Although
Vanuatu had encouraged offshore activity since
the 1970s, the offshore sector began to grow
more quickly after the passing of the International
Companies Act in 1992, and the establishment
of the Financial Services Commission in 1993.
The
OECD designated Vanuatu as an uncooperative
tax haven in April 2002. However, Vanuatu managed
to stay off the Financial Action Task Force
list of uncooperative countries on money laundering
by introducing "know-your-customer"
guidelines in mid-2002.
This
section of the 
site describes the most important types of offshore
business activity carried out from Vanuatu.
Vanuatu
Banking
Banking in Vanuatu is regulated by the Banking
Act Cap 63 and the Reserve Bank of Vanuatu Act
Cap 125. Until 2002 the licensing of banks was
carried out by the Financial Services Commission;
but in that year, in response to international
pressure to control money-laundering, a revised
International Banking Act was passed which handed
the licensing responsibility to the National
Reserve Bank.
Banks
in Vanuatu need to be incorporated under the
Companies Act, since International Companies
are not permitted to engage in banking activity,
although they can hold the shares of a company
that does.
Banks
operating domestically would normally use a
'local' limited company, and are called 'local'
banks, while offshore (external) banks would
normally use an exempted company and are called
'exempted' banks (see Forms
of Company).
There
are two types of license: a Financial Institution
License permits most banking activities other
than the operation of chequeing accounts, while
a Banking Licence includes chequeing activity.
An exempted bank is not normally allowed to
offer chequeing, however, so the two types of
license are operationally equivalent, except
that a Banking Licence includes (and obliges)
use of the word 'bank' in the institution's
name. See Law of Offshore
for more details of the licensing process and
regulatory regime.
More
than 100 exempted banks were registered in Vanuatu
in 2002, making it the leading offshore banking
centre in the Eastern hemisphere; only a few
banks provide services locally, including ANZ,
Westpac, the National Bank of Vanuatu, and the
Bank of Hawaii. The Asian Development Bank has
its Pacific regional office in Port Vila. The
2002 Banking Act however led to a considerable
reduction in the number of licensed banks -
by mid 2005, only four domestic banks and a
mere six international banks remained. In the
two years prior to this, 28 banks had departed
or been closed down.
The
annual fee for a Banking Licence or a Financial
Institution Licence is $5,000 (at the time of
writing).
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Vanuatu Insurance
Insurance activity in Vanuatu is regulated by
the Insurance Act Cap 82. The licensing of insurance
companies is carried out by the Financial Services
Commission.
Insurance
companies in Vanuatu need to be incorporated
under the Companies Act, since International
Companies are not permitted to engage in insurance
activity, although they can hold the shares
of a company that does.
Insurers
operating domestically would normally use a
'local' limited company, and are called 'local'
insurers, while offshore (captive) insurance
companies would normally use an exempted company
and are called 'exempted' insurers (see Forms
of Company).
An
exempted insurer is exempt from a number of
prudential and reporting requirements under
the Insurance Act.
The Financial Services Commission applies fairly
stringent criteria to applicants for exempted
insurance company status. See Law
of Offshore for more details of the licensing
process and regulatory regime. A captive (exempted)
insurance company may not deal with the public
or insure Vanuatu risks. There is no provision
in Vanuatu for protected cell corporations or
rent-a-captives, although legislation under
consideration in 2004 may change this.
The
incorporation and licensing process for a captive
in Vanuatu takes two to three months. Normally
the administration of a captive should be based
in Vanuatu, however there are companies in Port
Vila providing captive management facilities.
The
annual fee for an insurance license is VT100,000
(at the time of writing). There are about 30
captives in Vanuatu.
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Vanuatu
Trust Management
Trust management companies in Vanuatu are regulated
by the Trust Companies Act Cap 69. Licenses,
which are required for any company acting as
trustee, executor or trust administrators, are
issued by the Financial Services Commission.
Trust
managers in Vanuatu need to be incorporated
as 'local' companies under the Companies Act
(see Forms of Company),
since International Companies are not permitted
to engage in trust management activity, although
they can hold the shares of a company that does.
