Vanuatu

As an employer in Vanuatu, you have several tax obligations, primarily focusing on Value Added Tax (VAT) and contributions to the Vanuatu National Provident Fund (VNPF).

Value Added Tax (VAT)

Vanuatu levies a 15% VAT on most goods and services. Businesses with an anticipated annual turnover of VUV 4 million (approximately USD 34,000) or more must register for VAT. Registration should be completed within 21 days of reaching this threshold. Returns and payments are due on the 27th of the month following the taxable period. The exception is December returns, due on January 5th of the following year. If the due date falls on a weekend or public holiday, the deadline shifts to the next business day. While the standard taxable period is monthly, businesses with annual taxable supplies under VUV 8 million can opt for quarterly filing.

Vanuatu National Provident Fund (VNPF)

Employers are obligated to register with the VNPF if they have employees earning up to VUV 3,000. The contribution rate is 8% of the employee's salary, split equally between the employer and employee (4% each). Registration is free and typically takes up to five business days.

Annual Returns

Employers must submit annual returns to the Department of Labour and Employment Services by the end of April each year. These returns cover statistical employment information, not financial data.

Other Taxes

Vanuatu does not impose personal or corporate income tax, capital gains tax, inheritance tax, or wealth tax. A 2% property transfer tax applies to real estate purchases. Additional taxes include import duties and stamp duty on specific transactions like property transfers and share transactions.

Vanuatu's tax system is characterized by its minimal direct taxation, making it attractive for businesses and individuals.

Personal Income Tax

Vanuatu does not levy personal income tax on its citizens or residents, regardless of whether the income source is domestic or international. This means that individuals retain 100% of their earned income. There are also no capital gains, inheritance, or wealth taxes.

Corporate Tax

Companies registered in Vanuatu and generating income from outside the country are exempt from corporate taxes. There is an annual company registration fee, varying based on the company's type and size. Companies doing business within Vanuatu are also subject to this exemption but may be subject to other fees or taxes.

Value Added Tax (VAT)

Vanuatu levies a Value Added Tax (VAT) on most goods and services at a rate of 15%. This rate may be subject to change, and it's essential to verify the current rate. Some goods and services are exempt, while others are zero-rated (taxable at 0%). Businesses registered for VAT charge VAT on their sales but can claim a credit for the VAT they paid on their purchases. The final consumer bears the burden of the VAT.

Customs Duties

Import duties are levied on goods imported into Vanuatu, with varying rates depending on the specific items. Certain sectors, such as tourism, manufacturing, and mineral exploration, may qualify for exemptions. Personal effects and baggage brought into the country may also have customs concessions. VAT is payable on imported goods at the same time as customs duty, typically when goods are cleared from customs.

Vanuatu National Provident Fund (VNPF)

Both employers and employees are required to contribute to the VNPF. Employees contribute 4% of their gross salary, which is deducted by the employer. Employers also contribute 4% of the employee's salary. These contributions are mandatory for employees earning a minimum monthly salary of VT 3,000. Payments are due to the VNPF by the last day of the month following the salary payment.

Other Taxes and Fees

• Business Licenses: All businesses operating within Vanuatu must obtain a license. Fees vary by business category and turnover.
• Stamp Duty: Applies to transfers of local land leases (2% registration fee and 5% stamp duty) and share transfers in companies.
• Motor Vehicle Tax: An annual tax is levied on all vehicles.
• Work and Residence Permits: Foreign employees require work and residence permits, each with an annual fee.

It's important to note that while Vanuatu offers a low-tax environment, it adheres to international tax reporting standards. It's advisable to seek professional tax advice for specific situations. This information is current as of February 5, 2025, and may be subject to change.

In Vanuatu, the Value Added Tax (VAT) is a consumption tax levied on most goods and services.

VAT Rates

• Standard Rate: 15% This applies to most goods and services.
• Zero Rate: 0% This applies to exports, services performed outside Vanuatu, certain goods and services for educational establishments, and approved aid projects.

