Overview
The actual market for auditing services in Papua New Guinea is relatively small. The sector is dominated by the presence of three of the ‘Big Four’ international accountancy and audit firms – PWC, Deloitte and KPMG. Papua New Guinea is in the process of adopting the International Financial Reporting Standards (IFRS). In 2012 small and mid-sized companies are compliant with IFRS in accordance with the Companies Act 1997 which also established Papua New Guinea’s Accounting Standards Board. Since the Board is fully compliant with International Accounting Standards, it is compulsory for companies to use IFRS. Banks and financial institutions have been compliant with IFRS since 2000. The World Bank Ease of Doing Business Index (2011) places Papua New Guinea 116th out of 183 countries around the world in terms of resolving insolvency.
Profession
The Papua New Guinea Institute of Accountants is the leading professional body and offers membership to both students and qualified accountants. Under its guidelines, members are required to take part in its Continuing Professional Education (CPE) programme which consists of a minimum of 40 hours of education per annum. This should be made up of at least 20 hours of structured education with a balance of unstructured CPE. The Accounting Standards Board is the regulatory body. This ensures compliance with the Generally Accepted Accounting Practices (GAAP) within the sector in Papua New Guinea. The Association of Certified Chartered Accountants (ACCA) offers online courses and has examination centres in Australia and New Zealand.
Tax
The country has a multifaceted tax regime. Income tax is progressive ranging from 22% to 42% on taxable income. Taxes on the net profits of companies vary depending on the sector. For resident companies, it amounts to 30%, while non-resident companies pay a higher tax of 48%. Firms involved in mining and designated gas projects pay 30%, while petroleum companies pay 45% (2009). There are various tax incentives, usually in the form of exemptions from company income tax, like export sales exemption for younger companies, rural development incentives that allow firms to be exempt from tax for up to ten years after the first year of commencement of business, and double tax treaties with various countries. The World Bank Ease of Doing Business Index (2011) ranks Papua New Guinea 106th of 183 countries worldwide with regards to paying taxes.
