The private sector in Papua New Guinea is assessing the possible implications of the government’s proposed income tax reforms, which form part of a broader effort to strengthen fiscal stability and modernise public revenue systems. The review is examining the balance between direct and indirect taxation, how revenue is distributed across different sectors and the role of resource taxation in the national budget.
Businesses are particularly focused on how changes to income tax thresholds, deductions and reporting systems may affect payroll management and employee take-home pay. Employer associations have emphasised the importance of clear guidance and adequate transition timelines to avoid administrative disruption. Many firms are already planning for multiple scenarios, using financial modelling to understand how different policy outcomes might influence wage structures.
The reforms are taking place at a time when the government is working to improve regulatory oversight of the financial sector and reduce the risks associated with potential grey listing under the Financial Action Task Force review. Ensuring consistency across regulatory, fiscal and monetary policy is seen as essential to maintaining investor confidence.
The dual nature of Papua New Guinea’s economy adds additional complexity. While large resource projects generate significant fiscal revenue, the majority of employment occurs in small businesses and subsistence-based livelihoods. Policymakers have acknowledged that reforms must support broad-based development and avoid placing disproportionate burdens on smaller enterprises.
Inflation and cost-of-living pressures remain influential in wage negotiations. Businesses are aware that adjustments to income tax settings may require careful communication with employees to manage expectations around disposable income.
Consultations between government agencies, employer groups and professional advisory bodies are ongoing. The government has stated its intention to structure reform in a phased and predictable manner. The business sector will continue to monitor developments closely as more detailed tax proposals are brought forward for legislative consideration.
