G/SCM/N/253/PNG  
G/SCM/N/260/PNG  
 
26 July 2013  
(13-4019) Page: 1/16 
Committee on Subsidies and Countervailing Measures  Original: English  
 
 SUBSIDIES  
NEW AND FULL NOTIFICATION PU RSUANT TO ARTICLE XV I:I OF 
THE GATT 1994 AND  ARTICLE 25 OF THE AG REEMENT ON  
SUBSIDIES AND COUNTE RVAILING MEASURES  
TRANSPARENCY NOTIFIC ATION CONCERNING THE  EXTENSIONS PROVIDED FOR IN ARTICLE 27.4 
OF THE AGREEMENT ON SUBSIDIES AND COUNTERVA ILING MEASURES OF TH E TRANSITION 
PERIOD FOR THE ELIMI NATION OF EXPORT SUBSIDIES , GRANTED PURSUANT T O 
THE PROCEDURES IN THE GENERAL COUNCIL DECISION WT/L/691  
PAPUA NEW GUINEA 
The following communication , dated 2 July  2013, is being circu lated at the requ est of the 
Delegation of Papua New Guinea . 
 
_______________  
 
 
The Ministry of Commerce and Industry hereby submits to the Committee on Subsidies and 
Countervailing Measures Papua New Guinea 's new and full notification pursuant to Article  XVI:1 of 
GATT 1994 and Article 25 the Agreement on Subsidie s and Countervailing Measures. We also 
submit this notification for purposes of transparency in the context of the extensions granted to 
Papua New Guinea under Article 27.4 of the Agreement, pursuan t to the procedures in the General 
Council Decision of 27 July 2007 (WT/L/691).  
 
The subsidy programme offered by PNG is provided under Section 45B of the Income Tax Act, 
which aims to encourage foreign and export -oriented investment in the manufacturing s ector in 
Papua New Guinea.   
 
As mentioned in the previous submission, Papua New guinea further advises 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repealed Section 45B of the Income Tax Act 195 9. The Income Tax (2012 Budget)(Amendment) 
Act 2011  was passed as a consequential amendment accompanying the Appropriation Bill 2012 to 
pass the 2012 National Budget.  …… 
 
Hereby attached is PNG 's notification covering the period 2011 -2012 as well as a copy  of the 
Income Tax (2012 Budget) (Amendment) Act 2011 , for reference.  
 
 
 G/SCM/N/253/PNG • G/SCM/N/260/PNG  
 
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1. Title of the subsidy programme, if relevant, or brief description or identification of the 
subsidy  
 
Section 45B under Division 1A – Export Incentives of the Income Tax Act of Pa pua New Guinea.  
 
2. Period covered by the notification  
 
The period covered is calendar years 2011-12012 .  
 
3. Policy objective and/or purpose  
 
Section 45B of the Income Tax Act is an export 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 the total net income from export sales  for the 
first three  years after exports have started.  For another four years thereafter, increases in net 
export income, measured over the rolling average of the previous three years net export income, 
are exempted.  Given the company tax rate of 30 %1, the subsidy provided is 30 % 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 incentives" of the Income Tax Act.  The indirect subsidy 
was introduce d in 1984 and is administered 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 Act and mentioned in document G/SCM/N/74/PNG, is no 
longer va lid. 
 
5. Form 
 
Income tax exemption for up to 100 % of net income derived from export sales of a variety of 
goods (mainly mining and petroleum products) for three years.  After this period, any export 
income which is in excess of the average of the prior yea rs can be treated as exempt income, up 
to and including the seventh year.  
 
6. To whom and how the subsidy is provided (whether to producers, to exporters, or others;  
through what mechanism;  whether a fixed or fluctuating amount per unit;  if the latter, how  
determined ). 
 
In 2011 -2012, no companies benefitted.  
 
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 previou s year).  Where provision of per unit subsidy 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 Guinea is 30 % and the subsidy provided is 30 % 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 available due to no application or beneficiary of this subsidy to 
update the costs of this indirect subsidy to the Gover nment for the years 2011 -2012. 
 
                                                
1 The company tax rate was increased from 25 % to 30% in the 2003 National Budget and has remained 
at 30% since then.   G/SCM/N/253/PNG • G/SCM/N/260/PNG  
 
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  8. Duration of the subsidy and/or any other time limits to it, including date of 
inception/commencement  
 
PNG is aware of the obligation to eliminate the subsidy in 2015, including the final two years 
referred to in Article 2 7.4, and intends to undertake, at an appropriate time, a detailed study of 
possible options in this respect.  
 
