WORLD TRADE  
ORGANIZATION   
G/SCM/N/243/PNG 
3 August 2012 
 (12-4299) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Continuation of Extension under SCM Artic le 27.4 of the Transition Period for 
the Elimination of Export Subsidies Pursuant to the Procedures Contained 
in the General Council Decision in Document WT/L/691 
 
Updating notification 
 
PAPUA NEW GUINEA 
 
  The following communication, dated 12 July 2012, is being circulated at the request of the Delegation of Papua New Guinea.  
_______________ 
 
  PNG' subsidy programme is pr ovided under Section 45B of the Income Tax Act, which aims 
to encourage foreign and export-oriented in vestment into the manufacturing sector in 
Papua New Guinea. 
 
 By way of this submission, Papua New Guinea wishes to advise the Committee that PNG's Parliament passed in 2011 the Income Tax (2012 Budget) (Amendment) Act 2011 , which repealed 
Section 45B of the Income Tax Act 1959.  The Income Tax (2012 Budget) (Amendment) Act 2011  was 
passed as a consequential amendment accompanyi ng the Appropriation Bill 2012 to pass the 2012 
National Budget. 
 G/SCM/N/243/PNG 
Page 2  
 
  1. Title of the subsidy progra mme, if relevant, or brief descr iption or identification of the 
subsidy 
 
 Section 45B under Division 1A – Export Incentives of the Income Tax Act of Papua New Guinea. 
 
2. Period covered by the notification 
  The period covered is calendar years 2010-2011.   
3. Policy objective and/or purpose 
 
 Section 45B of the Income Tax Act is an e xport incentive provided to the companies by the 
Government, which aims to attract export-oriented  manufacturing and foreign investment through the 
provision of export incentives.  It provides for exemption from income tax, of profits resulting from 
new export sales.  The amount exempted is th e total net income from export sales for the 
first three years after exports have started.  For a nother four years thereafter, increases in net export 
income, measured over the rolling average of th e previous three years net export income, are 
exempted.  Given the company tax rate of 301 per cent, the subsidy provided is 30 per cent of net 
profits derived from export sales, for the periods and to the extent shown above. 
 
4. Background and authority 
 
Section 45B is under "Division 1A – Export incentiv es" of the Income Tax Act.  The indirect 
subsidy was introduced in 1984 and is administ ered by the Internal Revenue Commission, the 
government agency responsible for taxation and customs matters in Papua New Guinea. 
 
 Section 45B (2), part of the Income Tax Ac t and mentioned in document G/SCM/N/74/PNG, 
is no longer valid.  5. Form 
  Income tax exemption for up to 100 per cent of net income derived from export sales of a variety of goods (mainly mining and petroleum produc ts) for three years.  After this period, any 
export income which is in excess of the average of the prior years can be treated as exempt income, 
up to and including the seventh year. 
 
6. To whom and how the subsidy is provided (whe ther to producers, to exporters, or others;  
through what mechanism;  whether a fixed or fluctuating amount per unit;  if the latter, how 
determined). 
 
 This subsidy, provided through the income tax system, is to promote exports of goods 
manufactured in Papua New Guinea.  In 2000, two companies benefited from the export incentive and 
the revenue forgone was K965,368.00.  In 2006, fi ve companies benefited and the revenue forgone 
was K21,796,614.00.  In 2008, only one comp any benefited and the revenue forgone was 
K1,337,349.00.  One company benefited from the pr ogramme in 2009 and the revenue forgone was 
K10,552.00.  In 2010 and 2 011 no companies benefitted. 
 
                                                      
 1 The company tax rate was increased from 25 per cent to 30 per cent in the 2003 National Budget and 
has remained at 30 per cent since then.    G/SCM/N/243/PNG 
 Page 3 
 
 
  7. Amount/subsidy per unit, or in cases where this is  not possible, the total amount or the annual 
amount budgeted for that subsidy (indicating, if possible, the average subsidy per unit in the 
previous year).  Where provision of per unit subs idy information (for the year covered by the 
notification, for the previous year, or both) is not possible, a full explanation. 
 