To
qualify for a licence, a trust management company
must have:
- minimum
paid-up capital of VT12.5 m if its head office
is in Vanuatu, or VT50m if not;
- either
a head office or a principal office in Vanuatu;
- at
least two corporate officers resident in Vanuatu.
The
annual fee for a trust management license is
VT200,000 (at the time of writing).
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Vanuatu
Ship Management and Maritime Operations
See
Offshore Business Review
– Shipping for a more general treatment
of offshore shipping registries.
An
open shipping registry was established in Vanuatu
in 1981 under the Vanuatu Maritime Act Cap 131,
which is modelled on Liberian legislation. Administration
is provided by Vanuatu Maritime Services Ltd,
which has an office in Port Vila, but maintains
the registry in New York.
In
order to register a vessel in the Vanuatu registry,
it must be owned by a Vanuatu national or a
Vanuatu corporation, it must be less than 20
old, and must be in safe and seaworthy condition
at the time of registration. Eight recognised
classification societies include Bureau Veritas,
Det Norske Veritas and the American Bureau of
Shipping.
In
2003, Vanuatu announced a reduction in the initial
registration fees for larger tonnage vessels.
The reduction was announced by Vanuatu Maritime
Services Limited's Executive Vice President,
Donald J. Sheetz, after approval by the Vanuatu
Maritime Authority.
At
the time of writing, registration fees are $200
plus a maximum tonnage-based fee of $1.05 per
ton for vessels under 5000 tons, falling to
$0.435 on tonnage up to 25,000, and $0.35 on
tonnage over 25,000. Annual tonnage fees are
$0.25 per net ton. There are annual marine inspection
and investigation fees. Transfer from another
registry costs $1,250.
In
October 2006, Vanuatu's shipping registry announced
that for the fourth year in a row, Vanuatu’s
low detention rate in the United States made
Vanuatu vessels eligible for the US Coast Guard’s
QUALSHIP 21 program. The QUALSHIP 21 eligibility
continued in 2006 with only 1 detention, and
a three year rolling average detention rate
of 0.61%, more than three times better than
the all ships/all flags rate of 2.00%.
Vanuatu
Maritime Services Ltd (VMSL), which runs the
registry for Vanuatu, has stated however that
it is disappointed to note that Vanuatu remains
on the Paris MOU's ‘grey list’ of
countries, with just 1 detention in 2005 (but
3 from 2003 and 2004 combined). These detentions
resulted in a one year detention rate of 2.17%
versus the all ships/all flags rate of 4.67%,
and a three year rolling average rate for Vanuatu
of 3.05% versus the all ships/all flags rate
of 5.83%.
The
Tokyo MOU on Asia/Pacific Port State Control
statistics was more than satisfactory, placing
Vanuatu on the A/P ‘white list’
of countries, with only 2 detentions recorded
in 2005. The Vanuatu one year detention rate
of 2.50% was less than half the all ships/all
flags detention rate of 5.21%. The three year
rolling average detention rate for Vanuatu was
3.62% versus the all ships/all flags rate of
6.71%.
VMSL
is a privately held Vanuatu company operating
under contract to the Vanuatu government as
the Maritime Administrator. VMSL operates the
central registry office and handles all details
of vessel registration, mortgage recordation,
crew documentation, and all matters relating
to safety and proper vessel inspection and documentation.
There are more than 600 ships on the Vanuatu
register.
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Vanuatu
Electronic Gaming
In 1999, the Government of Vanuatu completed
a research and analysis project into internet
gaming. The
Government then determined that internet gaming,
if managed responsibly and appropriately, may
be offered from within Vanuatu with significant
advantage to operators, players and the people
of Vanuatu represented by the Government.
Vanuatu says it aims to attract strong and well
positioned internet gaming operators who can,
together with the Government, be a driving force
to the sensible legitimization of internet gaming
worldwide.
Vanuatu has enacted a comprehensive legislative
framework that provides for the following:
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