9. Statistical data permitting an assessment of the trade effects of the subsidy.  The specific 
nature and scope of such statistics 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 t hree most recent years for which statistics are available;  
b. for a previous representative year, which, 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 for assistance under this programme to export.   
 G/SCM/N/253/PNG • G/SCM/N/260/PNG  
 
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  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. Losse s 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. Losse s 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 c arries on same 
business (Amendment of Section 101G).  
11. Interpretation (Amendment of Section 155).  
12. Deduction for the allowable capital expenditure (Amendment of Section 155E).  
13. New Sections 155T, 155U, 155V, and 155W  
 
"155T.  DEDUCTION FOR SITE REHA BILITATION EXPENDITURE".  
 
"155U.  LOSSES OF PREVIOUS YEARS INCURRED IN ENGAGING IN SITE 
REHABILITATION".  
 
"155V.  DEDUCTION OF REHABILITATION LOSSES OUTSIDE OF RESOURCE 
PROJECT".  
 
"155W.  REHABILITATION LOSS CAP".  
 
14. Project basis of assessment (Amendment o f Section 156A).  
15. Project basis of assessment (Amendment of Section 157A).  
16. Project basis of assessment (Amendment of Section 158A).  
17. Related corporations (Amendment of Section 158F).  
18. Interpretation (Amendment of Section 159A). 
19. Credits in respect of prescribed infrastructure developments (Amendment of Section 219C) . 
20. Credits in respect of bank community service 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).  G/SCM/N/253/PNG • G/SCM/N/260/PNG  
 
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  24. Penalty for unpaid tax (Amendment of Section 262).  
25. New Section 316A.  
 
"316A.  INCOMPLETE RETURNS AND FORMS."  
 
26. New Section 323.  
 
"323.   TAXATI ON PROSECUTIONS.".  
 
27. Repeal.  G/SCM/N/253/PNG • G/SCM/N/260/PNG  
 
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  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 deemed 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 Subsection (1) in the definition of "property unit trust" 
by repealin g 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.  COMPUTE R 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 A ct 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 inserting 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.  
 
"(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 ap ply as of 1 January 2016.".  
 
4. EXEMPTION RELATED TO EXPORT SALES (AMENDMENT OF SECTION 45B).  
 
Section 45B of the Principal Act is amended - 
 G/SCM/N/253/PNG • G/SCM/N/260/PNG  
 
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  (a) in Subsections (1) and (2) by repealing the word and figure "Subsection (3)" and 
replacing them with "Subsecti ons (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) shal l 
continue to apply to income derived 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 TREATM ENT OF APPROVED REDUNDANCY PAYMENTS.  
 
(1) In this section - 
 
"approved redundancy scheme" means a scheme for which an employer has applied in 
writing for approval from the Commissioner General, and the Commissioner General has 
approved the scheme under Sub section (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 o f 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 emp loyer;  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 taxp ayer's employment would have terminated when he or she 
reached a particular age or completed a particular 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 rece ived 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 posit ion 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 r easonably 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  G/SCM/N/253/PNG • G/SCM/N/260/PNG  
 
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  (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 respect 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 approve 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 genuin ely 
made  redundant from the public sector.  
 
(3) The application referred to in Subsection (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 com ponents;  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 - 
 
(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 repealed 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 b y 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,  
 G/SCM/N/253/PNG • G/SCM/N/260/PNG  
 
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  shall be an eligible amount.  
 
"(2) The taxpayer shall be allowed under this section either an amount equal to 150% the 
eligible amount as an allowable deduction under this section.  
 
"(3) Where an eligible amount (or part thereof) allowed under this section is recouped or 
recoupable, an amount shall be included i n 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 the tax saving resulting from the allowance of the deduction d oes 
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 "and 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".  
 
8. SPECIAL PROVISIONS RELATING TO BENEFICIAL OWNERSHIP OF, OR RIGHTS 
ATTACHED TO, SHARES (AMENDMENT OF SECTION 101E).  
 
Section 101E of the Principal Act is amended by repealing the word, figure and letter "or  101A" 
and replacing them wit h the following:  
 
"101A, or 155U".  
 
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)  
 
Section 101F of the Principa l Act is amended in Subsection (1) by - 
 
(a) repealing the word, figure and letter "and 101D" and rep lacing them with the 
following  - 
 
"101D and 155U";  and 
 
(b) repealing the word, figure and letter "or 101A" second time occurring and replacing 
them with t he following:  
 
"101A or 155U".  
 
10. LOSSES OF PREVIOUS YEARS MAY BE TAKEN INTO ACCOUNT WHERE A COMPANY 
CARRIES ON SAME BUSINESS (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 G/SCM/N/253/PNG • G/SCM/N/260/PNG  
 
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(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. INTERPR ETATION (AMENDMENT 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 activity carried on by o r for a taxpayer to restore or 
rehabilitate (whether partially 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 were 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 replac ing the definition of "resource project" as follows:  
 
"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 petroleu m project.".  
 
