The World of Business

The government of Vanuatu does not levy any direct taxes or exercise change controls and offers a politically stable environment in which to do business. In addition, there are only a few indirect taxes and fees and bank accounts may be in any currency, and international transfers are free of all controls. It is clear that the legislative environment in Vanuatu is committed on creating a friendly environment for the offshore business market. This commitment was further strengthened in 1993 when the legislature passed the International Companies Act, which cemented Vanuatu’s position as a superior jurisdiction for offshore financial activities.

It is possible for foreigners to carry out business transaction in Vanuatu as long as they do so through a local company.

It is necessary to obtain a license in order to do business in Vanuatu. All business licenses are issued annually, transferable, subject to annual fee, and may be subject to certain conditions. The fees for most licenses have been standardized to a flat rate of VT20, 000 plus VT90, 000 for each non-citizen employee, principal or partner engaged in the business but other businesses in the financial and monetary institutions including insurance companies and agents are charged on the basis of 2% of estimated turnover.

Information relating to offshore entities is protected by the Official Secrets Act as well as other legislation. The government has not passed any legislation on the exchange of information, as it is not necessary because Vanuatu has no income tax or double taxation treaties. There is some legislation, however, that is directed towards the prevention of money laundering.

Although Vanuatu is an attractive jurisdiction for foreign investment, the government has not created any formal investment incentive schemes. The government has, however, passed legislation that allows them to waive import and export duties for activities that benefit the economy. It is not unusual for foreign businesses to negotiate significant benefit packages. It is also important to remember that as the government does not levy any direct corporate taxes conventional incentives schemes simply aren’t applicable.

Legal System

Vanuatu is a civil law country meaning that the organization of the legal system is derived from the French Napoleonic Code rather than English common law.

Civil law, also called Continental law or Romano-Germanic law, is the most prevalent legal system in the world. The main difference between civil and common law is that that common law draws abstract rules from specific cases, whereas civil law starts with abstract rules, which judges must then apply to the various cases before them. In other words, historically speaking, common law is based upon traditions and laws are codified following court rulings. On the other hand, in the case of civil law, laws are first codified and then applied. There are a number of civil codes besides the Napoleonic code.