 The standard company tax in Papua New Guin ea is 30 per cent and the subsidy provided is 
30 per cent of net profits derived from export sales.  The cost of this subsidy is between US$25,000 
and US$100,000 per annum.  There are no statistics av ailable to more precisely update the costs of 
this indirect subsidy to the Government for the years 2010-2011.  
8. Duration of the subsidy and/or any ot her time limits to it, including date of 
inception/commencement 
 
 PNG is expecting that this request for exte nsion will be granted fo r 2012 and the subsequent 
years as per the requirements of the fast-track proce dures.  Similarly, PNG is aware of the obligation 
to eliminate the subsidy in 2015, including the final two years referred to in Article 27.4, and intends 
to undertake, at an appropriate time, a deta iled study of possible options in this respect. 
 9. Statistical data permitting an assessment of th e trade effects of the subsidy.  The specific 
nature and scope of such statis tics is left to the judgement of the notifying Member.  To the 
extent possible, relevant and/or determinable, however, it is desirable that such information 
include statistics of production, consumption,  imports and exports of the subsidized 
product(s) or sector(s): 
 
 (a) for the three most recent year s for which statistics are available; 
 (b) for a previous representative year, whic h, where possible and meaningful, should be 
the latest year preceding the introduction of the subsidy or preceding the last major 
change in the subsidy 
 The statistical data for this period is not available as most companies targeted by the 
Government for this subsidy did not apply fo r assistance under this programme to export.  
One project, the Ramu Nickel/Cobalt, which the G overnment provided this incentive of indirect 
subsidy to mine the resources and through this tax exemption on e xport income, assist/develop that 
region of the country, remains under developm ent and is not yet in full production.  
Papua New Guinea wants to reassure WTO Members that  at this stage there is no evidence of trade 
effects as a result of this subsidy. G/SCM/N/243/PNG 
Page 4  
 
  No. 12 of 2011. 
 
Income Tax (2012 Budget) (Amendment) Act 2011.  
 
ARRANGEMENT OF SECTIONS. 
 
1. Interpretation (Amendment of Section 4). 2. New Section 10A.  
 "10A. COMPUTER SERVICE." 
3. New Section 22B. 
 
 "22B. EXEMPTION FOR 2015 PACIFIC GAMES." 
4. Exemption related to export sales (Amendment of Section 45B). 
5. New Section 46CA. 
 
"46CA. CONCESSIONAL TREATMENT OF APPROVED 
REDUNDANCY PAYMENTS". 
6. 150% deductions for the gifts in respect of the 2015 Pacific Games (Repeal and Replacement 
of Section 69K). 
 
"69K. 150% DEDUCTIONS FOR GIFTS IN RESPECT OF THE 2015 
PACIFIC GAMES". 
7. Losses of previous years not to be taken into  account unless there is substantial continuity of 
ownership (Amendment of Section 101D). 
8. Special provisions relating to beneficial ownership of, or rights attached to, shares 
(Amendment of Section 101E). 
9. Losses of previous years of subsidiary not to  be taken into account unless there is substantial 
continuity of beneficial ownership of shares in holding company (Amendment of Section 101F). 
10. Losses of previous years may be taken into account where a company carries on same 
business (Amendment of Section 101G). 
11. Interpretation (Amendment of Section 155). 
12. Deduction for the allowable capital expe nditure (Amendment of Section 155E). 
13. New Sections 155T, 155U, 155V, and 155W 
 
"155T. DEDUCTION FOR SITE RE HABILITATION EXPENDITURE". 
"155U. LOSSES OF PREVIOUS YEAR S INCURRED IN ENGAGING IN 
SITE REHABILITATION". 
"155V. DEDUCTION OF REHABILI TATION LOSSES OUTSIDE OF 
RESOURCE PROJECT". 
"155W. REHABILITATION LOSS CAP". 
14. Project basis of assessment (Amendment of Section 156A). 
15. Project basis of assessment (Amendment of Section 157A). 
16. Project basis of assessment (Amendment of Section 158A).  G/SCM/N/243/PNG 
 Page 5 
 
 
  17. Related corporations (A mendment of Section 158F). 
18. Interpretation (Amendment of Section 159A). 19. Credits in respect of prescribed infrastruct ure developments (Amendment of Section 219C) . 
20. Credits in respect of bank community serv ice obligations (Amendment of Section 219D). 
21. Refund of taxes overpaid (Amendment of Section 234). 
22. New Section 243. 
 
"243. REMOVAL OR SUSPENSION  OF PERSON CONSTITUTING 
TRIBUNAL." 
23. Interpretation (Amendment of Section 258A). 
24. Penalty for unpaid tax (Amendment of Section 262). 
25. New Section 316A.  
"316A. INCOMPLETE RETURNS AND FORMS." 
26. New Section 323. 
 
"323. TAXATION PROSECUTIONS.". 
27. Repeal. G/SCM/N/243/PNG 
Page 6  
 
  No.    of 2011 
 
AN ACT 
 
entitled 
 
Income Tax (2012 Budget)(Amendment) Act 2011. 
  
