Vanuatu

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Business Environment

Vanuatu is on the OECD's blacklist of tax havens deemed to be engaging in 'harmful tax' competition. Sanctions are due to be applied after April 2002. Vanuatu is not on the Financial Action Task Force's blacklist of jurisdictions deemed to be uncooperative in preventing money laundering. However several major international banks have banned US dollar transactions with Vanuatu after concerns over money laundering. Some of these banks have since resumed US dollar transactions with certain institutions.

Government promotes the formation of international companies, e-commerce and online gaming companies, discretionary or unit trusts, offshore banks, offshore insurance companies, trusts and shipping companies. All companies are incorporated under either the International Companies Act 1993, or the Vanuatu Companies Act 1986. There are no exchange control regulations. Bank accounts can be held in vatu or any of the major international currencies, and funds in any currency can be readily transferred anywhere in the world without the need for approvals.

A company can register under the Vanuatu Companies Act as a local, as an exempted company or as an overseas company. An exempted company is prohibited from trading within Vanuatu except with another exempted company. The business can be administered in Vanuatu and can also hold funds in Vanuatu banks. Exempted companies are not required to lodge accounts and other records with the Registrar of Companies. Secrecy provisions impose sanctions on any government official who discloses information about the affairs of exempted companies. Legal proceedings which relate to the affairs of an exempted company are held in private. There is no legal requirement to disclose the beneficial ownership of an exempted company to any local authority even on incorporation. Exempted companies are not required to lodge an annual return or audited financial statements. An overseas company is one that is incorporated outside Vanuatu and carries on business in Vanuatu. The company must register under the Companies Act and nominate two persons resident in Vanuatu authorised to accept notices on behalf of the company. An overseas company must also lodge an annual return and audited accounts with the registrar.

International companies may be limited by shares, guarantee or both and require a minimum of one director and one shareholder, who may reside overseas. Companies that offer their shares to the public, or that intend to hold banking, trust or insurance licences, are prohibited from registering as international companies. International companies have a constitution instead of a memorandum and articles of association. The company must lodge with the registrar the constitution, the location of its registered office and agent in Vanuatu, the name of its registered agent and any charges against its assets, all of which are available for public inspection. No other records need to be submitted. An international company can use or distribute assets so long as it remains solvent.

Partnerships are regulated by the Partnership Regulation 1975. Banks are licensed by the minister for finance under the Banking Regulation. The regulation provides for two types of licence: a banking licence and a financial institution licence. A company also must be licensed as either a local bank or an exempted bank or financial institution. An exempted bank must carry on business outside Vanuatu. An exempted bank must use the word 'bank' as part of its name and is subject to inspection under powers granted to the minister for finance. The Insurance Regulation 1973 regulates the incorporation and operation of insurers, underwriters, agents or brokers and exempted insurers. Exempted insurers are not subject to the same registration conditions of local insurers but are required to obtain a licence, maintain an office in Vanuatu and appoint representatives.

Vanuatu's shipping register is open to owners of any nationality under the Vanuatu Maritime Law and the Vanuatu Maritime Regulation. Vanuatu's central registry offices in New York and Hong Kong handle all details of ship registry and have control over documentation and licensing standards.

Vanuatu's Electronic Transactions Act allows legally binding contracts for business conducted over the Internet. The E-Business Act sets the conditions for establishing electronic commerce companies in Vanuatu. The act defines a web site domain as a 'Cybersuite', as a virtual office from which a business conducts electronic commerce transactions. Cybersuites have the same status as an offshore company. Business must be conducted from computers located in Vanuatu. International Companies can rent cybersuites to the website owner, allowing the e-commerce business to conduct business from the site without having to establish a Vanuatu company. Vanuatu has been encouraging the registration of online gaming operations. Three online companies (Australian Casino (Vanuatu) Ltd., DJN Ltd., and PBL Gaming (Vanuatu) Ltd.) are currently licensed. One application was listed as under consideration as of March 2002.

Resident Permits

Work permits are renewable every year. Long-term permit applications need required minimum investments and fee payments. Link: Immigration Information.

Taxes

Vanuatu has no personal income taxes, corporate taxes, estate duties, succession duties, gift duties, capital gains tax, double taxation agreements, or withholding taxes. A value added tax of 12.5% was introduced on 1 August 1998 on all local goods and services. All previous indirect taxes were either abolished or lowered on that date, including import and export duties, port and airport dues, registration and business licence fees, tourist turnover tax, cheque tax, stamp duties and land transfer fees. The Gaming Control Act levies a flat 25% tax on the gross profit of casino operations. The Interactive Gaming Act imposes a flat 2.5% tax on gross winnings.

Contacts

The Vanuatu Investment Promotion Authority acts as the one-stop shop for investors, providing general information and assistance, including obtaining work permits, residence permits, business licences and other approvals.

