Vanuatu tax benefits and rates
Tax laws of Vanuatu, a country in Oceania, provide equal terms for tax residents and non-residents. Tax residency in Vanuatu is available for people who live there for more than 183 days a year. Non-residents are foreigners and Vanuatu citizens who mostly live abroad.
Individuals don’t pay most of the taxes in Vanuatu. Personal income, real estate ownership, and other assets are tax-free.
Vanuatu taxes for individuals
|Capital gains tax|
|Capital export tax|
VAT is already included in the cost of goods and services; individuals don’t pay it separately. The Vanuatu's value-added tax rate is 12.5%. In comparison, VAT rates are up to 20% in Austria and the UK.
Legal entities can also enjoy tax benefits in Vanuatu. The country’s government is interested in foreign investors, so it provides favourable tax conditions for new businesses. Companies registered in Vanuatu may not pay taxes for 20 years — for example, the corporate tax rate is 0%. Instead, they pay an annual fee of $300.
Vanuatu taxes for companies
|Annual registration fee||$300 to $1,000|
|Contributions to a pension fund||6%|
Property taxes in Vanuatu
Ownership of property in Vanuatu is tax-free, but there are some taxes on real estate deals. When buying, changing an owner or renting a property out, you must pay a tax of 2 to 12%.
Vanuatu taxes on real estate
|Tax on rental income||12.5%|
|VAT on the purchase of a commercial real estate||12.5%|
Tax on rental income is charged every six months from the sum over VT200,000. VT stands for vatu, the national currency of Vanuatu. 200,000 in vatu is around 1,800 in US dollars.
The rental tax is charged in two stages:
- tax on the period from December 1 to May 31 is paid on June 28;
- tax on the period from June 1 to November 30 is paid on December 28.
The rental tax for individuals is paid by property owners who rent it out. The tax is not charged if the rental income for six months is less than VT200,000 ($1,800). A tax of 12.5% is levied on income exceeding VT200,000 for six months.
For example, the six-month rental income was VT300,000. The sum of VT200,000 is exempt from taxation. In this case, the rental tax will be charged on VT100,000.
For legal entities, these rules don’t apply. The rental tax is 12.5% for any rental income.
Tax reporting in Vanuatu
Owners of international companies in Vanuatu must keep accounting records and monitor the movement of capital and currency exchange. Still, they are not obliged to submit reports to the Vanuatu Inland Revenue Department.
Privacy. Protection of data is guaranteed to businesspeople. Vanuatu does not provide access to companies’ financial information and their owners’ personal data.
Opening a bank account in Vanuatu also does not carry any risks — banks ensure confidentiality to their customers. At the same time, Vanuatu fulfils the requirements of FATF — The Financial Action Task Force, an international organisation for combating illegal income.
Some countries that concluded Tax Information Exchange Agreements (TIEAs) with Vanuatu:
- the Republic of Korea;
- New Zealand;
- the Faroe Islands;
- San Marino.
Vanuatu provides information to these countries if a request connected with a criminal or civil tax investigation is made.
Double taxation. Vanuatu has not concluded Double Taxation Conventions (DTCs) with most countries worldwide. But the majority of income sources and transactions in Vanuatu are tax-free, so individuals and companies that earn income abroad or transfer money from Vanuatu to another country don’t pay taxes twice.
Vanuatu citizenship by investment
Vanuatu offers the fastest route to citizenship by investment globally — an investor can get a passport in one to two months.
The Vanuatu passport allows investors to travel visa-free to 95 countries, including the UK, Singapore, and Hong Kong. Vanuatu citizenship can make getting visas to the US, Canada, and Australia easier. Citizens of the country can become tax residents in Vanuatu or form a company there to enjoy low tax rates.
Principal requirements for an applicant:
- Over 18 years of age.
- Without criminal records or serious illnesses.
- Investment in the country’s economy over $130,000.
- A bank account balance of $250,000 $.
Close relatives of the investor can also get citizenship together with them:
- a spouse;
- children aged under 18;
- children aged from 18 to 25 that study at a university and are financially dependent on the investor;
- parents over 50 years old.
The investor makes a contribution to the National Development Fund. All the money from this fund goes to the development of Vanuatu’s economy.
Frequently asked question
Individuals are exempt from most taxes in Vanuatu. They pay only tax on rental income if the income for six months is over VT200,000.
Legal entities pay an annual state fee of $300 to $1,000 and taxes on real estate deals.
There is no income tax in Vanuatu for residents and non-residents of the country.
There is no property tax in Vanuatu, but there are taxes on real estate deals. According to the type of deal, they are from 7% to 12.5%:
- 5% — stamp duty;
- 2% — registration fee;
- 12.5% — tax on income from renting out residential or commercial property.
There are no taxes on income, inheritance, capital gains, or property in Vanuatu. Companies pay value-added tax (VAT) at the rate of 12.5%. Also, there are some taxes on real estate deals: buying an object, renting it out, or changing an owner.
In Vanuatu, there work several licensed banks: National Bank of Vanuatu, Bred Bank Vanuatu, ANZ bank Vanuatu, and others.
Individuals can open a bank account in Vanuatu. To do it, they submit some documents:
- An application for opening an account.
- An identity document.
- A certificate of income and origin of funds.
- Letter of recommendation from another bank.
To get Vanuatu citizenship, an investor needs to contribute $130,000 or more to the National Development Fund. Also, the investor pays government fees and duties and pays for the Due diligence check.