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Tax system of Vanuatu: important details investor needs to know before purchasing a passport

Kristina Kurkuliak
19 November 2018

In this article we’ll cover the highlights of the tax system of Vanuatu, a state in Oceania, which can rightfully be considered the most attractive “tax harbour” in the world.

Taxation of individuals and legal entities

Vanuatu tax system is extremely friendly. The taxation conditions on the island are the same for residents and non-residents. No taxes are imposed on income, wealth, inheritance, capital gains, corporations, capital export, profit generated by exchange activities. International Business Companies (IBCs) are exempted from paying any taxes during the first twenty years.
International companies registered in the territory of Vanuatu pay only an annual fee of $300. The fee is paid annually by June 30th.
Today the registration of the company in Vanuatu is subject to the payment of VAT in the amount of 12.5%. It is reported that the government plans to raise this bar to 17%, however, the decision has not yet been taken. There is a 0% rate corporate and income tax for businessmen wishing to buy a company on the island.
In case of real estate transactions, a lessee or a buyer of the property must pay stamp duty and registration fees (5% and 2% of the volume of the transaction, respectively).

Peculiarities of the taxation system

Funds can be stored and moved in any currency. Owners of offshore companies in Vanuatu should control the movement of capital and monitor currency exchange, do the bookkeeping, but the government do not officially require reporting to any authority or carry out the audit. In addition, unlike most other offshore jurisdictions where a license fee is charged to compensate the lack of administrative obligations, the “tax haven of Vanuatu” has no administrative expectations from offshore companies.
Treaties on the avoidance of double taxation have been signed with Vanuatu by Australia, New Zealand, Grenada, Denmark, Ireland, Norway, France, Switzerland and other countries.
Vanuatu restricts public access to the financial information of offshore companies, as well as business and personal information about owners and beneficiaries. Information is confidential under all circumstances, except in special cases when the company is involved in illegal activities such as money laundering, fraud and terrorism.
Statistics shows that the state taxation system has been developed with due account of the best interests of the country, since about 15% of Vanuatu’s GDP account for the investments in activities related to international companies. Basically, this means that the government is interested in creating friendly legal and business environment specifically designed to meet the needs of such companies.

Benefits of Vanuatu citizenship

Along with the favorable tax planning, the Vanuatu passport offers a number of other benefits:

How to obtain Vanuatu’s passport?

Investors who have donated $130,000 to the government fund may apply for citizenship. They will also need to pay additional fees for dependent family members, due diligence and application processing fees.
You can get a passport within 2 months. Together with the main applicant, investor’s dependent family members such as spouse/children, and parents may apply for the second citizenship.
The attractiveness of Vanuatu for wealthy businessmen is caused by the opportunity to obtain a second passport and by the availability of a friendly tax system. The government is working on creating a favorable business environment that promotes business development, on the one hand, and attracts private capital to the country, on the other.

Interested in more detailed information about Vanuatu citizenship by investment program? Contact us!

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