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An Overview of Vanuatu Taxes

Kemal Nicholson
27 August 2021

The South Pacific nation of Vanuatu is quite famous and is usually in the news for its stunning natural beauty, pleasant climate, hospitable residents, delightful culture, and, of course, its illustrious citizenship by investment program (CIP).

The nation, although small in size, is a hot touristic destination, with its capital of Port Vila being the main attraction. And as more of the world’s wealthy visited the country and became enchanted with it, the higher the demand for its CIP grew.

Those looking to obtain a second passport must, at some point or another, consider that of Vanuatu. Not only is the commonwealth country’s passport a great mobility asset, providing visa-free travel to 135 destinations worldwide, but the process of getting a Vanuatu passport is simple, quick, and cost-effective.

But there remains one more major reason become a citizen of the naturally stunning nation, which is enhanced financial freedom in the form of reduced taxation. Vanuatu doesn’t just reduce a person’s tax rates but eliminates them entirely in most cases. So let’s take a look at the tax rate structure in Vanuatu, and give you a better idea of how it can benefit you.

Vanuatu Taxes

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Corporate tax

This is where things get real interesting; Vanuatu does not impose any corporate tax on local or international companies. This is one of the main reasons why high net worth individuals move their international business to Port Vila.

According to the international companies act, businesses registered in Vanuatu as offshore businesses are not levied for any tax on corporate income. Vanuatu offshore company registration and Vanuatu offshore banking make it a great place to relocate your HQ. The absence of any type of corporate tax rate means offshore entrepreneurs can safeguard their profits and expand their wealth without having to worry about paying corporation or individual taxes that drain any respectable profit margin.

Companies only need to meet a fee for their employees towards the Vanuatu National Provident Fund, and the fee is no more than 6% of that employee’s salary. These fees go towards an employee’s social security and pension fund and this fee is not technically a form of taxation as it goes directly to the bank accounts of the fund rather than the government treasury.

A business also needs to settle stamp duty when applicable, and it is levied at a flat rate of 2%. This is one of the lowest rates in the region and is a great rate for any business.

There are customs and duties on international imported goods, but those duties range from 0% to 50% depending on a large number of details such as the type of good and country of origin. The good news is that necessity goods usually have a customs duty rate that ranges between 5%-15% so they remain viable in a financial sense.

This 0% tax rate has helped businesses flourish within the nation’s many islands, and has made it one of the world’s hottest offshore jurisdictions for international business and trade.

Vanuatu Taxes

Vanuatu international companies and offshore banking

The main attraction of any offshore destination is taxation; Vanuatu excels in this area, but it has much more to offer for international business. The country’s entire setup is perfect for corporate growth and thriving businesses, and any company would jump at the chance to save its capital from taxes burning through it like wildfire.

This is why registering a company in Vanuatu is considered a smart move, but couple it with the offshore banking system and it is pure genius. Vanuatu currently has two offshore banks, with each bank providing a comprehensive list of offshore banking services to their clients.

Opening an offshore bank account in Vanuatu is very simple and usually takes no more than a couple of days. It may require a higher minimum amount of capital than opening normal bank accounts in your home country, but that is just to ensure that the clients coming to the bank are of a certain caliber.

The international companies act also allows foreign companies to register as non-resident companies, which get even further incentives in terms of value-added tax (VAT) or otherwise.

The stringent anti-money laundering regulations in Vanuatu also make it a safe place for your money, whether in a bank or in venture capital, and supplement the Pacific island nation’s place as one of the world’s most robust offshore jurisdictions.

The Pacific island nation’s close proximity to the likes of Australia and New Zealand is also another great addition in the many number of details that make it a great place for banks and businesses to do their work efficiently.

Find out more about benefits of Vanuatu Tax Haven.

Value added tax (VAT)

Vanuatu’s tax regime is nearly free of taxes, but one tax rate that remains is value added taxation (VAT) on domestic goods and services rendered.

Any domestic product or service will be liable for a value-added tax rate of 12.5%, except for a few exceptions. This VAT system in Vanuatu is very similar to that found in New Zealand, as there are more than one sector in which goods or services are still considered VAT eligible, but are taxed at a VAT rate of 0%.

Exported goods, global transportation of persons or goods, domestic service exchange provided to offshore clients, service exchange rendered outside of Vanuatu’s jurisdiction, aid project sector services, or services for approved educational institutes within Vanuatu’s jurisdiction are taxed at a rate of 0%

There are other parts of the economy that are exempt from value added tax, and need not be registered for any type of value added tax filing such as financial services, education provided by an approved local educational institution, donated goods and services sold by local non-profit organizations, domestic residential rental accommodation, and the sale of a property which has been used for residential rental accommodation for at least 5 years.