Being an Act to amend the Income Tax Act 1959, 
 
MADE by the National Parliament and deem ed to have come into operation on - 
 
(a) in respect of Sections 3 and 6, 1 April 2011;  and 
(b) in respect of the remainder of the Act, 1 January 2012. 
 
1. INTERPRETATION (AMENDMENT OF SECTION 4). 
 
Section 4 of the Principal Act is amended in S ubsection (1) in the definition of "property unit 
trust" by repealing Paragraph (b)(ii) and replacing it with the following: 
 
"(ii) not less than 50% of the fund was invested in Papua New Guinea;  and". 
 
2. NEW SECTION 10A. 
 
The Principal Act is amended by inserting after Section 10 the following new section: 
 
"10A. COMPUTER SERVICE. 
 
"(1) The Commissioner General may establish and operate a computer service and 
make provision for returns or any other document required or authorized by this Act to be 
made, served or submitted by electronic transmission (referred to in this Act as an electronic 
notice). 
 
"(2) The Commissioner General may approve from time to time, conditions for -  
(a) the returns or any other document which may be transmitted through 
the computer service including the form and manner in which they are 
to be transmitted;  or  
(b) the correction of errors in or amendments to electronic notices;  or  
(c) the procedure for use of the computer service including the procedure 
in circumstances where there is a breakdown or interruption in the service;  or  
(d) generally for the better provision of the computer service."  
 
3. NEW SECTION 22B. 
 
 The principal Act is amended by insertin g after Section 22A a new section as follows: 
 
"22B. EXEMPTION FOR 2015 PACIFIC GAMES. 
 
"(1) The income of the 2015 PNG Pacific Games Limited is exempt from income 
tax.  G/SCM/N/243/PNG 
 Page 7 
 
 
  "(2) The income derived by any person arising from, or in connection with, the 
participation by that person as an athlete or competitor in the 2015 Pacific Games is exempt from income tax. 
 "(3) This exemption shall cease to  apply as of 1 January 2016.". 
 
4. EXEMPTION RELATED TO EXPORT SALES (AMENDMENT OF SECTION 45B). 
 
Section 45B of the Principal Act is amended - 
 
(a) in Subsections (1) and (2) by repealing the word and figure "Subsection (3)" and 
replacing them with "Subsections (3) and (4)";  and 
 (b) by inserting after Subsection (3), the following new subsection: 
 
"(4) Despite Subsection (3), the exemption provided under this section 
shall cease to apply as of 1 January 2015 and the provisions of Subsection (1) and (2) 
shall continue to apply to income derive d from export sales where the declared year 
of income is prior to 1 January 2015.". 
 
5. NEW SECTION 46CA. 
 
The principal Act is amended by inserting after Section 46C a new section as follows: 
 
"46CA. CONCESSIONAL TREATMENT OF APPROVED REDUNDANCY 
PAYMENTS. 
 
(1) In this section - 
 
"approved redundancy scheme" means a sch eme for which an employer has 
applied in writing for approval from the Commissioner General, and the Commissioner General has approved the scheme under Subsection (2); 
 
"concessional component" means the lesser of - (a) the amount calculated using the formula, Base Amount + 
(Service Amount x Years of Service) where - (i) "base amount" means K5,000;  and 
(ii) "service amount" means K2,000;  and 
(iii) "years of service" means the number of completed years of 
continuous service during which the taxpayer was employed by the same employer;  or 
(b) K50,000; 
 
"eligible taxpayer" means a resident of PNG - 
(a) with at least five years of continuous service with an employer;  and 
(b) who receives a redundancy payment upon termination of their 
employment with the employer under an approved redundancy scheme;  and 
(c) who is dismissed before the earlier of the following: 
(i) the day he or she turned 65;  or (ii) if the taxpayer's employment would have terminated when he 
or she reached a particular age or completed a particular G/SCM/N/243/PNG 
Page 8  
 
  period of service, the day he or she would reach the age or 
complete the period of service (as the case may be);  and 
(iii) who has not previously received an amount taxed under 
Subsection 46CA(5) from the employer. 
 
