Vanuatu: Country and Foreign Investment
Vanuatu is a group of tropical islands on the eastern seaboard of Australia, off the coast of Queensland, with a mostly Melanesian population of 258,334 (2012). The 80 islands are mountainous, and some are volcanic. There are international airports on the two main islands; most connections are to Australia. The islands had British/French governance until independence in 1980; languages are English, French and Bislama (pidgin). The time zone is GMT plus 11 hours. There is a uni-cameral Parliament with a Westminster-model Prime Ministerial government and an elected President. The legal system is based on English common law with some civil law influence.
Vanuatu's economy, historically based on agriculture and fishing, is now dependent on tourism and financial services. Cruise liners call at the two deep-water ports. GDP of USD4,900 per head is low but has been growing strongly. There is a strong contrast between the relatively sophisticated capital Port Vila, with its expatriate workers, and the subsistence economy of most of the Ni-Vanuatu islanders. Most goods are imported, and import duties and value-added tax are the main sources of Government revenue. The currency is the Vatu (VT), fixed against a dollar-based currency basket. In recent years, USD1 has been worth approximately VT100.
There is no direct taxation in Vanuatu. Import and export duties, registration fees, business license fees, stamp duty, VAT and a tourist turnover tax generate Government revenue. The offshore sector is well-developed, with the IBC-style International Company being the entity of choice. Banking, insurance, trust management and electronic gaming are the most important activities.
Vanuatu has no tax treaties. Vanuatu has signed Tax Information Exchange Agreements with Australia, Denmark, the Faroe Islands, Finland, France, Greenland, Grenada, Iceland, Ireland, Korea (Republic of), New Zealand, Norway, San Marino and Sweden. There is domestic legislation to counter money-laundering and which enables international co-operation with investigators. However, privacy is good with statutory protection, and there is no crime of tax evasion since there are no taxes.