International companies are also exempt from VAT, as any activity performed by an international company for financial gain is exempt from the tax as per the international companies act, which is great news to global investors who are looking for a new place with a good economy and limited restrictions to set their HQ.

VAT is paid on an annual cycle, and the companies that need to meet it must be registered with the customs and inland revenue department. The minimum amount of financial turnover a company must have to be eligible for value-added tax in the country is four million VUV.

Property tax

Keeping up with the consistent framework, there is no real estate tax. The only tax a person will pay in relation to property or real estate is on the residential rental returns. This is also paid on a bi-annual basis.

If you have any real estate throughout the islands of Vanuatu and is legally part of the government jurisdictions, and you rent it out for money then you must pay rental tax.

Rental tax is limited to a flat rate of 12.5%. Any gross rental earnings on a semi-annual basis that is less than 200,000 VUV (approximately 2,050 USD) is taxed at 0%. Any gross rental proceeds on the islands that exceeds that minimum is taxed on the 12.5% rate,

There is stamp duty on property transactions, share transfers, up to 1%, with the minimum 2,500 VUV.

Vanuatu Tax Haven

Other taxes in Vanuatu

The government of Vanuatu is extremely generous in its taxation structure throughout its islands and jurisdictions, and that is highlighted by the limited, or even the lack, of many taxes in the country such as capital gains, withholding, wealth, or inheritance tax. Making it a truly global tax haven with a great offshore infrastructure in place for international investors.

The lack of capital gains taxes in particular is great for any investor or company wishing to conduct worldwide business and maintain its financial stability while doing so. A company registered on any of Vanuatu’s islands is not required to pay capital gains or withholding tax.

Benefits of Vanuatu as a Tax Haven

The main benefit is that taxes are limited and you won’t pay much on an annual basis. And unlike the USA where you have to spend a long time doing your annual tax returns, Vanuatu makes the process extremely simple and straightforward.

The landscape is fertile for international companies from countries all over the world to come and set up shop, which in turn will help bolster the country’s economy. It is these little details that make the entire premise of a tax haven work. Little to no taxes is great news for international companies, which entices a company to move its financial and operational HQ to Vanuatu, and the country then benefits and creates a better environment for the next company that wants to set up shop.

And the great thing is the nation’s CIP allows you to take advantage of its multitude of benefits, becoming a citizen of the nation along with your family for a reasonable donation of 130,000 USD for a single applicant, or 220,000 USD for a family of four.

Beaty of Vanuatu

Frequently Asked Questions

Is Vanuatu a tax-free country?

Vanuatu is a tax haven, there are limited taxes such as VAT and rental returns, but no personal or corporate taxation.

Is Vanuatu a tax haven?

Yes, Vanuatu is one of the world’s leading tax havens in all sense of the phrase.

Is there income tax in Vanuatu?

No, there is not any tax on local or international financial revenue. Earnings derived from various sources such as dividends, salaries, freelancing, shares, stocks, bonds, or otherwise are all free of taxes. It is only earnings from renting out residential property that are levied for taxes at a rate of 12.5%

Is there property tax in Vanuatu?

No, there is only tax on residential rental earnings. This is only payable if the amount of earnings derived from renting out a residential property exceeds the base threshold of 200,000 VUV, the equivalent of approximately 2,500 USD.

Does Vanuatu have GST?

Vanuatu has value added tax, which is very similar to GST. The latter is collected at every point of sale, but the former is levied upon the original supplier of the goods or services on a yearly basis, which is the case in Vanuatu.

Can you open an offshore bank account in Vanuatu?

Yes, you can, there are two offshore banks in Vanuatu that allow you to open an offshore account. Opening an account is extremely simple and will only take a couple of days.

How do you become a resident of Vanuatu?

The easiest way is by becoming a citizen through its CIP which takes no more than 2 months.

What can Migronis do for you?

Our expertise and professionally assembled team can help you create the best portfolio of citizenships, researching which second nationality suits your needs best and helping acquiring it. We deal in Citizenship-by-Investment, providing a wide range of Citizenship by Investment programs that allow you to obtain citizenship and a passport to enter various countries visa-free.

Our extensive knowledge of Citizenship-by-Investment not only helps you gain a passport that enables you to travel visa-free but allows you more financial freedom though more favorable tax regimes and banking options.

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