"redundancy payment" means so much of a payment - 
(a) made under an approved redundancy scheme;  and 
(b) received by an employee who is dismissed from employment because 
the employee's position is genuinely redundant and, at the time of the dismissal, there was no arrangement between the employee and the 
employer, or between the employer and another person, to employ the 
employee after the dismissal;  and 
(c) as exceeds the amount that could reasonably be expected to be 
received by the employee in consequence of the voluntary termination of his or her employment at the time the employment 
ceases;  and  
(d) if the dismissal was not at arm's length, the amount that does not 
exceed the amount that could reasonably be expected to have been made if the dismissal were at arm's length,  
but does not include so much of a payment - (e) received in lieu of superannuation benefits to which the employee 
may have become entitled at the time the payment was received or at 
a later time;  or 
(f)  a superannuation benefit;  or 
(g) a payment of a pension or an annuity  (whether or not the payment is a 
superannuation benefit);  or 
(h)  an unused annual leave payment;  or 
(i) an unused long service leave payment;  or 
(j)  a payment that is an advance or a loan to an employee on terms and 
conditions that would apply if the employee and the employer were dealing at arm's length;  or 
(k)  a payment that is deemed to be a dividend under this Act;  or 
(l)  an amount included in your assessable income in relation to an 
employee share scheme;  or 
(m) a capital payment for, or in r espect of, personal injury to an 
employee;  or 
(n)  a capital payment for, or in respect  of, a legally enforceable contract 
in restraint of trade. 
 
(2) The Commissioner General shall appr ove the scheme under the definition of 
"approved redundancy scheme" in Subsection (1) if he is satisfied that at least 30 employees 
are to be genuinely made redundant under that scheme, or the employee or employees are genuinely  made redundant from the public sector. 
 
(3) The application referred to in Subsec tion (1) must contain information on - 
(a) the positions to be made redundant;  and 
(b) the amounts of the redundancy payments;  and 
(c) the amounts of the concessional components;  and 
(d) the amounts of salary and wages of eligible taxpayers;  and 
(e) any other information prescribed by the Commissioner General. 
(4) Despite anything else in this Act -  G/SCM/N/243/PNG 
 Page 9 
 
 
  (a) the taxable income of an eligible taxpayer that is the concessional 
component of a redundancy payment;  or 
(b) a termination payment pursuant to a termination under the 
Rationalisation of the Public Service (Budget Provisions)  Act 1995  
paid on or after 1 January 2012, 
shall be taxed at the rates set out in Subsection 1(4) of the Income Tax 
(Salary or Wages Tax) Rates Act 1979 .". 
 
6. 150% DEDUCTIONS FOR GIFTS IN RESPECT OF THE 2015 PACIFIC GAMES 
(REPEAL AND REPLACEMENT OF SECTION 69K). 
 
Section 69K of the Principal Act is re pealed and replaced with the following: 
 
"69K. 150% DEDUCTIONS FOR GIFTS IN RESPECT OF THE 2015 PACIFIC 
GAMES. 
 
"(1) The amount (the market value of which is not less than K500,000) of a gift of 
money, or property purchased by a taxpayer in the 12 months immediately preceding the 
making of the gift, made by the taxpayer, in respect of the 2015 Pacific Games to - 
 
(a)  the PNG Sports Federation & Olympic Committee Inc.;  or 
(b) the Pacific Games (2015) Authority;  or 
(c) PNG 2015 Pacific Games Limited, 
shall be an eligible amount. 
 "(2) The taxpayer shall be allowed under th is section either an amount equal to 
150% the eligible amount as an allo wable deduction under this section. 
 "(3) Where an eligible amount (or part  thereof) allowed under this section is 
recouped or recoupable, an amount shall be incl uded in assessable income to the extent that a 
deduction has been allowed. 
 
"(4) Where a 150%  deduction is allowed under this  section, the amount deductible 
shall be allowable only to the extent that th e tax saving resulting from the allowance of the 
deduction does not exceed 45% of the eligible amount. 
 "(5) This section applies to gifts made up until 31 December 2015.". 
 
7. LOSSES OF PREVIOUS YEARS NOT TO BE TAKEN INTO ACCOUNT UNLESS 
THERE IS SUBSTANTIAL CONTINUITY OF OWNERSHIP (AMENDMENT OF SECTION 101D). 
 
Section 101D of the Principal Act is amended by -  
(a) repealing the word, figure and letter "a nd 101A" and replacing them with the 
following: 
"101A, and l55U";  and 
(b)  repealing the word, figure and letter "or 101A" and replacing them with the 
following: 
"101A, or 155U".  G/SCM/N/243/PNG 
Page 10  
 
  8. SPECIAL PROVISIONS RELATING TO BENEFICIAL OWNERSHIP OF, OR 
RIGHTS ATTACHED TO , SHARES (AMENDMENT OF SECTION 101E). 
 
Section 101E of the Principal Act is amende d by repealing the word, figure and letter 
"or 101A" and replacing them with the following: 
"101A, or 155U". 
 
