Discover employer and employee tax responsibilities in Vanuatu
In Vanuatu, employers have several tax responsibilities. One of these is the mandatory contribution to the Vanuatu National Provident Fund (VNPF). Employers are required to contribute 4% of an employee's gross salary to the VNPF. Additionally, they must withhold 4% from the employee's wages for the same purpose.
Employers must register with the VNPF within seven days of starting a business. The contributions, both from the employer and the employee, must be remitted on a monthly basis.
Employers may be required to withhold income tax from employee salaries. This is based on a progressive tax system. It's essential for employers to check with the Vanuatu Revenue and Customs Department for the latest withholding requirements and submission deadlines.
Employers must maintain accurate payroll records for tax and compliance purposes. They may also have additional reporting requirements, particularly concerning foreign employees and work permits.
In Vanuatu, employees are required to contribute 4% of their gross salary to the Vanuatu National Provident Fund (VNPF). This mandatory contribution is deducted directly from their wages by their employer. The VNPF is a social security scheme that provides retirement benefits to members.
Interestingly, Vanuatu does not currently have a personal income tax. This means employees do not have any income tax deductions from their salaries.
While there's no direct income tax, employees will indirectly pay taxes on their purchases of goods and services. However, these are not deducted from their salaries but are paid at the point of purchase.
VAT applies to a wide array of services provided in Vanuatu. Some common examples include professional services such as consulting, legal, accounting, hospitality services like hotels, restaurants, tourism activities, telecommunications services, transportation services, construction and engineering services, and advertising, marketing, and related services.
Businesses providing taxable services in Vanuatu must register for VAT if their annual turnover exceeds a specific threshold. The current threshold for mandatory VAT registration is 4,000,000 Vatu (VT).
VAT-registered businesses must follow these compliance requirements:
Certain services are zero-rated for VAT purposes. This means:
Some examples of zero-rated services in Vanuatu include exported services and international transport services.
Vanuatu offers a highly attractive tax environment for businesses, with several general and specific tax incentives.
Certain industries and activities in Vanuatu are eligible for additional tax incentives. These include:
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