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Vanuatu: Double Tax Treaties

Introduction

Not having any taxes other than customs duties, VAT and stamp duty, Vanuatu has not entered into any Double Tax treaties with other countries.

The Mutual Assistance in Criminal Matters Act contains a procedure for co-operation with foreign investigators, and the Serious Offences (Confiscation of Proceeds) Act has anti-money-laundering provisions which could encompass fiscal crime.

In August, 2008, an attempt to stop evidence gathered in a tax evasion investigation being sent back to the authorities in Australia was thwarted by the Court of Appeal in Vanuatu.

The evidence was gathered by officers of the Australian Federal Police during raids on financial institutions, as part of a wider crackdown by Australia against offshore tax evasion under the banner of Project Wickenby. The Australian authorities were focusing in particular on the activities of one tax scheme promoter based in Perth, Western Australia, who was arrested in April.

The Australian Taxation Office (ATO) is also conducting 80 audits examining allegedly false tax deductions exceeding AUD90mn (USD84mn) in connection with the Vanuatu probe.

Earlier in the year, Australian and international agencies conducted operations across three countries to attack abusive tax evasion schemes linked to Vanuatu, and Australian Tax Commissioner Michael D’Ascenzo issued a warning that people who use offshore structures to generate false deductions "or to deliberately hide assets or income in tax havens like Vanuatu can face serious penalties including criminal prosecutions.”

The issue has caused divisions in the Vanuatu government. The Financial Services Authority has been keen to cooperate with the Australian and other international agencies in the investigation, and supports proposals to overhaul financial services legislation by the end of the year to make the jurisdiction less 'secretive.' Certain ministers such as Finance Minister Wille Jimmy, on the other hand, are aghast at the government's appeasement of the onshore authorities, and have warned that the changes will spell the end of Vanuatu as an offshore financial centre, which has come to play an increasingly important role in the Pacific nation's economy.

In a statement issued at the time of the Australian raids, Mr Jimmy said that this course of action would constitute a "huge blow" to Vanuatu's economy, and would effectively end its status as a 'tax haven.'

George Andrews, head of the Vanuatu FSC, has countered, however, that it is no longer desirable for Vanuatu to remained labeled as a "tax haven," telling the Australian newspaper that the jurisdiction has "been associated with this stigma for a long time."

Latest Vanuatu Treaty Updates

Treaty Update: Korea, South - Vanuatu
22 March, 2012
According to the South Korean Foreign Ministry, South Korea and Vanuatu signed a TIEA on March 14, 2012.
Treaty Update: Ireland - Vanuatu
24 June, 2011
According to the OECD, Ireland and Vanuatu signed a TIEA on May 31, 2011.
Treaty Update: Grenada - Vanuatu
24 June, 2011
According to preliminary media reports, Grenada and Vanuatu signed a TIEA on May 31, 2011.
Treaty Update: San Marino - Vanuatu
01 June, 2011
In San Marino, the TIEA applies to general income tax on individuals and corporations, and to all taxes in Vanuatu. The TIEA also provides for the exchange of information held by banks and other financial institution, and information regarding the ownership of companies, partnerships, trusts and foundations.
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