9. LOSSES OF PREVIOUS YEARS OF SUBSIDIARY NOT TO BE TAKEN INTO 
ACCOUNT UNLESS THERE IS SUBSTANT IAL CONTINUITY OF BENEFICIAL 
OWNERSHIP OF SHARES IN HOLDING COMPANY (AMENDMENT OF 
SECTION 101F) 
 
Section 101F of the Principal Act is amended in Subsection (1) by - 
 
(a) repealing the word, figure and letter "a nd 101D" and replacing them with the 
following - 
"101D and 155U";  and 
 
(b) repealing the word, figure and letter "or 101A" second time occurring and 
replacing them with the following: 
"101A or 155U". 
 
10. LOSSES OF PREVIOUS YEARS M AY BE TAKEN INTO ACCOUNT WHERE A 
COMPANY CARRIES ON SAME BUSINE SS (AMENDMENT OF SECTION 101G). 
 
Section 101G of the Principal Act is amended - 
 
(a) in Subsection (1), Paragraph (a) by repealing the word, figure and letter "or 
101A" and replacing them with the following: 
"101A, or 155U";  and 
 
(b) in Subsection (2), Paragraph (b) by repealing the word, figure and letter "or 
101A" and replacing them with the following: 
"101A or 155U". 
 
11. INTERPRETATION (AME NDMENT OF SECTION 155). 
 
Section 155 of the Principal Act is  amended in Subsection 1 by - 
 
(a) inserting, after the definition of "resource right", the following new 
definition:   
 
"site rehabilitation activity" means an ac tivity carried on by or for a taxpayer 
to restore or rehabilitate (whether par tially or fully) a site on which the 
taxpayer for the purposes of producing income, carries or carried on a resource project to the condition, or a reasonable approximation of the condition, it was in before operations we re first started on the site (whether 
the activity was first started by the taxpayer or a predecessor of the taxpayer 
whether immediate or otherwise), including any activities as prescribed by 
regulation;  and   
 (b) repealing and replacing the definition of "resource project" as follows: 
  G/SCM/N/243/PNG 
 Page 11 
 
 
  "resource project" means a designated gas project, a mining project or a 
petroleum project, including any resource environmental protection activity in relation to the designated gas, mining or petroleum project.". 
 
12. DEDUCTION FOR ALLOWABLE CAPITAL EXPENDITURE (AMENDMENT OF 
SECTION 155E). 
 
Section 155E of the Principal Act is am ended by inserting a new subsection after 
Subsection (6) as follows: 
 
"(7) To the extent that expenditure is incurred solely or predominantly for - 
(a) environmental protection activities as defined in Section 72D(1);  or  
(b) environmental impact study as defined in Section 72E(1);   or 
(c) site rehabilitation activities, 
Section 155E(6) does not apply.". 
 
13. NEW SECTIONS 155T, 155U, 155V AND 155W. 
 
The Principal Act is amended by inserting th e new sections after Section 155S as follows: 
 
"155T DEDUCTION FOR SITE RE HABILITATION EXPENDITURE. 
 
"(1) Expenditure incurred by a taxpayer is an  allowable deduction to the extent that it 
is incurred for the sole or dominant purpose of  one or more site rehabilitation activities, 
provided that it is not an outgoing of capital, of  a capital nature, or incurred for private or 
domestic purposes, or in producing exempt income. 
 
"(2) A provision that expressly prevents or restricts the operation of Subsection 68(1) 
applies in the same way to this section. 
 "(3) Where an amount (or part thereof) is a llowed under this section is recouped or is 
recoupable, an amount is included in assessable  income to the extent that a deduction has 
been allowed.". 
 
"155U. LOSSES OF PREVIOUS YEARS INCURRED IN ENGAGING IN SITE 
REHABILITATION. 
 
"(1) In this section, "net exempt income" has the same meaning as in Section 101. 
 "(2) A taxpayer, in relation to a resour ce project, is taken to have incurred a 
rehabilitation loss in any income year where - 
 
(a) the aggregate of deductions attributable to that project that result 
from the operation of Subsections 72D(2), 155T(1) and 155E(7), 
exceed the assessable income and ne t exempt income of that year 
attributable to that project;  and 
(b) the excess referred to in Paragraph (a), together with the total of 
rehabilitation loss or losses incurred in  all preceding income years in 
relation to the  resource project, does not exceed the rehabilitation 
loss cap (if any) for the project. 
 
