It was the sweetener to sign NRL players to the competition’s 19th team and lure them to Papua New Guinea.

And now the federal government has revealed how much it will lose in tax revenue by allowing the NRL to sign players to tax-free contracts.

“The government will amend the tax law to ensure that income tax exemptions provided by Papua New Guinea for players and staff of the PNG Chiefs National Rugby League team operate as intended. This will decrease receipts by $5.4m over four years from 2026–27,” budget papers noted on Tuesday.

Wests Tigers captain Jarome Luai and South Sydney scoring machine Alex Johnston are the first two key signings to the Chiefs, with club bosses expected to sign more players ahead of the team’s 2028 season debut.

Under Australian tax rules, Luai takes home around $650,000 of his $1.2 million contract at the Tigers, but he will pocket the entire salary when at the Chiefs.

Code Sports reported clubs are “pissed off” about the tax-free dollars PNG can offer, with once CEO predicting the situation would deteriorate into a “sh*t fight”.

NRL boss Peter V’landys has confirmed the Chiefs won’t pay tax for at least their first 10 years, as part of the federal government’s $600 million investment to set up a team in PNG.

Chiefs general manager of football Michael Chammas said Luai, the team’s inaugural signing, would send a strong message to the rest of the competition.

“Off the field, the significance is even greater,” he said.

“Jarome Luai in a PNG Chiefs jersey is a cultural moment for our nation. Rugby league is everything to our people, and a player of his standing choosing PNG will resonate far beyond the sport. It will inspire a generation.

Separately, Perth Bears, who will enter the competition in 2027, have not yet signed a marquee player to their list.

Chammas believed the Bears will thrive in the west despite the challenges they are facing.

“We have our own challenges around being so far away from Sydney and Brisbane, and they’re going to have some logistical challenges being five or six hours away,” he said.

“But we know that with (Bears coach) Mal Meninga at the helm, they’ll build a strong roster. They’re coming in a year before us, so we hope they have success and we hope we fall on the back of it. The game needs success.”

Originally published as Federal budget 2026: how much the NRL’s tax-free contracts will cost