Do I Need a Local Entity to Hire in Papua New Guinea?

In Papua New Guinea, a "local entity" typically refers to a legally recognized presence such as a subsidiary or branch office that can act as an employer. This setup allows your company to meet local payroll and employment obligations, ensuring compliance with Papua New Guinea's labor laws.

Without a local entity, you may face challenges in registering as an employer, managing payroll, and adhering to mandatory employment protections. An EOR can serve as a viable alternative, allowing you to hire employees while navigating local regulations without the complexities of establishing a local entity.

What is Required to Employ Someone in Papua New Guinea?

• Local employing entity required to directly employ? Yes (a local entity is needed for direct employment)
• Payroll registration required? Yes (registration with the Internal Revenue Commission is mandatory)
• Withholding/tax remittance required? Yes (employers must withhold income tax from employee salaries)
• Social contributions required? Yes (mandatory contributions to the National Superannuation Fund apply)
• Local employment agreement required? Yes (written employment contracts are standard practice)
• Mandatory benefits to budget? Yes (includes annual leave, sick leave, and public holidays)
• Works council/collective agreements considerations? Usually (certain sectors may have collective agreements in place)

Best Options If You're Hiring in Papua New Guinea

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but it’s important to be cautious about the nature of the contractor relationship.

While hiring contractors can be a flexible option, Papua New Guinea has strict labor laws that protect workers. If a contractor is deemed to be functioning like an employee, you may face legal risks for misclassification. Ensure that contractors maintain independence and are not integrated into your business operations.

Consider these points when hiring contractors:

• Ensure they have other clients and are not solely dependent on your business.
• Allow them to set their own hours and methods of work.
• Keep the scope of work project-based and avoid long-term commitments.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Papua New Guinea, depending on the type of business and required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated 1,500–4,000 PGK per month ($420–$1,120)
• Payroll provider: Estimated 200–600 PGK per employee per month ($56–$168)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated 2,000–5,000 PGK per year ($560–$1,400)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 p/month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Papua New Guinea

Hiring in Papua New Guinea can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Papua New Guinea quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.