The Internal Revenue Commission (IRC) of Papua New Guinea (PNG) has announced a number of tax relief measures introduced in the 2025 Budget by the Marape-Rosso Government.
These reforms are aimed at addressing the rising cost of living, supporting small businesses, and promoting home ownership across the nation, the IRC said in a statement.
Key Relief Measures:
- Zero-Rated GST on Essential Goods - To combat rising inflation and its effects on households, the Government will zero-rate Goods and Services Tax (GST) on 13 essential items, including staples such as rice, canned fish, cooking oil, and soap. This measure, set to take effect in the second half of 2025, will lower the cost of these basic necessities, providing relief to families. The IRC, in collaboration with the Independent Consumer and Competition Commission (ICCC), will monitor compliance to ensure businesses pass on the tax savings to consumers. This reform is projected to cost the Government K272 million annually in forgone revenue, but represents a crucial investment in household welfare and economic resilience.
- Simplified Tax Filing for Small Businesses - Small businesses with annual turnovers below K1.5 million will now file GST returns quarterly instead of monthly. This change aims to reduce administrative burdens, enabling small businesses to focus on growth and innovation. More than 10,000 small and medium enterprises (SMEs) will benefit from this initiative, which reflects the Government's commitment to fostering an environment conducive to SME success.
- First-Home Buyer Incentives - Stamp Duty Exemption: The stamp duty exemption threshold for first-time homebuyers will rise from K500,000 to K700,000 starting 1 January 2025, aligning with current housing market conditions. This reform, costing K15 million annually, reduces upfront costs for homeownership. Citizen Employee First-Time Homebuyer Scheme: The qualifying threshold under this scheme will also increase to K700,000 effective 1 January 2025. Additionally, employees will receive income tax exemptions on employer-supported housing loans for properties valued up to K700,000. These measures aim to make homeownership more accessible and affordable, with an annual cost of K40 million in forgone revenues.
- Superannuation Tax Exemption - Individuals with over 15 years of service will enjoy full tax exemptions on their superannuation withdrawals. This reform ensures financial security for retirees and recognizes their years of contribution, enabling them to live with dignity.
- Retirement Savings Account Relief - Only the interest earned on Retirement Savings Accounts will now be taxed, with the principal amount remaining untaxed. This move incentivizes long-term savings and enhances retirement benefits for account holders.
- Tax Exemption on Judges’ Pensions - Judges’ pensions will be exempt from income tax, ensuring financial security in retirement and reinforcing judicial independence. This reform reflects the Government’s appreciation for the judiciary's role in upholding justice and the rule of law.
- Corporate Tax Reduction for Banks - The Corporate Income Tax (CIT) rate for banks will be reduced in a phased approach starting 1 January 2025. This measure, which will cost K30 million annually, seeks to balance fiscal goals with the need to foster growth and innovation in the financial sector.
- NRL-Related Tax Exemptions - In preparation for establishing a National Rugby League (NRL) team in PNG, players and staff will be exempt from income tax if they are tax residents in PNG. This initiative aims to attract world-class talent and build a competitive team, with an annual fiscal impact of K12 million.
- Tax Clearance Certificate (TCC) Relief - The TCC threshold for overseas remittances has increased from K500,000 to K1.5 million as of 1 January 2025. This change reduces compliance costs for businesses and individuals while enhancing oversight of larger transactions.
- Continuation of the K20,000 SWT Threshold - The Marape Government continues to prioritize relief for hardworking Papua New Guineans through the ongoing K20,000 Salaries and Wages Tax (SWT) threshold. This measure ensures that employees earning below K20,000 per year pay no tax at all, while those earning above the threshold benefit by having the first K20,000 of their income excluded from SWT calculations.
The Government did make a slight correction in the 2025 Budget to clarify that its intent when permanently maintaining the tax-free threshold at K20,000 in the 2024 Budget, adding that the removal of the 22% tax bracket equally applied to non-resident individuals.
This initiative provides critical financial relief to employees, helping them manage living expenses and improve their quality of life, the IRC said.
“While this policy costs the Government over K160 million annually in forgone revenue, it underscores a strong commitment to easing the tax burden on wage earners and supporting the nation's workforce.”
The Marape Government’s 2025 Budget delivers nearly K500 million in tax relief measures to support households, businesses, and key sectors of the economy. Despite these revenue sacrifices, the IRC’s revenue collection target has been increased by 14% to K19.4 billion for 2025.
“These measures reaffirm the Government’s commitment to creating a fair and supportive economic environment, prioritizing relief for families, workers, and small businesses. The IRC will publish detailed implementation guidelines for each measure in the coming weeks,” it added.
