22/02/2022
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PUBLIC NOTICE
TAXATION STATUS OF AID DONORS AND PROJECTS
It has come to the attention of the Internal Revenue Commission that there are a number of misunderstandings with regards to Tax Exemptions applied to Aid Donors, Aid Projects and Aid Personnel.In order to apply Tax Exemptions, Organisations, Projects and Individuals must have possession of all of the following documents:
(1) An organization may be granted designated aid status by the Head of State, acting on advice. This is in the form of a Certificate granting Aid Status and this Certificate is the first step in gaining tax exemptions. This Certificate is signed by the Minister for DFAIT.
(2) Where an organization has been granted designated aid status under Subsection (1), the Minister may grant to persons engaged by or attached to such an organization, designated aid status.
Once step 1. Is fulfilled, the organisation granted Designated Aid Status may apply for the Project and individuals involved in the Project, to be granted Designated Aid Status. This granting of exemption is in the form of a Certificate, signed by the Minister for DFAIT and must be supported by the Gazettal of the individual’s names, passport details, Project name and Project start and finish dates.
If you and/or, your organisation/project do not have all the documents and gazettal notices listed above then you are not exempt from any taxes and you must be compliant with all of your responsibilities under the Income Tax Act.
There is a misconception that once PNG signs a bilateral or multilateral aid treaty, the privileges and immunities, including tax exemptions and concessions, automatically apply and have the force of law domestically.
The terms of a treaty only take effect when it is given domestic law status under a Constitutional Law or an Act of the Parliament. The relevant Act of Parliament that domesticates the tax exemptions and concessions as envisaged under a treaty, is the Aid Status (Privileges & Immunities) Act.
This Act dictates the process for relevant treaty party organizations and personnel to invoke their Aid Status. Aid Status is not approved or issued by the Commissioner General. They are considered and issued pursuant to the Act by the Minister for Foreign Affairs in the form of granting of Certificates of Designated Aid Status which are to be published in the National Gazette by the Head of State.
The Internal Revenue Commission will be conducting compliance audits within the Aid Donor Community and it is
suggested that Organisations and Individuals review their compliance history and take action to become fully compliant.
The Internal Revenue Commission will assist Organisations by facilitating contact with The Chief Protocol Officer of DFAIT in order to become compliant with all of the criteria listed above. The contact officer within the Internal Revenue Commission is Mr Elijah Titus, Assistant Commissioner, Legal Service Division and email [email protected].
For more information regarding this issue and a more detailed explanation of requirements please see the following document available on the IRC website www.irc.gov.pg.
Authorised by;
Mr. Sam Koim, OBE
Commissioner General
Internal Revenue Commission
Release Date: 22nd of February 2022
