Indirect tax incentives exist in the form of low rates of duty and restrictive or protective tariffs.

In some cases, there are import bans placed on selected products to promote infant industry growth or to ensure self-sufficiency in the manufacturing, primary industry and agricultural sectors. Over the years successive governments have applied such measures at different times to assist agricultural, fisheries, tourism and small to medium-sized manufacturing industries.

Average Rates of Import Duty

The Lihir, Ok Tedi, Misima and Porgera gold mining projects and the Kutubu petroleum project were granted average rates of duties for a range of items which would otherwise have attracted higher rates of duty. They now pay a mining levy calculated to be equivalent to the average rates of duty formerly paid.

Import Duty Drawback

Duty drawback is a rebate paid to exporting manufacturers, when they export goods, equal to the amount of duty already paid on the raw materials. It is offered so that locally manufactured goods can compete effectively in overseas markets. Requests for the consideration of duty drawback must include a detailed description of the manufacturing process involved, including the nature and volume of inputs used, accompanied by unit cost data based on import/ export documents and commercial invoices. When approved by the Minister for Finance and Planning, a drawback notice is then issued in the National Gazette giving the terms of compliance.

When goods subject to drawback have been exported, under the proper supervision of an Internal Revenue Commission Officer as detailed in the Customs Act, and documentary evidence to this effect has been supplied to the satisfaction of the Commissioner General, then drawback is promptly paid. An application for drawback is very straightforward. All manufacturers intending to use the drawback facility are advised to submit their requests, with supportive evidence, to the Commissioner General.

The current duty rates are incorporated in the schedule to the Customs Tariff Act 1990. It is advisable that any investors who may be seeking duty concessions contact the Internal Revenue  Commission.

Imports of Specialised Capital Equipment

The import of certain specialized capital equipment is exempt from duty. Such equipment must not be readily available in Papua New Guinea and can be imported only on a temporary basis for a specific purpose and a specific time. The importers must satisfy the Commissioner General of Internal Revenue that the equipment will be used on an approved project and a security must be lodged for the period of temporary importation. The importer must undertake to re-export the equipment at the end of the specified activity. This exemption is expected to be particularly welcome for the mining and petroleum industries, since equipment that they require for exploration is included.

Double Taxation Treaties

Double Taxation Agreements have been signed with:

Australia,

Canada,

China,

Fiji,

Germany (still to be ratified)

Malaysia

Singapore,

South Korea, and

UK.

The treaty with Indonesia is in final stage for gazettal notification.

Currently, Double Taxation Agreements are being considered for:

The USA,

New Zealand,

Philippines, and,

Thailand.

Export Promotion Policies

Export promotion policies include bilateral and multilateral trade arrangements, such as these below which assist with market access, in some cases provide duty-free entry into the markets:

PICTA - the Pacific Islands Countries Trade Agreement allows duty-free access for tradeable goods and services to the 14 Pacific Island Countries excluding Australia and New Zealand.

SPARTECA - provides access to Australia and New Zealand for all South Pacific nations.

Cotonou Agreement (European Economic Community)

Further, Papua New Guinea qualifies as an under-developed country entitled to the benefits of the US General System of Preferences and enjoys similar privileges in Japan and Canada. Papua New Guinea also benefits from access to the US sugar quota, which allows PNG to receive prices higher than world prices.

The signing of a Memorandum of Co-operation under the US Market Access and Regional Competitiveness (MARC) program has strengthened trade and Investment links with the United States.

Papua New Guinea is also a member to APEC (Asia Pacific Economic Cooperation) and the World Trade Organisation (WTO).