12. DEDUCTION FOR ALLOWABLE CAPITAL EX PENDITURE (AMENDMENT OF 
SECTION  155E).  
 
Section 155E of the Principal Act is amended 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 the new sections after Section 155S as follows:  
 
"155T  DEDUCTION FOR SITE REHABILITATION EXPENDITURE.  
 
"(1) Expenditure incurred by a taxpayer is an allowable deduction to the extent that it i s 
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 t hat 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 allowed 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.  
 G/SCM/N/253/PNG • G/SCM/N/260/PNG  
 
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  "(2) A taxpayer, in relation to a resource pr oject, 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 net 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 t he 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).  
 
"(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 ass essable 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 derived exempt income, the deduction is made 
successively from the net exempt income and f rom the assessable income 
remaining after all deductions apart from those under this section and those 
under Subsections 101(3) and 101A(4);  and 
"(c) where a deduction is allowable under this section in respect of two or more 
rehabilitation losses, the los ses 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 f or 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 insolvency, no loss to which this section app lies that was 
incurred by him before the date on which he became a bankrupt or was adjudicated insolvent, or 
the date on which he was so released, as the case may be, is a rehabilitation loss.  
 
"(6) Where deductions are allowable from the income of a taxpa yer of the year of income 
under this section and either Subsection 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 ac count for the 
purpose of Section 101 or Section 101A or both shall not exceed the amount (if any) of that net 
exempt income that remains after deducting so much of the net exempt income as has been taken 
into account under this Section.".  
 
"155V.  DEDUCTION  OF REHABILITATION LOSSES OUTSIDE OF RESOURCE 
PROJECT.  
 
"(1) Where - 
 
"(a) a taxpayer could, but for Sections 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 ano ther 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 whi ch the rehabilitation loss relates;  and G/SCM/N/253/PNG • G/SCM/N/260/PNG  
 
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  "(c) the taxpayer has made an election in writing signed by or on behalf of the 
taxpayer, delivered to the Commissioner General on or before 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, to deduct an 
amount not exceeding that referred to in Paragraph (a),  
 
then Sections 156A, 157A and 158A do not apply 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 corporation 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 proport ions 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 rehabilitation 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 General signed by or on behalf of the taxpayer, delivered to the 
Commissioner General on or before 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 the election is made, in relation to the resource project for the purpose of establishing a 
rehabilitation l oss cap.  
 
"(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 .". G/SCM/N/253/PNG • G/SCM/N/260/PNG  
 
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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 155 V,"; 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 und ertaken 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 replacin g 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 Gen eral may require the lodgement of separate 
returns 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 Sub section (2) by repealing the word "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 lodgement of separate 
returns for each project undertaken and may issue separate assessments for each 
project.".  
 
17. RELATED CORPORATIONS (AMENDMENT OF SECTION 158 F). 
 
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 (AMENDMENT 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".  G/SCM/N/253/PNG • G/SCM/N/260/PNG  
 
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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 foll owing 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 project 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 
Highway, the amount of such expend iture is, subject to this section and prescribed conditions, 
deemed to be income tax paid in respect of that taxpayer 's liability assessed for the year of tax 
relating to that year of income, limited to the lesser of - 
 
(a) 1.25% of the assessable income d erived 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 repealin g Paragraph (b) in the definition of "basic banking 
product" and replacing it with the following new paragraph:  
 
"(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 fig ure "2012" and replacing it with the following:  
 
"2017".  
 
21. REFUND OF TAXES OVERPAID (AMENDMENT OF SECTION 234).  
 
Section 234 of the Principal Act 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.".  
 G/SCM/N/253/PNG • G/SCM/N/260/PNG  
 
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  23. INTERPRETATION (AMENDMENT 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 insert ing 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 "D ivision";  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) Notwith standing 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 pena lty, 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.".  
 
26. NEW SECTION 323.  
 
Section 323 of the Principal Act is repealed an d 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 Commissioner General by way of information or action in a cou rt of 
competent jurisdiction.  
 
"(2)  A taxation prosecution under this Act may be commenced, prosecuted and proceeded 
with in accordance with any rules of practice and procedure established by the relevant court of 
competent jurisdiction.  
 
"(3)  Despite Su bsection (2), a taxation prosecution 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 b een made by the National Parliament.  
 
Acting Clerk of the National Parliament.  
 G/SCM/N/253/PNG • G/SCM/N/260/PNG  
 
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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.  
 
 
__________