Vanuatu

Vanuatu, a Pacific Island nation, offers a distinct legal and regulatory environment for offshore corporate entities, primarily through the International Companies Act [Cap. 222]. This legislation governs the formation and operation of International Companies (ICs), which are entities limited by shares and structured to facilitate international commercial activities with minimal domestic interference.

Despite its relatively small geographic and economic footprint, Vanuatu remains an attractive jurisdiction for international incorporation due to its simplicity of administration, tax neutrality, and a regulatory regime that prioritizes flexibility while maintaining essential safeguards.

An International Company in Vanuatu is typically established as a company limited by shares. The ownership structure is based on shareholding, and there is no minimum or maximum threshold for issued share capital. It is sufficient to issue a single share to constitute the company, and there is no legal requirement for the paid-in capital to be deposited or verified at the time of incorporation.

Share capital may be issued at any value, whether par or no-par value, allowing companies to define their capital structure according to their specific commercial needs. The flexibility extends to classes of shares, though care must be taken to ensure that shares are not issued in bearer form—bearer shares were expressly abolished in 2016, reinforcing global standards for transparency and accountability.

International Companies may be established by one or more shareholders, and similarly, at least one director is required. Both shareholders and directors may be either natural persons or legal entities, and there are no restrictions based on nationality or residency. It is also permissible for a single individual to serve as both shareholder and director, allowing for single-person entities, which are common in private asset holding and small-scale international trade.

Citizens and residents of Vanuatu, including Ni-Vanuatu individuals, are not barred from participating as shareholders or directors in these entities. However, the use of ICs by residents must still comply with the restrictions imposed by the Act on domestic operations.

International Companies are explicitly prohibited from conducting business within the domestic economy of Vanuatu, save for specific exemptions. The Act imposes the following limitations:

An International Company must not:

• Engage in commercial activities within Vanuatu’s domestic market;
• Own or hold an interest in immovable property situated in Vanuatu, aside from leased premises used for permitted purposes;
• Conduct banking, insurance, or trust business, unless separately licensed under relevant financial legislation;
• Offer management services for other companies;
• Make public offerings for shares, debentures, or solicit deposits from the public;
• Operate with fewer than one member at any time.

These constraints serve to preserve the offshore nature of such entities, aligning with international standards that distinguish between domestic and international business conduct.

However, certain activities do not constitute “carrying on business in Vanuatu” under the law. These include

• Conducting transactions with other International Companies or businesses incorporated abroad;
• Offering services online or through digital platforms, even when using infrastructure located in Vanuatu;
• Advertising or maintaining an online presence that lists a Vanuatu contact address or domain;
• Leasing office space or engaging professional service providers based in Vanuatu, such as accountants, legal advisors, and company secretaries;
• Holding meetings of shareholders or directors within the territory;
• Maintaining corporate records or preparing books of account domestically;
• Issuing securities to other Vanuatu-incorporated entities or residents in limited circumstances.

This distinction allows companies to maintain a nominal presence in Vanuatu for administrative or compliance purposes, without breaching the prohibition on domestic trade.

One of the principal attractions of Vanuatu as an incorporation jurisdiction is its tax-neutral regime. There is no corporate income tax, no capital gains tax, and no withholding tax on dividends, interest, or royalties for International Companies. The absence of direct taxation reduces the compliance burden significantly, although companies must still adhere to certain recordkeeping and regulatory requirements.

There is no requirement to file annual tax returns or financial statements with any public authority in Vanuatu. This includes the Registrar or any tax authority. However, companies are required to maintain proper accounting records that are sufficient to show and explain their financial transactions and to determine the company’s financial position with reasonable accuracy.

These records must be maintained for a minimum period, usually five years, and can be kept either in Vanuatu or at another location specified in the company’s internal documentation, provided that copies are available on request by the registered agent or regulators where necessary.

All International Companies must retain a registered agent and maintain a registered office within Vanuatu at all times. The registered agent must be licensed and is responsible for maintaining a copy of the company’s constitutional documents and assisting with compliance matters. The registered office must be a physical location in Vanuatu, not merely a mailing address.

Each company is also subject to annual government fees, which must be paid to the Vanuatu Financial Services Commission (VFSC) to remain in good standing. The failure to pay such fees may result in penalties or administrative dissolution.

While there is no requirement for public disclosure of shareholder or director information, details are typically maintained by the registered agent and may be made available to authorities under lawful request, especially under anti-money laundering or counter-terrorist financing frameworks.

Due to the simplicity of formation, minimal reporting, and tax-neutral structure, Vanuatu International Companies are used globally for a range of international commercial purposes. These include:

Asset protection and estate planning

• Holding of investments, intellectual property, or real estate (outside Vanuatu)
• Ownership of maritime vessels or aircraft
• Serving as intermediary holding companies in multinational corporate structures