"(3) An amount of rehabilitation loss cannot form a part of a loss taken to be 
incurred under either Subsections 101(2) or 101A(2). G/SCM/N/243/PNG 
Page 12  
 
  "(4) Subject to Subsection 66A(3), so much of the rehabilitation loss incurred by a 
taxpayer as has not been allowed as a deduction from his income is allowable as a deduction 
in accordance with the following provisions: 
 
"(a) where he has not, in the year of income, derived exempt income, the 
deduction is made from the assessable income remaining after all 
deductions, apart from those under this Section and those under Subsections 101(3) and 101A(4);  and 
"(b) where he has in that year derive d exempt income, the deduction is 
made successively from the net exempt income and from the 
assessable income remaining after all deductions apart from those 
under this section and those under S ubsections 101(3) and 101A(4);  
and 
"(c) where a deduction is allowable under this section in respect of two or 
more rehabilitation losses, the losses are taken into account in the 
order in which the losses were incurred;  and 
"(d) where a deduction is allowable under this section, it is deducted after 
the allowance of all other deductions except for deductions under Subsections 101(3) and 101A(4). 
 "(5) Where, before the year of income, a taxpayer has become a bankrupt or been 
adjudicated insolvent or has been released from any debts by the operation of the law of 
Papua New Guinea relating to bankruptcy or inso lvency, no loss to which this section applies 
that was incurred by him before the date on wh ich he became a bankrupt or was adjudicated 
insolvent, or the date on which he was so re leased, as the case may be, is a rehabilitation loss. 
 
"(6) Where deductions are allowable from the income of a taxpayer of the year of 
income under this section and either Subsec tion 101(3) or Subsection 101A(4) or both, any 
deductions allowable under this section are taken into account before any deductions 
allowable under Subsection 101(3) or  Subsection 101A(4). 
 "(7) Where, but for this Subsection, the net exempt income of a taxpayer of the 
year of income would be taken into account for the purpose of this Section, and either 
Section 101 or Section 101A or both, the amount of  that net exempt income to be taken into 
account for the purpose of Section 101 or Secti on 101A or both shall not exceed the amount 
(if any) of that net exempt income that rema ins after deducting so much of the net exempt 
income as has been taken into account under this Section.". 
 
"155V. DEDUCTION OF REHABILITATI ON LOSSES OUTSIDE OF RESOURCE 
PROJECT. 
 
"(1) Where - 
 
"(a) a taxpayer could, but for Secti ons 156A, 157A or l58A, deduct an 
amount of rehabilitation loss in an income year against an amount of net exempt income or assessable income from another resource project that remains after all deductions;  and 
"(b) in the income year, but for this  section, the amount of the assessable 
income referred to in Paragraph (a) would be subject to a rate of tax 
not exceeding that of the resource project to which the rehabilitation loss relates;  and 
"(c) the taxpayer has made an election in  writing signed by or on behalf of 
the taxpayer, delivered to the Comm issioner General on or before the  G/SCM/N/243/PNG 
 Page 13 
 
 
  last day for the furnishing of the ta xpayer's return of income for that 
year of income, or within such further time as the Commissioner 
General allows, to deduct an amount not exceeding that referred to in 
Paragraph (a),  
then Sections 156A, 157A and 158A do not a pply to the taxpayer in relation to the 
amount the subject of the election. 
 
"(2) Where, at a particular time -  
"(a) a taxpayer ceases to have an interest in a resource project consequent 
upon - 
(i) the surrender, cancellation or expiry of a resource 
development licence;  or 
(ii) the disposal by the taxpayer of the whole of its interest in the 
resource project;  or 
(iii) abandonment of a resource project occurs,  
and immediately before such cessation, disposal or abandonment a taxpayer was entitled to the benefit of rehabilitation losses in relation to that resource project, the 
Commissioner General may at any time allocate that rehabilitation loss - 
"(b) if the taxpayer or a related corpora tion has a beneficial interest in any 
other resource project from which the taxpayer is deriving assessable 
income, to that resource project or those resource projects, as the case 
may be, in such proportions as the Commissioner General considers reasonable;  or  
"(c) if the taxpayer or a related corporation has no beneficial interest in 
another resource project but has a beneficial interest in any other 
resource project from which the taxpayer or the related corporation, 
as the case may be, is deriving assessable income from resource operations, to that resource project or those resource projects, as the case may be, in such proportions as the Commissioner General considers reasonable;  or 
"(d) in any other case, to any resource project or if no resource project 
becomes available to any resource project carried on by the taxpayer 
or by a related corporation pursuant to any development licence issued within 20 years from the date of such cessation or abandonment,  
and following the allocation, that rehab ilitation loss shall become rehabilitation loss 
of the taxpayer or of the related corporation, as the case may be, in relation to the 
resource project or projects to which it was allocated (other than for the purposes of 
Subdivision E), with effect from the date of allocation.". 
 
