Vanuatu corporate tax - guide for international expansion

Are you considering expanding your business to Vanuatu? Understanding the corporate tax landscape is essential for any company looking to establish operations in this Pacific island nation.

Vanuatu offers a unique tax environment that can be particularly attractive for international businesses. Whether you're exploring new markets, setting up regional operations, or considering Vanuatu as part of your global expansion strategy, having a clear grasp of the corporate tax requirements will help you make informed decisions and ensure compliance from day one.

If you're planning international operations, Wise Business can help streamline your financial management with local account details and cost-effective international payments, making it easier to handle your business expenses and tax obligations in Vanuatu.

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This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Wise Payments Limited, its subsidiaries or affiliates, and it is not intended as a substitute for obtaining business advice from a tax advisor or any other professional.

Vanuatu Corporate tax rate in 2025

Vanuatu operates with a 0% corporate income tax rate, making it one of the few jurisdictions worldwide that does not levy corporate income tax on businesses. This policy applies broadly to companies incorporated and operating in Vanuatu, regardless of their size or industry.¹

Unlike many countries that have gradually reduced corporate tax rates over recent decades, Vanuatu has consistently maintained its tax-free regime for corporate income. The exemption generally covers both domestic and foreign-sourced income for companies resident in Vanuatu.

The absence of corporate income tax forms part of Vanuatu's broader strategy to attract international business and investment. However, businesses should note that while there is no corporate tax, other taxes and fees apply — including business licence fees, stamp duties, and a Value Added Tax (VAT) currently set at 15% on goods and services.²

Companies operating in Vanuatu benefit from this zero-corporate-tax environment, but they must still comply with regulatory requirements such as proper business registration, filing annual returns, and adhering to international compliance standards.³

Read more about Corporate Tax Planning best practices

How to pay corporate tax in Vanuatu

Since Vanuatu maintains a 0% corporate income tax rate, there are no corporate income tax payments required for businesses operating in the country. However, companies must still fulfil other financial obligations and regulatory requirements.

Business Registration and Licensing

All businesses operating in Vanuatu must register with the Vanuatu Financial Services Commission (VFSC) and obtain appropriate business licences. These registration fees and annual licence renewals are paid in Vanuatu Vatu (VUV), the local currency.⁴

Value Added Tax (VAT) Obligations

While there's no corporate income tax, businesses with annual turnover exceeding 4 million Vatu must register for VAT and pay 15% on taxable supplies. VAT returns are typically filed quarterly, and payments must be made in Vanuatu Vatu.³

Other Financial Obligations^{3 5}

Companies may be subject to:

• Annual return fees to maintain corporate status

• Stamp duties on certain transactions

• Import duties on goods brought into the country

• Employment-related taxes and social contributions for local employees

Tax Due Calculation Example

For a company with an annual turnover of 1.5 million Vatu (approximately £10,000), the corporate income tax calculation would be:

Annual turnover: 1,500,000 VUV x 0%: 0 VUV

However, if this company's turnover exceeds the VAT threshold of 4 million Vatu, it would need to register for VAT and charge 15% on its taxable supplies.

When expanding your business to Vanuatu, the right financial tools will make the process smoother. Using a platform like Wise Business makes it easy to manage international finances. A multi-currency account allows businesses to pay for incorporation costs, registration fees, and government taxes in local currency without paying high exchange rate fees.

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Tax Compliance in Vanuatu

Staying compliant with Vanuatu’s tax and reporting obligations is essential for long-term business success. While the nation is often listed among low corporate tax countries because it does not impose corporate income tax, businesses must follow strict compliance rules.

Annual Return

Companies must file annual returns through the Vanuatu Financial Services Commission (VFSC) online registry. Filing is quick if no changes are required, but delays trigger late fees. If a return is over six months overdue, the company will be removed from the register and its assets transferred to the Crown. Importantly, no filings take place in December or January; companies incorporated in these months must file in November or February, respectively.⁶

Tax Registration and VAT

Companies must register for taxes early to avoid any corporate tax penalty. Even though there is no corporate income tax, businesses may be liable for VAT, customs duties, license fees, and annual charges. VAT returns are due on the 27th day of the month following the end of the taxable period, or the next working day if this falls on a weekend or public holiday. For the period ending 30 November, the due date is extended to 5 January.⁷

Recordkeeping and Reporting

VAT-registered businesses must maintain adequate records, issue tax invoices when requested, and notify the VAT Office of any changes or cessation of taxable activities.⁷

By maintaining proper records, filing on time, and staying aware of their obligations, businesses can continue benefiting from Vanuatu’s effective zero corporate tax rate while avoiding penalties that disrupt operations.

