Private company limited by shares
Vanuatu is a pure tax haven, there are no direct taxes both for individuals and corporations.
Company law in Vanuatu is based in English Common Law. Companies in Vanuatu are governed by the Companies Act.
Companies registered under the Companies Act have no restriction to trade with residents and lease real properties within the territory, but may require a license to provide financial services. There are four main types of resident companies: Single Shareholder Private Company, Private Company, Public Company and Community Company.
Private Companies may be limited by shares or by guarantee. They are restricted to invite the public to subscribe to the shares, shares may not be freely negotiated and transferred, and the numbers of shareholders are limited to 50. A private company must have at least one Vanuatu resident director and one local secretary.
Details of shareholders and directors of resident companies are publicly disclosed.
Private companies limited by shares must hold annual meetings in Vanuatu, file annual returns, and submit audited financial statements if their annual turnover exceeds VUV 20m.
Resident companies are tax exempt, but subject to annual registration fees, may be subject to a stamp duty on certain transfers and to V.A.T.
Resident companies registered under the Companies Act may be considered exempted. Exempted Companies must file financial accounts and annual returns. They must have a resident director and must hold annual general meetings. But accounts and details of shareholders and directors are not available to the public.
An Exempted company is a commonly used vehicle for holding bank, trust or insurance licenses, as they must be registered under the Companies Act. Exempted companies may have restrictions to do business with residents.
Banking in Vanuatu is regulated by the Banking Act Cap 63, Reserve Bank of Vanuatu Cap 125 and the International Banking Act. The banking system in Vanuatu consists mainly of a national bank “Reserve Bank”, commercial banks, banks and the offshore banking sector. Commercial banks are authorized to provide services to non-residents and internationally through a network of correspondents, consultants and branches. The Reserve Bank is the authority in charge of supervising the operations of banks and financial institutions.
In Vanuatu, there are two types of licenses for the financial sector, the financial institution license and the banking license.
The main difference is that the financial institution license prevents the provision of the checking accounts service, since most other banking services are available. Most offshore banks under the exempt company structure operate under the license of financial institution.
Under the International Banking Act, a financial institution can be established with a minimum paid-in capital of at least USD 500,000.
Subject to the approval of the Reserve Bank, the capital may be held in a foreign financial institution and may be invested in approved financial instruments. It may not be required to hold a banking license in another reputable jurisdiction.
The Reserve Bank will conduct a due diligence process, to verify that the company has a sound business plan, shareholders and directors have good bona fides and evaluation of facility property, management and capital (source and structure) to assess risk management.
Offshore banks may have restrictions to do banking business locally. Banks must maintain a physical office and keep all accounting and financial records in Vanuatu and must file financial accounts and annual returns, so shell banks are not allowed.
Any bank, whether offshore or not, must present monthly and quarterly data on assets and liabilities, profitability, large loans and deposits, maturity of assets and liabilities, credit risk between countries, risks of partner organizations and capital investments.
In addition, the Reserve Bank conducts at least once every two years’ banks’ inspections. To verify loans risks and the measures of compliance with the anti-money laundering regulations.
The guidelines established by the Reserve Bank’s Banking Supervision Department for banks and financial institutions in accordance with the Financial Institutions Act and the International Banking Act include:
- A minimum capital of USD 500,000 for offshore entities and VUV 200m (≈USD 1.8m) for local entities.
- A maximum risk limit on the issuance of loans for a single customer or related clients group, of 25% in relation to exposures to non-banking and non-government counterparties.
- Authorization of the Reserve Bank for holdings of more than 25% of its capital in non-financial companies, amounts exceeding that limit are deducted from the capital of a bank. The establishment of a subsidiary requires the authorization of the Reserve Bank, either in Vanuatu or abroad.
- Compliance with KYC policies established for the effective management of bank risks and compliance with anti-money laundering and terrorism guidelines in customer due diligence.
- Credit risk management and compliance with the minimum requirements of the Reserve Bank for the classification of assets and measures to reduce losses.
- Application of liquidity management policies to ensure compliance with its depositors’ demand.
- Annual report from the external auditors that the information filled to the Reserve Bank is correct and that the bank operates in accordance with all the rules and requirements
- The financial institution must be well-managed and the people in key positions have relevant qualifications and experience in accordance with their responsibilities.
Vanuatu has committed to undertake the first OECD’s automatic exchanges of information (AEOI) following the CRS (Common Reporting Standard) by 2018. It is an unknown how will be done because Vanuatu does not currently collect the financial data of its citizens and foreigners. Vanuatu does not have an Income Tax Office and therefore has no means to collect the information.
There is no intergovernmental agreement (IGA) between Vanuatu and the United States to report US taxpayers accounts, but some Vanuatu banks participate in the US Foreign Account Tax Compliance (FATCA) on an individual basis.
Vanuatu is on the FATF list of high-risk and non-cooperative jurisdictions, currently there are no sanctions in force but the country has been warned to implement anti-money laundering and fiscal transparency measures.
