Vanuatu Tax Regulations

Tax Benefits and Rates in Vanuatu

Vanuatu has built a reputation as a business-friendly jurisdiction with clear and transparent tax laws. The country actively attracts foreign investors by offering equal tax advantages to both residents and non-residents. Key benefits include:

• No Personal Income Tax – Salaries, dividends, interest, and other earnings are entirely tax-free.
• No Capital Gains Tax – The sale of shares, real estate, and other assets is not subject to taxation.
• No Inheritance or Gift Tax – Wealth transfers, including inheritances and gifts, incur no tax obligations.
• No Corporate Tax – Instead of a corporate tax, businesses pay a fixed annual fee of approximately €300, regardless of profit levels.
• Value Added Tax (VAT) at 12.5% – Applies to most goods and services. Businesses exceeding an annual turnover of approximately 4 million vatu (~$35,000 USD) must register for VAT.
• Import Duties – Range from 0% to 20%, depending on the category of goods.

Corporate Tax in Vanuatu

Unlike most jurisdictions, Vanuatu does not impose a corporate income tax. Companies registered in Vanuatu pay a fixed annual government fee instead of a tax on profits. This system simplifies compliance and allows businesses to reinvest earnings without the burden of heavy taxation.

Corporate Tax Features:

• No corporate income tax for both domestic and international companies.
• Businesses pay a fixed registration fee (~€300 annually).
• No mandatory financial reporting requirements for offshore companies, though Economic Substance regulations may apply for international operations.

This tax regime makes Vanuatu an attractive location for global businesses seeking a jurisdiction with minimal regulatory and tax burdens.

Property Taxation in Vanuatu

Vanuatu does not impose an annual property tax. However, real estate transactions are subject to Stamp Duty, typically ranging between 2% and 5% of the property’s declared value.

• No Annual Property Tax – Property owners are not required to pay annual taxes based on property value.
• No Capital Gains Tax on Real Estate Sales – The profit from selling real estate is not subject to taxation.
• Stamp Duty on Transactions – Applies to property purchases, calculated based on either the contractual price or an independent appraisal.
• Import Duties on Construction Materials and Furnishings – Ranging from 0% to 20%, depending on the type of imported goods.

Additionally, rental income may require VAT registration if revenue surpasses 4–5 million vatu (~$35,000 USD) per year. In this case, landlords must collect and remit 12.5% VAT on rental payments.

For businesses operating in global markets, economic substance requirements may also play a crucial role. Depending on the nature of their operations, some companies registered in Vanuatu may need to demonstrate a physical presence, maintain operational offices, or employ local staff if they wish to claim tax residency benefits. This is particularly relevant for businesses providing financial services, international trading, or investment management, as international regulators are increasingly scrutinizing offshore jurisdictions that facilitate tax advantages without substantial business activity.

To navigate the complexities of global regulatory compliance, businesses should seek professional legal and financial guidance. Ensuring full adherence to the latest tax laws, reporting requirements, and international transparency standards is essential for maintaining operational legitimacy and minimizing potential risks associated with non-compliance.