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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