Country code – VU
Legal Basis – Common law
Legal framework – Companies Act
Company form – Private company limited by shares (Ltd)
Liability - The liability of a shareholder to the company is limited to any amount unpaid on a share held by the shareholder.
Business restrictions – Companies registered under the Companies Act have no restriction to trade with residents and lease real properties within the territory, but may require a license to provide financial services. Domestic entities incorporated as exempted may have restrictions to do business with residents.
Share capital – The smallest possible number of shares in a company is one. Any number of shares, however, can be issued for any price. There is no authorised capital, par values or partly paid shares.
Shareholders – The company may be formed by a minimum of 1 shareholder, who can be an individual or a corporation, and may be non-resident. Details of the shareholders are disclosed on a public file, except for exempted companies.
Directors – At least one resident director is required. Details of the directors are disclosed on a public file, except for exempted companies.
Secretary – The appointment of a secretary is required, who must be a resident in Vanuatu.
Registered Address – All companies incorporated in Vanuatu shall at all times have a registered office in Vanuatu.
General Meeting – Annual general meetings are mandatory, and must be held in Vanuatu.
Electronic Signature – Permitted.
Re-domiciliation – A foreign entity can continue as a Vanuatu company, and vice versa.
Compliance – Vanuatu companies must prepare annual accounts and must file them along with an annual return to the Financial Services Commission. Audited financial statements must be filled if the company annual turnover exceeds VUV 20m.
Domestic companies are subject to an annual government fee.
- Shareholders not disclosed
- Directors not disclosed
- Corporate shareholders permitted
- Corporate directors permitted
- Local director required
- Secretary required
- Local secretary required
- Annual general meetings required
- Redomiciliation permitted
- Electronic signature
- Annual return
- Audited accounts
- Audited accounts exemption
- Exchange controls
- Mixed (Customary, French civil and Common) Legal basis
- 1 Minimum shareholders
- 1 Minimum directors
- USD 1 Minimum issued capital
- - Minimum paid up capital
- USDAny Capital currency
- Local Location of annual general meeting
- 2018 AEOI
Vanuatu does not levy corporate and individual income taxes, no dividend distribution taxes, no capital gains taxes, no withholding taxes, no estate and inheritance taxes, and there are no foreign exchange controls.
The only applicable taxes are a value-added tax of 12.5%, stamp and custom duties, with certain exemptions in sectors such as Tourism, Manufacturing or processing and Mineral exploration.
- Offshore Income Tax Exemption
- Offshore capital gains tax exemption
- Offshore dividends tax exemption
- CFC Rules
- Thin Capitalisation Rules
- Patent Box
- Tax Incentives & Credits
- Property Tax
- Wealth tax
- Estate inheritance tax
- Transfer tax
- Capital duties
- 0% Offshore Income Tax Rate
- 0% Corporate Tax Rate
- 0% Capital Gains Tax Rate
- 0% Dividends Received
- 0% Dividends Withholding Tax Rate
- 0% Interests Withholding Tax Rate
- 0% Royalties Withholding Tax Rate
- 0 Losses carryback (years)
- 0 Losses carryforward (years)
- 120 Tax time (hours)
- 31 Tax payments per year
- 6% Social Security Employee
- 6% Social Security Employer
- 0% Personal Income Tax Rate
- 12.5% VAT Rate
- 14 Tax Treaties
The Republic of Vanuatu is a former English-French protectorate, made up by an archipelago of 83 islands of volcanic origin surrounded by coral reefs, covering more than 12,000 sq. km of the South Pacific Ocean. Located 1750 km from Australia, 500 km northeast of New Caledonia, west of Fiji and south of the Solomon Islands, near New Guinea.
The islands are inhabited by 267,000 inhabitants. Its capital, most populated city and economic and commercial center is Port Vila, located in Efate Island (the third largest of the archipelago), which has the most important port and airport of the country.
Its official languages are Bislama, French and English. Its official currency is the Vanuatu Vatu (VUV).
The government and politics of Vanuatu takes place within the framework of a multi-party representative parliamentary democratic republic, in which the Prime Minister of Vanuatu is the head of government and the President of Vanuatu is the head of state.
The country is one of the most underdeveloped in the region, with a per capita income that barely reaches USD 3,000 annually and a very unequal distribution of wealth, with much of the population devoted to subsistence agriculture.
It has a fragile economy, with inherent economic difficulties, is remote and isolated, facing heavy transport costs, is prone to natural disasters and is heavily dependent on foreign investment, tourism and commodities price fluctuations.
Tourism is its largest sector, accounting for half of GDP. Agriculture and fisheries are the second largest, about a quarter of its economy. Its main exports are copra, coconut oil, kava, beef, timber, cocoa and coffee, and destined to Australia, New Zealand and Japan.
The Government plays an important role in the country’s economy. There are more than a dozen state-owned enterprises in such important economic areas as airports, banking, agriculture and broadcasting.
Vanuatu has been an offshore financial center for more than 40 years. The sector contributes almost one tenth of GDP. With well-developed banking and financial infrastructure, international financial institutions, professional lawyers, accountants and financial advisors, including multinational firms.
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