Offshore Legal and Tax Regimes

Please be aware that the following is simply a brief summary of some of the more important aspects of Vanuatuan tax law and should be considered only general information. Please do not substitute this for professional tax advice.

Overview

As the government of Vanuatu does not levy any direct corporate taxes, having “offshore” status does not carry any specific tax advantage. There are, however, other advantages such as better confidentiality and less bureaucracy. Only companies that conduct the essential minimum of business within the jurisdiction are eligible for “offshore” statues. There are two main forms of “offshore” in Vanuatu, exempted companies and International Companies.

Forms of Offshore Operation

Generally speaking, most non-financial companies with operations that take place beyond the borders of Vanuatu adopt the International Company form as established by the International Companies Act 1992. Any financial institution, including banks, insurance companies, and trust and fund management companies, that has external operations is an exception to the rule. These institutions are required to use the Exempted Company form under the Companies Act.

Taxation of Offshore Operations

The government of Vanuatu does not levy any income taxes, corporation taxes, capital gains taxes, VAT or sales taxes, or withholding taxes. Depending on their nature and capitalization, companies and partnerships simply pay annual fees to the government.

Taxation of Foreign Employees of Offshore Operations

There is no legal distinction between the employees of resident or non-resident operations. Moreover, as stated before, there is no income tax, capital gains tax or payroll taxation.

Vanuatu Offshore Activities

As a rule, the forms of company and partnership mentioned above and used for offshore operations are allowed to trade freely from Vanuatu with external partners. However, they must limit their dealings on the island to activities that directly their international operations. They are allowed operate bank accounts, use professional services, and hold shares and other securities as long as they are not connected with local companies.