International Expansion to Vanuatu

Vanuatu has emerged as a competitive jurisdiction for entrepreneurs and global investors seeking to expand their businesses. Located in the South Pacific, the country has a population of around 331,000⁸ and a GDP of $1.16 billion, with a steady growth rate of 4% in 2024.⁹ Its economy is supported by agriculture, tourism, and financial services, with foreign direct investment contributing up to 8% of GDP.¹⁰

One of Vanuatu’s strongest advantages is its tax regime. The nation offers Vanuatu offshore tax benefits with 0% corporate tax, no personal income tax, and no capital gains tax. Investors can freely repatriate profits, making it one of the most favourable environments for international businesses. The only applicable taxes are VAT at 15%, rental income tax above VT200,000, and limited stamp duties.² Using the best corporate tax software can simplify VAT reporting and ensure compliance with local regulations.

Infrastructure also supports business expansion. Vanuatu has two international airports, world-class ports, and daily flights connecting Australia, New Zealand, and Fiji.¹² Over 80% of the population has mobile coverage, and undersea fibre connections provide stable digital infrastructure.¹³ This connectivity helps both exporters and service-based companies operate efficiently.

The business environment is further strengthened by Vanuatu’s bilingual workforce fluent in English and French,¹⁴ its year-round tropical climate, and fertile land that supports organic agricultural exports.¹² Together, these advantages create a stable and appealing environment for long-term business ventures.

To establish a business in Vanuatu, you have to:¹⁶

1. Begin with market research to understand demand and competition.
2. Develop a strong business plan and identify a location.
3. Check the availability of the business name with the Vanuatu Financial Services Commission (VFSC).
4. Apply for foreign investment approval (for foreign investors only).
5. Register the company with VFSC and apply for the necessary business licenses.
6. Register with the VAT Office and as an employer with the Vanuatu National Provident Fund.
7. Open a local bank account to begin operations.

Vanuatu’s investor-friendly tax system, improving infrastructure, and global links make it a rising hub for regional trade. Understanding local money exchange is equally vital, as currency conversion impacts international payments and profit repatriation.

Discover the top 5 best Corporate Tax softwares

Incorporation of Business in Vanuatu

To incorporate a business in Vanuatu, you must register through the Vanuatu Financial Services Commission (VFSC) via its online registry or at a VFSC kiosk. The process is straightforward but requires key information and compliance with the Companies Act 2012.¹⁷

When registering, businesses need the following:¹⁷

• Company name: A unique and distinctive name that cannot duplicate an existing registered company.
• Company rules: These govern how the business will operate internally. You may adopt Vanuatu’s model rules under the Companies Act or submit customised regulations.
• Directors: Every company must appoint at least one director responsible for overseeing management and complying with company law. Directors can also be shareholders, but this is not mandatory.
• Shares and shareholders: Each company must issue at least one share and have at least one shareholder. Shareholders invest in the company, and their voting rights depend on the number of shares they hold.

Keeping proper records and staying compliant is essential. Many investors rely on corporate tax compliance software to streamline reporting and meet obligations under the Vanuatu corporate tax rate.

Business Entities in Vanuatu

The main business structures recognised in Vanuatu under the Companies Act are:^{18 19}

• Sole Trader: This type of business is ideal for small businesses such as retail shops or market stalls. The owner is personally liable for debts, as there is no legal separation between the individual and the business.
• Partnership: Two or more people pool resources (cash, property, or time) and agree on how to share profits. This structure is standard among professionals like lawyers and accountants.
• Company (Limited Liability Company): The most widely used structure globally and in Vanuatu. A company is a separate legal entity from its shareholders, meaning owners’ liability is limited to their share investment. Companies can own property, enter into contracts, sue, and be sued. This structure provides greater protection and flexibility, especially for foreign investors.

Note: In 2023, Vanuatu also introduced updates to its company registry system, making it easier for businesses to complete filings online and stay aligned with international transparency standards.¹¹

International corporate tax best practices

Managing international tax obligations requires careful planning and adherence to global standards, even when operating in zero-tax jurisdictions like Vanuatu.

Maintain Substance and Compliance

Even in tax-free jurisdictions, companies must demonstrate genuine business substance. This includes maintaining proper books and records, having real business activities, and ensuring adequate physical presence where required. The OECD's Base Erosion and Profit Shifting (BEPS) initiatives emphasise the importance of substance over form in international tax planning.

Understand Home Country Obligations

Companies incorporated in Vanuatu but controlled from other jurisdictions may still have tax obligations in their home countries. Many countries have Controlled Foreign Company (CFC) rules that can attribute income from foreign subsidiaries to domestic parent companies, potentially negating the benefits of zero corporate tax rates.

