Like most countries around the world, Vanuatu, the tropical paradise that attracts visitors from all four corners of the world, isn’t immune from administrative and legal hurdles when establishing a company. However, unlike most countries, Vanuatu offers some notable benefits that have made it a prime candidate for the establishment of a local business or company, including very few if any taxes.
The advantages of setting up a business in Vanuatu
Despite the paperwork involved, setting up a business in Vanuatu is remarkably straightforward with the right assistance. There are numerous reasons why business people might find it advantageous to set up a business or company in Vanuatu, including the tax breaks that it offers in abundance, including no:
- Capital gains taxes (with the exception of certain real estate transactions)
- Corporate taxes
- Income taxes (there’s no statutory requirement to report income to any authority)
- Sales taxes
- Withholding taxes
Moreover, there are further benefits to setting up a business in Vanuatu in addition to favorable tax breaks, including its inexpensive labor force, the Government’s interest in promoting investment and the extensive business and financial services available there.
How to establish a business in Vanuatu – Company formation
Forming a company in Vanuatu isn’t so dissimilar from forming a company in Australia or the UK. In order to incorporate a company, the Memorandum and Articles of Association must be filed, and to incorporate with the Vanuatu Financial Services Commission, a permit applied for.
The incorporation process usually takes from seven to ten working days and although business people are pretty much free to choose their company name, all company names must end in the word ‘limited’.
Local companies are required to have at least two shareholders, at least one resident director and there’s also a stipulation that a sole director cannot also act as company secretary. Non-citizens are also required to obtain business licenses (Business Licence Act No 19 of 1998) from the Vanuatu Investment Promotion Authority (VIPA).
The minimum registration (and annual fee) is currently Vt30,000 which is approximately US$300 and relatively inexpensive in comparison to many other countries, as is enlisting the services of a firm that specialises in company formations.
Due to the nature of establishing a business in Vanuatu, or anywhere else in the world for that matter, it’s recommended that business people looking to establish a business presence in Vanuatu by forming a company enlist the services of a local business advisory and accountancy firm, one with strong experience in company formations and related services.
Residency and work permits
Business people looking to form a company in Vanuatu should also give some thought to residency and work permits, something that can be discussed with the business advisors and accountants in Vanuatu who’ll assist them with the company formation process.
When applying to the Vanuatu Investment Promotion Authority, or VIPA, as it’s usually abbreviated to, business people should specify how many work permits they require. Although the VIPA doesn’t issue the work permits directly, once approval is granted by VIPA they can then apply for work permits through the Department of Labor (DOL) and residency permits through the Department of Immigration (DOI).
There are very few ongoing requirements that business people will need to take note of, though they’ll need to lodge an annual statutory return with the VFSC and renew their VIPA application, residency and work permits annually, and also prepare for auditing if their company has a turnover in excess of Vt20,000,000.
The entire process is relatively quick and straightforward, though business people are highly advised to seek local assistance when establishing a business presence in Vanuatu.