People often treat stamping as paperwork that can wait. The Stamp Duties Act (Chapter 117) treats it as a deadline with three separate consequences.
The deadline
Section 18(1A) requires a person liable in respect of a dutiable instrument to cause it to be duly stamped, or lodged with the Collector of Stamp Duties:
- where the instrument was executed in Papua New Guinea — within 60 days after execution; or
- where it was executed outside Papua New Guinea — within 60 days after its receipt in PNG, or 180 days after execution, whichever period expires first.
Consequence one: an offence
Under section 18(1B), a person who contravenes section 18(1A) is guilty of an offence and liable to a penalty of:
- a fine of not less than K650 and not exceeding K6,500; or
- an amount equal to the duty chargeable on the instrument,
whichever is the lesser.
Consequence two: penalty duty that keeps growing
Under section 18(2), an instrument that is unstamped or insufficiently stamped after the section 18(1A) period is charged, in addition to the unpaid duty, with penalty duty of:
- K120; or
- an amount equal to 10% of the unpaid duty for each 30-day period, or part of one, for which the instrument has remained unstamped or insufficiently stamped, calculated from the day it fell due.
Read it again: each 30-day period, or part thereof. A document left unstamped for a year is exposed to penalty duty many times the original duty. This is the single most expensive mistake in the Act, and it is entirely avoidable.
Section 22 provides that an assessment may include penalty, so what you receive from the Collector will be a single figure covering duty and penalty together. Section 89 allows for the remission of penalties — worth asking about where there is a genuine explanation, but not something to rely on.
Consequence three: you cannot use the document
This is the one that hurts commercially. Section 19(1) provides that an instrument shall not:
- be pleaded or given in evidence, except in criminal proceedings; or
- be admitted to be good, useful or available in law,
unless it is duly stamped in accordance with the law in force when it was first executed, or when it came into the country, whichever is later. Under section 19(1A) the same applies to an unexecuted copy, unless the court is satisfied the original is duly stamped.
And it is not left to the parties to overlook. Under section 19(2), where an unstamped instrument is produced in evidence in civil proceedings, the officer of the court whose duty it is to read the instrument shall inform the court that it is not duly stamped.
Under section 19(3), where the instrument is one that may be stamped after execution, it may be received in evidence on payment to that officer of:
- a fee of K190; and
- the stamp duty, or so much of it as has not been paid; and
- the penalty payable on stamping the instrument.
The officer gives a receipt. So an unstamped contract does not become worthless — but you pay the duty, the accumulated penalty and the fee, in court, on the day, before you can rely on it.
Other consequences
- Section 26 — restrictions on the enrolment or registration of an unstamped instrument. This is why registries and company secretaries ask about stamping.
- Section 71 — unstamped transfers of shares, with section 72 on the transferee's title. See share transfers.
- Section 90 — retention of instruments not duly stamped.
- Section 88 — offences for fraudulently removing or selling stamps.
If a document is already late
- Work out the date of execution, and whether it was executed in or outside PNG. That fixes the deadline and the running of penalty.
- Do not wait longer. Penalty accrues per 30-day period; every month of delay adds to it.
- Lodge it with the Collector — section 18(1A) is satisfied by stamping or lodging.
- Ask about remission under section 89 if there is a genuine explanation, in writing.
- Check whether duty was ever payable at all. Many duties were abolished in 2008 — see abolished duties. An old belief that a mortgage or agreement is dutiable may simply be wrong.
- Take advice before producing the document in proceedings.
Penalty figures are those in the Act as consolidated to No 14 of 2019 and can change by amendment. Confirm with the Internal Revenue Commission, and take advice from a lawyer.
Sources
- Stamp Duties Act (Chapter 117) — vLex
- Stamp Duties (Penalties Amendment) Act 2001 — PacLII
- PNG Consolidated Legislation — PacLII index
The National Court Rules are referenced by section 21 for appeals; see the PacLII index for PNG court rules.