
Growing SME Sector:
There is a recognized potential for the growth of local small and medium enterprises (SMEs), which are vital for job creation, community development, and fostering economic self-reliance. This creates opportunities for partnerships and local engagement.
Access to Funding and Enhanced Credibility:
Formal business registration in PNG enhances a company's credibility and reputation, which can facilitate access to funding and credit from banks, investors, and financial institutions.
Simplified Tax Structure:
The nation offers a simplified tax structure and various tax advantages, making it an attractive location for business operations.
TAX REGIME
Corporate Tax:
The standard corporate tax rate for resident companies is 30%, whereas non-resident companies are taxed at 48% on their PNG-sourced income. Tax losses can generally be carried forward for 20 years.
Personal Income Tax (Salary or Wages Tax):
Residents face progressive rates, starting from a tax-free threshold of PGK 20,000 up to a maximum rate of 42% on income exceeding PGK 250,000.
Goods and Services Tax (GST):
A 10% GST is applied to most goods and services.
Small and Medium Enterprise (SME) Tax:
A simplified regime applies a 2% flat tax rate on turnover for SMEs with a turnover of less than PGK 250,000.
Other Taxes:
PNG imposes various other taxes, including dividend withholding tax, interest withholding tax, royalty tax, and stamp duty.
PAPUA NEW GUINEA COMPANIES
Proprietary Limited Company (PTY LTD):
The most common structure for small to medium businesses, offering limited liability. They can be formed by one person/director and must have 1 to 50 shareholders.
Public Company:
Suitable for larger enterprises, which may be limited by shares or guarantee.
Foreign Company/Branch:
Foreign entities can register a branch to operate in PNG, allowing them to trade directly.
Sole Proprietorship:
A business owned and operated by one individual, with no legal distinction between the owner and the business (unlimited liability).
Partnership:
A business owned by two or more people sharing management, profits, and liabilities.
No-Liability Company:
Specific type of company used in certain sectors.
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