VAT Registration

• Threshold: Businesses with an annual turnover exceeding VT 4,000,000 are required to register for VAT.
• Voluntary Registration: Businesses below the threshold can register voluntarily to claim input tax credits.
• Deadline: Registration must be completed within 21 days of crossing the threshold.
• Procedure: Businesses must complete an application form (TIN 201), submit required documents (business license, registration certificate, or business plan if not yet operational) to the VAT office, and may require a site visit.

VAT Filing and Payment

• Returns: Registered businesses must file VAT returns monthly. Businesses with annual turnover below VT 8,000,000 may apply to file quarterly.
• Deadline: Returns and payments are due on the 27th of the month following the taxable period. Returns due on December 27th are due January 5th. If the due date falls on a weekend or public holiday, the next business day applies.
• Payment Methods: Cheques or cash at the Inland Revenue Taxpayer Services office.

Exempt Supplies

Certain goods and services are exempt from VAT:

• Financial services
• Donated goods and services by non-profits
• Residential rental accommodation
• Sale of residential properties used for rental for at least five years
• Education provided by approved institutions

Penalties

• Late Payment: 5% of the outstanding tax, plus daily interest at 20% per annum.
• Late Filing: VT 30,000 for individuals, VT 50,000 for entities, plus a daily penalty for each day outstanding.

It's important to note that this information is current as of February 5, 2025, and might be subject to change. For the most up-to-date information, it is recommended to consult the Department of Customs and Inland Revenue of Vanuatu. Additional information you might find useful include the Tax Administration Act No. 37 of 2018 and the Value Added Tax Act [CAP 247].

Vanuatu offers a tax-friendly environment, particularly appealing to international businesses and investors.

Corporate Tax Incentives

• Tax Exemptions: Vanuatu does not impose corporate tax, income tax, capital gains tax, withholding tax, inheritance tax, wealth tax, gift tax, or stock exchange gain tax on international companies for 20 years from the date of incorporation. Companies registered in Vanuatu but earning income from outside the country are not subject to corporate taxes on those earnings. This encourages international businesses to establish a presence in Vanuatu and reinvest profits without tax burdens.
• No Exchange Controls: Vanuatu does not impose exchange controls, allowing for the free flow of capital in and out of the country. This simplifies international business operations and investments.
• Import Duty Waivers: Import duties may be waived in full or in part for businesses engaged in import replacement or export-oriented industries. This can significantly reduce the cost of doing business in Vanuatu.

Individual Tax Incentives

• No Personal Income Tax: Vanuatu does not levy personal income tax on its citizens or residents, regardless of where the income is sourced. This includes income from employment, investments, and other sources.
• Other Tax Exemptions: Vanuatu also exempts individuals from capital gains tax, inheritance tax, wealth tax, and gift tax. This comprehensive lack of direct taxation makes it attractive for high-net-worth individuals and those seeking to optimize their tax liabilities.

Residency and Citizenship by Investment

• Citizenship by Investment Program: This program offers a pathway to citizenship through a government contribution starting at USD 130,000. Obtaining citizenship allows individuals to benefit from Vanuatu's tax policies and visa-free travel to over 100 countries.
• Permanent Residency Program: Investing USD 400,000 in real estate or business ventures, combined with fulfilling other requirements like police and medical clearance, can lead to permanent residency. This provides long-term residency rights and access to Vanuatu's tax advantages.
• Real Estate Investment Residency: Investing at least USD 100,000 in Vanuatu's real estate market, whether through property purchase or project funding, offers another route to tax residency.

Value Added Tax (VAT)

While Vanuatu boasts a largely tax-free environment for international income, it's essential to note that a 15% Value Added Tax (VAT) applies to goods and services consumed within the country. This VAT is a primary source of government revenue.

International Compliance

Despite its tax haven status, Vanuatu is committed to international tax compliance and transparency standards. The introduction of personal Tax Identification Numbers and adherence to the Common Reporting Standard (CRS) reflect this commitment. Individuals and businesses operating in Vanuatu should be aware of these reporting requirements.

It's crucial to remember that tax laws and regulations can change. This information is current as of today, February 5, 2025, and it's advisable to seek professional tax advice for personalized guidance.