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Vanuatu

 
   

Executive Summary
The Republic of Vanuatu is located in the Pacific Ocean on the archipelago of volcanic origin. It is located between Australia, New Caledonia, Fiji and Solomon Islands. Thanks to the local independence movement, the Republic of Vanuatu was created in 1980, which before that was divided in two parts, governed by UK and France.

Port Vila is the Capital of Vanuatu; Bislama, English and French are its official languages. The country has adopted a parliamentary democracy political model, it has a unicameral parliament, elected by the population, the Prime Minister is the head of the government and the President has ceremonial powers, and is elected by an electoral college.

Agriculture, tourism and financial services are well developed in Vanuatu. Economic vulnerability is determined by natural disasters (earthquakes, tsunami), small number and amount of exported goods and a long physical distance from major markets. Main suppliers and supporters of Vanuatu are Australia and New Zealand. National currency of Vanuatu is Vanuatu vatu (VUV).

Geography
The archipelago of Vanuatu is Y-shaped and consists of four main and 80 smaller islands. Port Vila, its capital, and Luganville are the biggest cities of the country. Mount Tabwemasana  is the highest point of Vanuatu, which rises at 1,879 metres above the sea level. Unstable soils and small amount of fresh water are characteristic traits of the majority of the archipelago islands. There are several underwater and active volcanoes. Vanuatu rain forests are included in the Australian ecozone, in which also New Caledonia, New Guinea, Solomon Islands, Australia and New Zealand are present.

Sub-tropical climate of Vanuatu brings approximately nine months of warm/hot weather with rainy period and a high level of humidity, while remaining three months are usually cooler and drier. Deforestation is caused by the presence of a high value timber, in which forests are replaced by coconut plantations and cattle ranches, which causes soil erosion. Proper waste disposal, water and air pollution, and the lack of fresh water are important problems at present.

Map, Flag and Coat of Arm

 


Types of Company

Local Limited Company

Local companies may be limited by shares, guarantee or unlimited, and must conduct business on the territory of Vanuatu.

Private Local Company
At least one director must be a resident of Vanuatu, and there should be a company secretary. Public may not subscribe to the shares, and there is a limit of 50 shareholders such a company may have.

Public Local Company
This company must have at least two directors, one of which should be a Vanuatu resident, and a secretary. General public may subscribe to the shares of the company.

Exempted Company
Companies obtain exempted status if they do not conduct business in Vanuatu,  do not offer shares to the general public in Vanuatu, and do not own any interest in any non-exempt company that operates in Vanuatu. If such companies do not conduct banking, insurance, trusteeship or selling securities activities, they are not required to file accounts, and they need not be audited.

International Company
It is the most popular type of company used for offshore business purposes. This company is registered in one day and no permit application or details on beneficial owners must be submitted. In order to be registered a new company must file its constitution, containing the name, purpose, registered office in Vanuatu and a Vanuatu agent. Directors are personally liable for international company’s activities – which is called a solvency test on international companies, imposed by the International Companies Act. This company is exempt from all forms of taxes.

Many exempted companies choose to be converted to international companies. Companies that operate as banks, trusts or insurance entities, or those that offer shares to general public cannot be registered as international companies. In addition, an international company cannot conduct business or gain profits on real estate located in Vanuatu.

Overseas Company
This is a foreign company which had chosen to be re-registered in Vanuatu. At least two residents of Vanuatu must be nominated by the company in order to accept notices on behalf of the company. Annual returns and audited accounts must be filed. If it is not forbidden by a foreign country legislation a company is registered in, it can be redomiciled to and continued in Vanuatu. Vanuatu companies can be redomiciled to another jurisdiction as well.

General Partnership
The name of a general partnership must be registered, and license should be obtained. General partners are jointly and severally liable for partnership’s activities, obligations and debts.

Limited Partnership
At least one general and at least one limited partner should form a limited partnership. The number of partners must not exceed 20. General partners are jointly and severally liable for partnership’s obligations, while limited partners are liable up to the amount invested.

Trust
The maximum perpetuity of a trust in Vanuatu is determined for 80 years. The dynamic trust legislation is in process of creating modern trust environment, allowing purpose trusts, specific asset protection rules and other important regulations. Trustees do not have to be Vanuatu residents, trusts do not have to be registered and do not have to file any reports.

Taxation

Personal
Individuals are not liable to pay income taxes. Main taxes that affect individuals are import duties, which are charged at varying rates, VAT is 12.5%, a tax on rental income over a certain amount in a six months period is charged at a rate of 15%, stamp duties on some property, share and some other transactions is applied at a rate of 1% of the value. When acquiring a land, government charges 2% as a registration fee and 5% as a stamp duty. There are no social security contributions, but employers and employees are liable to contribute 3% of their salaries to an approved scheme.

Corporate
Until 2008 Vanuatu did not provide any information to any government authority on its internal business environment, but due to the international pressure, mainly from Australia, Vanuatu starts following international rules and obligations with the aim to improve and ensure transparency.

There are no income, capital gains, inheritance taxes and no exchange controls. Main taxes affecting companies are import and export taxes, as well as business license tax. Import taxes vary significantly depending on the type of imported product. Standard rate of the VAT is 12.5%, which was introduced in 1998 and raised approximately 40% of the government annual income. Export tax in most cases is levied at a rate of 5%.

Business license should be renewed every year and its fee varies depending on the type of business and, in some cases, on the turnover.

Many international ship management companies and private individuals choose to register their vessels in Vanuatu, because of tax benefits and Vanuatu being the member of the International Maritime Organization, thus following all the international conventions of the sphere

 
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