"155W.   REHABILITATION LOSS CAP. 
 
"(1) In relation to a resource project, a taxpayer may make one irrevocable 
election, in writing to the Commissioner Genera l signed by or on behalf of the taxpayer, 
delivered to the Commissioner General on or be fore the last day for the furnishing of the 
taxpayer's return of income for that year of income (or within such further time as the 
Commissioner General allows) identifying up to five consecutive income years, all of which 
immediately precede the income year in which th e election is made, in relation to the resource 
project for the purpose of establishing a rehabilitation loss cap. 
 G/SCM/N/243/PNG 
Page 14  
 
  "(2) The rehabilitation loss cap is the sum of the taxpayer's share of the adjusted 
taxable income of the project of the income years identified in the election made in Subsection (1). 
 "(3) In relation to a resource project, the adjusted taxable income of an income 
year is - 
"(a) if the taxable income for that year is a positive amount and is subject 
to rates of taxation not less than the normal company tax rate for that income year, the taxable income of that year;  or 
"(b) otherwise, it is zero.". 
 
14. PROJECT BASIS OF ASSESSMENT (AMENDMENT OF SECTION 156A). 
 
Section 156A of the Principal Act is amended - 
 
(a) in Subsection (1) by inserting, after the words, "notwithstanding any other 
provision of this Act", the words -  
"except for Section 155V,";  and 
 (b) by inserting a new Subsection (3) as follows: 
 
"(3) Notwithstanding any other provision of this Act, for each person 
to whom this subdivision applies, the Commissioner General may require the 
lodgement of separate returns for each  project undertaken and may issue 
separate assessments for each project. ". 
 
15. PROJECT BASIS OF ASSESSMENT (AMENDMENT OF SECTION 157A).  
Section 157A of the Principal Act is amended - 
 
"(a) in subsection (5), by repealing the word "Each" first occurring and replacing 
it with the words - 
"Except for Section 155V, each";  and 
 
"(b) by inserting after Subsection (7), the following new subsection: 
 
"(8) Notwithstanding any other provision of this Act, for each 
person to whom this subdivision applies, the Commissioner General may 
require the lodgement of separate retu rns for each project undertaken and 
may issue separate assessments for each project.". 
 
16. PROJECT BASIS OF ASSESSMENT (AMENDMENT OF SECTION 158A). 
 
Section 158A of the Principal Act is amended - 
 
"(a) in Subsection (2) by repealing the wo rd "Each" first occurring and replacing it 
with the words -  
"Except for Section 155V, each";  and 
"(b) by inserting after Subsection (4), the following new subsection: 
 
"(5) Notwithstanding any other provision of this Act, for each person 
to whom this subdivision applies, the Commissioner General may require the  G/SCM/N/243/PNG 
 Page 15 
 
 
  lodgement of separate returns for each  project undertaken and may issue 
separate assessments for each project.". 
 
17. RELATED CORPORATIONS (AMENDMENT OF SECTION 158F). 
 
Section 158F of the Principal Act is amended by repealing the word and figure "Section 101" 
and replacing them with the following: 
"Sections 101 or 155U".  
18. INTERPRETATION (AME NDMENT OF SECTION 159A). 
 
Section 159A of the Principal Act is amended in  Subsection (1) in the definition of "project 
deductions" by deleting, in Paragraph (a), the figure "101" and replacing with the following: 
", 101 or 155U".  
19. CREDITS IN RESPECT OF PRESCRIBED INFRASTRUCTURE DEVELOPMENTS 
(AMENDMENT OF SECTION 219C). 
 