Leverage Double Taxation Treaties

While Vanuatu has limited double taxation agreements, understanding the tax treaties between your home country and Vanuatu can help optimise your tax position and avoid double taxation on the same income. Proper treaty planning can provide significant benefits for international businesses.

Maintain Transparent Financial Records

International businesses should maintain comprehensive, transparent financial records that clearly document the source of income, business activities, and compliance with local regulations. This transparency helps during tax audits and demonstrates good faith compliance with international tax standards.

Take the complexity out of international expansion with Wise Business

Researching corporate tax is a crucial step when expanding your business into a new country. The next step is setting up the financial infrastructure to handle the complexities of operating across borders, from managing multi-currency cash flow to mitigating FX risk.

The Wise Business account provides the financial tools to make your international expansion to Vanuatu efficient and simple. It's the one account for managing your money globally.

With a Wise Business account, you can:

• Pay suppliers and initial fees: Pay suppliers, global payroll, and one-off incorporation costs in the local currency.

• Get paid like a local: Use local account details for 8+ major currencies to easily receive payments from customers or investors.

• Manage your money across borders: Hold and exchange 40+ currencies in one account, always with the mid-market exchange rate and low, transparent fees.

• Streamline your accounting: Integrate with tools like Xero or QuickBooks to simplify tracking your company's international finances.

• Empower your team: Provide multi-user access for your finance team and issue expense cards for international spending.

Wise is designed to support every step of your journey, from paying your first registration fee to receiving international payments and managing your global treasury.

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FAQs - Corporate tax in Vanuatu

Who is liable for corporate tax in Vanuatu?

No companies are liable for corporate income tax in Vanuatu, as the country maintains a 0% corporate tax rate. This applies to all companies incorporated in Vanuatu, regardless of whether they are domestic or foreign-owned. However, companies must still comply with other regulatory requirements including business registration, annual returns, and VAT obligations where applicable.

Are there any tax incentives for businesses in Vanuatu?

The entire corporate tax system in Vanuatu can be considered a tax incentive, as there is no corporate income tax imposed on any businesses. This zero-tax environment applies universally to all companies operating in Vanuatu, making additional specific incentives unnecessary. However, businesses should be aware of other costs such as business licence fees and VAT obligations.

What is the tax treatment of dividends in Vanuatu?

Dividends paid by Vanuatu companies are generally not subject to withholding tax in Vanuatu. However, recipients of dividends may be subject to tax in their home jurisdictions depending on their local tax laws and any applicable double taxation treaties. Companies should consult with tax advisors in relevant jurisdictions to understand the full tax implications of dividend distributions.

What is the process for registering for corporate tax in Vanuatu?

Since there is no corporate income tax in Vanuatu, there is no specific corporate tax registration process. However, all businesses must register with the Vanuatu Financial Services Commission (VFSC) to obtain a business licence. Companies with annual turnover exceeding 4 million Vatu must register for VAT with the Vanuatu Revenue and Customs Service. The registration process typically involves submitting incorporation documents, business plans, and paying applicable fees.

What are the common pitfalls to avoid regarding corporate tax in Vanuatu?

The main pitfalls include assuming that zero corporate tax means zero compliance obligations. Companies must still maintain proper corporate governance, file annual returns, and comply with international reporting standards. Additionally, businesses should be aware that operating from a zero-tax jurisdiction may trigger additional scrutiny from tax authorities in other countries where they have connections. It's crucial to ensure genuine business substance in Vanuatu and understand the tax implications in all relevant jurisdictions where the company or its owners may have tax obligations.

Sources used in this article:

1. Tax Foundation: Corporate Tax Rates by Country 2024
2. Invest Vanuatu: Low Tax Jurisdiction
3. Vanuatu Immigration: Vanuatu Taxation Overview
4. Invest Vanuatu: Company Registration
5. Vanuatu Financial Services Commission (VFSC): Companies Fees and Penalties
6. VFSC: Annual Return Requirements
7. Vanuatu Customs: VAT Registration Guide (PDF)
8. SPC Statistics for Development Division: Vanuatu
9. World Bank: Vanuatu Country Data
10. Invest Vanuatu: Vanuatu Economy
11. Invest Vanuatu: VFIPA FDI Online Registration Launched
12. Invest Vanuatu: Perfect Location
13. Invest Vanuatu: Vanuatu Infrastructure
14. Invest Vanuatu: Discover Our Advantages
15. VFSC: Sole Trader, Partnership, and Company Definitions
16. Vanuatu Chamber of Commerce and Industry (VCCI): Starting a New Business Information
17. VFSC: How to Form a Company
18. VFSC: Companies Act 2012 (PDF)

Sources last checked 30/09/2025