Taxes in Vanuatu

Taxation in Vanuatu is like Little Green Men, Santa Clause, and bathing suits — at the right location in the island nation. All are non-existent.

Vanuatu has no corporate tax, no withholding tax, no gift tax, and no personal income taxes.

With the taxation plan currently in place for offshore companies, Vanuatu is viewed as a tax haven, and that made the country the most appealing on the planet.

With no taxes impacting persons other than import duties, the South Pacific country covers government revenue through other methods. These include:

  • Rental income tax (over VT200,000 within a six-month period) 12.5%
  • Stamp duty on some transactions 1%
  • VAT 12.5%

The government also places fees on acquiring land, 2%, and unimproved capital value, 5%. Despite no state social security contributions, employees and employers each hand over 6% of salary to the Vanuatu National Provident Fund.


Exempt Companies

International businesses and offshore — exempt — commercial enterprises are easy to incorporate in Vanuatu. The legislature permits the formation of flexible business structures and foreign, business; the legislation makes it ok for just one director and one shareholder to incorporate.

Providing top-tier offshore banking services to both companies and individuals, Vanuatu’s banking center is active, and multiple banks have acquired licenses to offer the offshore resources.


Like The Cayman Islands

Vanuatu is to Australia and New Zealand as the Cayman Islands are to America. People used the tropical islands to park their money, and banks promised privacy.

In 1998, Vanuatu implemented its firs VAT at 12.5%. As part of financial reform by the nation’s Comprehensive Reform Program, they group planned to charge a percentage for most services and goods following the lead of New Zealand’s government.

Additionally, there are other conditions which make Vanuatu a business-friendly location. While Vanuatu’s VAT remains at 12.5%, there are no corporate taxes for both domestic and foreign corporations and companies are exempted from capital and exchange controls.


Hidden In The Open

Vanuatu is not as well known as other offshore business jurisdictions including Belize, the British Virgin Islands or Seychelles. On the radar of nations like Australia, Vanuatu is also coming to the attention of North American residents concerned about shifting governmental attitudes in the Caribbean.


Personal Tax

The Revenue Review Committee is not supportive of a flat tax rate once the income tax is legislated. All personal tax would be calculated on a sliding scale as happens in other nations. For instance, a person making less than 750,000 VATU a year would pay zero tax. A person making over that threshold up to 3,500,000 VATU annually would face a tax of 10%. Beyond that, the sliding scale continues up to a 17% tax for anyone exceeding 3,500,000 VATU.


Corporate Tax

The RRC has suggested a corporate rate of 17% which would make Vanuatu remain competitive for investors.  There would be drawbacks to a corporate tariff.

Roughly 1% of the manufacturing sector would vanish, and there is a 10% change 2% of the nation’s retail sector would shut down or leave.


Increasing VAT — Not Likely

Vanuatu has looked at — and rejected — the idea of increasing their VAT. The RRC and government and business leaders are vehemently against the idea due to the cost of living increase which would follow.

Each of the tax scenarios, personal, corporate and VAT, are being considered as a possibility for the future. The government must evaluate many factors before implementing any.


The Takeaway

A beautiful and remote, tax-free paradise, Vanuatu is known not just for its idyllic location, but also the world’s greatest spot to own and operate a business.

If life was meant to be enjoyed, why aren’t you enjoying it. A second passport can be your ticket to life. Vanuatu Unified Services holds the key and can show you why hundreds of people make Vanuatu their new home each year.