Section 219C of the Principal Act is amended by -  
(a) inserting after the definition of "eligible taxpayer", the following new 
definition: 
"emergency repair" means, in relation to the Highlands Highway, an activity 
carried out to restore traffic flow follo wing an event that has resulted in the 
closure or partial closure of the highway, including bypass or replacement of a section of the highway, replacement  of culverts, construction of temporary 
bridges and removal and repair of major landslips; 
(aa) inserting after the definition of "gas pr oject companies", the following new 
definition: 
"Highlands Highway" means the main road from - (a) Lae to Koroba (Fugwa turn off)(805km);  and 
(b) Togoba Junction to Wabag;  and 
(b) repealing Subsections (6) and (7);  and 
(c) inserting a new subsection as follows: 
 
"(6) In addition to any deemed tax payment under Subsection (2), 
where an eligible taxpayer incurs, prior to 1 January 2015, expenditure on 
emergency repair on the Highlands High way, the amount of such expenditure 
is, subject to this section and prescribed  conditions, deemed to be income tax 
paid in respect of that taxpayer's lia bility assessed for the year of tax relating 
to that year of income, limited to the lesser of - 
(a) 1.25% of the assessable income derived by the taxpayer in 
the year of income;  or 
(b) the amount of tax payable.". 
 
20. CREDITS IN RESPECT OF BANK COMMUNITY SERVICE OBLIGATIONS 
(AMENDMENT OF SECTION 219D). 
 
Section 219D of the Principal Act is amended - 
 (a) in Subsection (1), by repealing Paragraph (b) in the definition of "basic 
banking product" and replacing it w ith the following new paragraph: G/SCM/N/243/PNG 
Page 16  
 
  "(b) the customer is charged no more than Kl.00 per transaction for a 
deposit or withdrawal;";  and 
(b) in Subsection (2), by repealing the figure "2012" and replacing it with the 
following: 
"2017". 
 
21. REFUND OF TAXES OVERPAID  (AMENDMENT OF SECTION 234). 
 
Section 234 of the Principal Ac t is amended in Paragraph (d) by repealing the following:  
"customs duty, excise duty,". 
 
22. NEW SECTION 243. 
 
Section 243 of the Principal Act is repealed  and replaced with the following new section:- 
 "243. REMOVAL OR SUSPENSION  OF PERSON CONSTITUTING 
TRIBUNAL. 
The Minister may remove or suspend the person constituting the Tribunal 
from office in accordance with the terms and conditions of his appointment.". 
 
23. INTERPRETATION (AME NDMENT OF SECTION 258A). 
 
Section 258A of the Principal Act is amended in Paragraph (b) by - 
(a) repealing the figures, letters and marks "136E, 136G," and "265,";  and 
(b) by inserting after the figure and mark "316," the following: 
"3l6A,". 
 
24. PENALTY FOR UNPAID TAX (AMENDMENT Of SECTION 262). 
 
Section 262 of the Principal Act is  amended in Subsection (3) by - 
(a) by repealing the word "section" and replacing it with the word "Division";  
and 
(b) by inserting after the word "any" the word "additional". 
 
25. NEW SECTION 316A. 
 
The Principal Act is amended by inserting the following new section after Section 316: 
 
"316A. ADDITIONAL TAX FOR INCOMPLETE RETURNS AND FORMS. 
 
"(1) Notwithstanding anything contained in the preceding sections, a person who 
lodges a return or any other form approved by  the Commissioner General that is not duly 
completed in every particular as required under this Act and Regulation, may be liable to pay 
a penalty, by way of additional tax, of K500.00 for each month or part of the month calculated 
in respect of the period commencing on the day that return is first lodged and ending on the 
day on which that return is lodged duly completed. 
"(2) The Commissioner General may for reasons considered sufficient, remit 
additional tax under Subsection (1) or any part of the additional tax, before or after making an 
assessment of the additional tax.". 
  G/SCM/N/243/PNG 
 Page 17 
 
 
  26. NEW SECTION 323. 
 
Section 323 of the Principal Act is repealed  and replaced with the following new section: 
 
"323. TAXATION PROSECUTIONS. 
 
"(1) A taxation prosecution for the recovery  of a pecuniary penalty under this Act 
may be instituted in the name of the Commissi oner General by way of information or action 
in a court of competent jurisdiction. 
 
"(2) A taxation prosecution under this Act may be commenced, prosecuted and 
proceeded with in accordance w ith any rules of practice and procedure established by the 
relevant court of competent jurisdiction. 
 "(3) Despite Subsection (2), a taxation pr osecution under this Act may be commenced 
at any time.". 
 
27. REPEAL. 
 
Sections 324, 325, 326 and 327 are repealed.  
I hereby certify that the above is a fair print of the Income Tax (2012 Budget) (Amendment) 
Act 2011  which has been made by the National Parliament. 
 
Acting Clerk of the National Parliament. 
 
 
I hereby certify that the Income Tax (2012 Budget) (Amendment) Act 2011 was made by the 
National Parliament on 21 December 2011.  
Acting Speaker of the National Parliament. 
 
 
 
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