Vanuatu Investment Promotion Authority

Private Mail Bag 003
Port Vila, Vanuatu
Tel: (678) 22770
Fax: (678) 25640
E-mail: cdi@vanuatu.com.vu
Internet: Vanuatu Investment Promotion Authority

Business/Investment Licences

First Secretary
Ministry of Finance
Private Mail Bag 058
Port Vila, Vanuatu
Tel: (678) 23032
Fax: (678) 27937

Getting There

Vanuatu is 2,500 km northeast of Sydney, Australia, 2,000 km north of Auckland, New Zealand, and 800 km west of Nadi (Fiji). Air Vanuatu flies to Sydney, Brisbane, and Melbourne in Australia, to Auckland in New Zealand, to Noumea in New Caledonia, and to Nadi in Fiji. Government's tourism agency: www.vanuatutourism.com

Country Information (Latest available figures)

Status

Vanautu became independent in 1980 after joint rule by Britain and France. Joint rule began in 1906. The chain of 83 islands were formerly known as the New Hebrides. Pronunciation guide: Vanuatu -- vahn-wah-TOO.

Population (2000)

187,700. Citizens of Vanuatu are known as ni-Vanuatu. The national language is Bislama. The official languages are Bislama, English and French. The principal languages of education are English and French. Indigenous Melanesians, who make up about 94% of the population, speak about 105 local languages.

Capital

Port Vila. Located on Efate Island.

Currency

The vatu is the official currency. US and Australian dollars are accepted by some businesses. US$1 = VT148.80 Vanuatu vatu (March 2002)

Legal System

The legal system is based on British law with modification for local traditions. Vanuatu has a Court of Appeal, a Supreme Court, and magistrate court. Village or island courts are presided over by chiefs to deal with questions of customary law. The Supreme Court is made up of a chief justice and up to three other judges. Two or more members of the Supreme Court may form a Court of Appeal.

Government

Vanuatu has a president, a prime minister who heads a cabinet, a 52-member parliament, and a national council of chiefs. The head of state is the president, who has a mostly ceremonial role. However all bills passed by parliament must have the assent of the president, who can also refer a bill to the Supreme Court if he believes it is inconsistent with the constitution. The head of government is the prime minister, who leads a council of 12 other ministers in a unicameral 52-member parliament. The national council of chiefs, called the Malvatu Mauri, acts as an advisory body to government on culture and language. The president is elected for a five-year term by a two-thirds majority of an electoral college made up of members of parliament and the council of chiefs. The prime minister is elected by a majority vote of a three-fourths quorum of parliament. The prime minister appoints the members of the council of ministers. Members of parliament are elected in multi-seat constituencies for four-year terms. The national council of chiefs is composed of customary chiefs elected by their peers sitting in district Councils of Chiefs.

Executive

President: Kalkot Mataskelekele
Prime minister: Serge Vohor

Cabinet

Deputy prime minister, transport and public utilities: Maxime Carlot Korman
Agriculture, forestry and fisheries: Steven Kalsakan
Comprehensive reform programme: Pipite Marcellino
Education: Joseph Natuman
Finance and economic development: Moana Carcasses
Foreign affairs: Barak Sope Maautamate
Health: Issac Judah
Internal affairs: Keasipal Song
Lands, geology and mines: Donna Browny
Youth and sports: Pierre Tore

Politics

Vanua'aku Pati (VP): leader Edward Natapei
Melanesian Progressive Party (MPP): leader Barak Sope
Union des Partis Modérés (UMP): leader Serge Vohor
National United Party (NUP): Willie Titongoa
Vanuatu Republican Party (VRP): Maxime Korman
John Frum (JF)

A general election is due to be held on 30 April 2002. The last elections were held on 6 March 1998. The VP won 20.8% of the vote and 18 seats. The UMP won 12 seats, the NUP 11 seats, the MPP six seats, the John Frum party two seats, the VRP one seat and independents two seats. Sope was ousted as prime minister in April 2001 by the current prime minister, Natapei, and his Vanua'aku Party, after the governing coalition collapsed. Elections Around the World

Economy

The country has a dual economy, with a large subsistence agricultural sector complemented by the financial and tourism sectors. The introduction of commercial laws in the early 1970s led to the development of an offshore finance and banking centre. Main agricultural exports: copra, beef, timber and cocoa. Agriculture contributes 24% of GDP and accounts for about 75% of the labour market. Most of the economic figures are estimates by the Asian Development Bank.

Gross Domestic Product (2000 estimates)

2.8% real growth

Trade (2000 estimates)

Total exports US$49.4 million; total imports US$109.3 million.

Inflation Rate (2000 estimate)

2%

Gross Official Reserves (2000 estimate)

US$38.8 million

Labour Force (2000)

14,270 employed

Government Accounts (2000 estimates)

Current revenue: VT6,722 million (US$46.7 million); current expenditure VT7,142 million (US$49.6 million); overall deficit VT2,632 million (US$18.3 million); foreign borrowing VT2,198 million (US$15.3 million); foreign grants VT374 million (US$2.6 million). The fiscal year is the calendar year. Government budget deficit reached about 8% of GDP in 2000, compared to a projected deficit of 3% of GDP. External debt service amounted to 1.3% of exports of goods and services and 5.7% of domestic revenue in 2000.

Public Holidays (2004)

1 January (New Year); 5 March (Custom Chief's Day); 9 April (Good Friday); 12 April (Easter Monday); 1 May (Labour Day); 20 May (Ascension); 24 July (Children’s Day); 30 July (Independence Day); 15 August (Assumption Day); 5 October (Constitution Day); 29 November (Unity Day); 25 December (Christmas); 26 December (Family Day).

Time Zone

GMT plus 11 hours. There is no summer time clock change.

Sources

Government of Vanuatu
Vanuatu Investment Promotion Authority
Asian Development Bank
International Monetary Fund
US State Department