In Vanuatu there are no:

• Income taxes
• Corporate taxes
• Estate duties
• Gifts duties
• Capital gains taxes
• Tax treaties or double tax agreements
• Withholding taxes
• Landlord taxes

Tax Exemptions

The Government of the Republic of Vanuatu has provided for the granting of exemption from payment of customs duty on goods imported for manufacture or process, and a reduction to a minimum rate of not less than 5% on specified imports as mentioned in Schedules III of the Vanuatu Customs Tariff under Section 1 for Economic Relief as follows:

• v X.1 Goods imported for Manufacture or Process (Total exemption)
• v X.3 Goods imported for Agriculture, Horticulture, Livestock or Forestry Projects
• v X.5 Goods imported for a Tourism Development Project
• v X.6 Goods imported for Mineral Exploration and Extraction
• v X.9 Fisheries Industry Equipment

Application for exemptions prior to the commencement of a project is recommended, as the savings available can be substantial.

The grant of exemption from custom duties is always subject to the condition that the goods imported fall within the policy guidelines laid down for the grant of such exemptions by the Government of Vanuatu

Other incentives for the investor are the allowances given to passengers on arrival at Bauerfield Airport, Port Vila.

The "Standard Allowances" shall mean the following goods:
Duty Free allowances per person for visitors and residents

Import Duty Concessions

The Minister of Finance may at his discretion grant exemption or reduction of customs duty on all or part of any goods imported for tourism development projects. Building materials such as cement, nails, nuts and bolts, which have duties ranging from 20-30%, may qualify for full or partial duty concession. Furniture, furnishing and fittings may also qualify for such concessions.

New boats or yachts bought for tourism purposes qualify for full duty concessions as well as equipment used in water sports.

Duty free on cars are low ranging from 22-60% depending on engine capacity. All items however are liable to a 5% port service tax, which is not exempted.

A turnover tax of 10% is imposed on sales of food, beverages and accommodation sold in hotels and restaurants.

Custom Duty Exemptions

Import

The lack of manufacturing capacity obliges Vanuatu to import almost all the consumer capital goods it needs.

New investment in Vanuatu is welcomed by the Government particularly in the areas of industry, tourism and agriculture. The following types of projects are seen as being particularly beneficial to the country, and accordingly are more likely to attract reductions of customs import duty rates down to a minimum of 5%.

Foreign exchange earning projects:

• Using locally available raw materials and exporting the products based thereon
• Tourism related
• Foreign exchange saving projects aimed at appropriate import substitution using imported or locally available raw materials.
• Projects planned for diversified and balanced development in rural areas on other islands in the group in addition to Efate (where the capital Port Vila is situated).

Value Added Tax

VAT was introduced for the first time in 1999. Value Added Tax (VAT) is a tax on consumption as legislated by the Value Added Tax Act No. 12 of 1998. It is charged and accounted for at a rate of 12.5%.

If you have an annual turnover of VT 4 million or more in your taxable activity, or you expect your turnover to be VT 4 million or more in the next twelve months, then you must register for VAT.

If your taxable activity has an annual turnover of less than VT 4 million your are not required to register but may do so if you wish. A business that registers for VAT can obtain a credit on the total VAT payable on business related expenses by that business.

If the business operates in branches, the taxable supplies of all the branches must be added together to get the total turnover. However, non-profit bodies, clubs, charities, and associations can look at each branch separately.

VAT, otherwise known as GST in other countries, is only charged on taxable activities. Activities classified as not being taxable activities include:

• Salaries and wages
• Hobby activities
• Private sales of personal or domestic items, and exempt supplies.

For further information on custom duties on imports and exports in Vanuatu please contact:

Department of Customs and Taxes (VAT Office)
PMB. 012
Port Vila
Vanuatu
Phone: +678 24573
Fax +678 245574