Papua New Guinea has implemented Country-by-Country Reporting (CbCR) in line with the OECD BEPS Action 13 framework. The Internal Revenue Commission (IRC) oversees compliance with these regulations, aimed at enhancing tax transparency and preventing base erosion and profit shifting (BEPS) by multinational enterprises (MNEs).

This guide provides chief financial officers and tax professionals with a detailed overview of CbCR requirements in Papua New Guinea, covering applicability, reporting obligations, filing procedures, penalties, and key resources.

Applicability of CbCR in Papua New Guinea

Reporting Threshold

CbCR obligations apply to MNE groups that:

• Have annual consolidated group revenue of at least PGK 2.3 billion in the preceding fiscal year.
• Include at least one entity or permanent establishment in Papua New Guinea.

Local Filing Requirement

A PNG entity must submit a CbC report if:

• It is the Ultimate Parent Entity (UPE) of the MNE group.
• It has been designated as the Surrogate Parent Entity (SPE) for CbCR purposes.
• The UPE is located in a jurisdiction that does not require CbCR or lacks an information exchange agreement with Papua New Guinea.

Relevant Legislation

• Income Tax Act 1959, amended to include CbCR provisions.
• OECD BEPS Action 13: Provides the international standard for CbCR requirements.

CbCR Reporting Requirements

Content of the CbC Report

The CbC report must include financial data for each tax jurisdiction where the MNE operates, covering:

• Total revenue (from related and unrelated transactions).
• Profit or loss before income tax.
• Income tax paid and accrued.
• Declared capital and accumulated earnings.
• Number of employees.
• Tangible assets, excluding cash or cash equivalents.

Notification Requirement

• All PNG entities within an MNE group must notify the IRC of the reporting entity and its jurisdiction.
• Notification must be submitted electronically before the fiscal year-end. (IRC CbCR Information Sheet)

Submission Platform

• Reports must be filed electronically via the IRC portal, using the OECD CbCR XML schema.

Resources

• Filing guidelines and instructions are available on the IRC website:
  Papua New Guinea Internal Revenue Commission

Filing Deadlines

• CbC Reports: Must be submitted within 12 months after the fiscal year-end.
  • Example: For a fiscal year ending on December 31, 2023, the report must be filed by December 31, 2024.
• Notifications: Must be submitted before the fiscal year-end.

Penalties for Non-Compliance

Sanctions and Consequences

Failure to comply with CbCR requirements in Papua New Guinea may result in:

• Administrative fines for failure to file or filing inaccurate reports.
• Additional penalties for continued non-compliance.
• Increased scrutiny from the IRC, leading to tax audits.

Mitigation Measures

• Companies can request extensions or appeal penalties if they can demonstrate a reasonable cause for non-compliance.

Confidentiality and Data Exchange

Data Protection

• The IRC ensures that CbC reports remain confidential and are used solely for tax risk assessment purposes.
• Reports are automatically exchanged with jurisdictions that have a bilateral exchange agreement with Papua New Guinea. (Papua New Guinea MCAA Agreement)