PRIME Minister James Marape has commended Parliament for its overwhelming support in passing the Income Tax Bill 2025 with a resounding vote of 79-0.
The Prime Minister described the bill as a monumental step towards eradicating outdated colonial laws and establishing a fairer, more equitable taxation system for Papua New Guinea.
Speaking during the parliamentary debate, PM Marape acknowledged the bill as a critical component of his government’s ‘Take Back PNG’ agenda.
The Prime Minister praised the bipartisan support received for the bill, which he described as an essential aspect of revisiting and modernising the fundamental architecture that holds the country together.
“For 66 years, the original law governing our nation’s taxation system has been in place, having been passed by the Australian Parliament before our independence.
“Since then, revenue administration has been governed by this law, resulting in inadequate revenue collection,” PM Marape said.
“No wonder why our revenue has been poor for such a long time.”
He added that the passing of the Income Tax Bill 2025 is a significant move towards reasserting PNG’s sovereignty over its economic affairs.
“This new law reflects our commitment to fairness and transparency. It secures our people’s economic future by clarifying the taxation process, especially for our rural communities and first-time homebuyers,” he stated.
The Prime Minister emphasised that the bill addresses several critical areas, including revenue collection, price transfers, capital gains, and depreciation.
He noted that the previous legislation allowed for ambiguities and loopholes that foreign companies exploited to the detriment of Papua New Guinea’s revenue base.The Income Tax Bill 2025 is a comprehensive rewrite of the 1959 Income Tax Act, which had grown overly complex over the years with amendments upon amendments.
According to the Prime Minister, the Act failed to keep pace with Papua New Guinea’s evolving economy and aspirations for economic independence.
“The outdated system was hard to read and understand, with numerous loopholes that allowed clever accountants to exploit the system,” he remarked.
The reform process, which began with recommendations from the Sir Nagora Bogan Tax Review Committee in 2015, was aimed at simplifying and consolidating the old Act.
Notable achievements include the reduction of sections from 369 to 165 and the reduction of pages from over 500 to just under 100 — an 80% reduction.
This streamlined approach provides a clearer, simpler framework that is more adaptable to PNG’s economic, business, and social environments.
“Good things can come in small packages,” Prime Minister Marape noted.
“This Act establishes clear, concise, and adaptable tax laws suitable for our nation’s growing economic needs.”
The Prime Minister highlighted several major policy reforms aimed at boosting economic growth and ensuring a fairer taxation system:
Decommissioning Funds: Introduction of a tax deduction for investments into decommissioning funds, which ensures resources are appropriately allocated for fixing up mine sites after resources have been exhausted.
Tax Incentives for Rural Areas: Incentives for businesses investing in rural areas and special economic zones to drive economic growth and development where it is most needed.
Capital Gains Tax: A capital gains tax of 15% on resource leases or assets, with measures to ensure gains are captured even with a 10% change in ownership of assets.Decommissioning Funds: Introduction of a tax deduction for investments into decommissioning funds, which ensures resources are appropriately allocated for fixing up mine sites after resources have been exhausted.
Crackdown on Tax Evasion: Measures to prevent funds from being moved to tax havens and tighten rules around cross-border transfer pricing.
Removal of Historic Tax Concessions: Simplification of depreciation categories from 213 to five, allowing for a 25% faster rate of depreciation across most categories.
Prime Minister Marape also reassured investors that the new law is not retrospective, stating, “We are a fair country. We respect agreements signed, but we also expect investors to respect our country’s desire to secure more benefits for our people.”
This assurance aims to provide confidence to investors that existing agreements will be honoured while new projects will be guided by the updated taxation framework.
The Prime Minister praised the Internal Revenue Commission’s efforts in improving revenue collection, highlighting the remarkable increase from K8 billion in 2018 to K16.8 billion in 2024 without raising taxes.
“This achievement is a testament to the effectiveness of a fair and transparent tax regime,” he said.
The Prime Minister acknowledged that while the law may not be perfect, it is a substantial step forward.
He encouraged all members of Parliament to thoroughly review the legislation, stressing that the government remains open to making improvements where necessary to serve the best interests of the country.
“Attempts must be made to change our country for the better. It starts here, in Parliament, with the laws we pass,” PM Marape stated.
“This is part of my government’s Take Back PNG vision. It is a foundational step towards greater economic sovereignty and a brighter future for our people.”He concluded by thanking members of Parliament from both sides of the House for their support and commitment to improving Papua New Guinea’s economic future.