Vanuatu Company Formation: International Companies Act, Zero Tax, and CRS Status

Introduction: Vanuatu's Unique Position

Vanuatu is a Pacific archipelago nation of approximately 83 islands, with a population of around 330,000. It achieved independence from a Franco-British condominium in 1980. Despite its small size and relative remoteness, Vanuatu has developed a financial services sector that offers a combination of features not available elsewhere in the Pacific: zero tax, a commercial CBI programme, and — as of 2025 — non-participation in the Common Reporting Standard.

This last feature is the most commercially significant in the post-CRS world. While most offshore jurisdictions automatically exchange financial account information with foreign tax authorities, Vanuatu does not yet participate in CRS. This does not make Vanuatu a secrecy jurisdiction in the pre-CRS mould — Vanuatu cooperates with foreign authorities under mutual legal assistance arrangements and FATF standards — but it does mean that financial account information in Vanuatu is not automatically exchanged with home country tax authorities.

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Legislative Framework

The International Companies Act

The primary legislation governing Vanuatu offshore companies is the International Companies Act [Cap 222], which provides for the formation of International Companies (ICs) — Vanuatu's offshore corporate vehicle.

Related legislation:

• Vanuatu Financial Services Commission Act — establishes and governs the VFSC
• Financial Transactions Reporting Act — AML/KYC requirements
• Company Registry Act — governs registration requirements
• International Banking Act — for banking licences

The Vanuatu Financial Services Commission (VFSC), established in 2002, is the primary regulator for financial services in Vanuatu. The VFSC regulates company registrars, banks, insurance companies, securities dealers, and the offshore financial services sector.

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The Vanuatu International Company

Formation Requirements

Requirement	Details
Minimum directors	1 (no maximum; no residency requirement)
Minimum shareholders	1 (no maximum)
Corporate directors	Permitted
Bearer shares	Prohibited (abolished under 2016 reforms)
Company secretary	Not mandatory
Registered agent	Required — must be VFSC-licensed
Local presence	Registered agent address serves as registered office

Formation Process

Formation through a VFSC-licensed registered agent:

1. Name search and reservation
2. Memorandum and Articles of Association preparation
3. Filing with the Company Registry (the VFSC for international companies)
4. Certificate of Incorporation issued

Formation timeline: 1–3 business days.

Formation and Annual Costs

Cost Item	Amount (USD)	Notes
Government incorporation fee	USD 300	Standard
Annual government fee	USD 300	Due on anniversary
Registered agent set-up	USD 350–700	First year
Annual registered agent fee	USD 400–900	Ongoing
Total all-in (first year)	USD 800–1,500	Approximate

Vanuatu is competitively priced among Pacific offshore jurisdictions.

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Tax Treatment: Zero on Offshore Income

Vanuatu imposes no income tax, corporation tax, capital gains tax, or withholding tax. International Companies earning income outside Vanuatu pay no Vanuatu tax on that income.

Vanuatu government revenue is derived primarily from:

• VAT (value added tax): 15%
• Import duties
• Tourism-related taxes
• Licensing and registration fees

No Double Tax Treaties

Vanuatu has no bilateral income tax treaties. This means that source-country withholding taxes on payments to Vanuatu entities will apply at domestic rates (potentially 20–30% for royalties, 25% for dividends in some countries). As with other pure zero-tax jurisdictions, Vanuatu companies are best suited for structures where withholding tax is not a significant consideration.

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The CRS Status: Vanuatu's Key Distinction

What CRS Is

The OECD Common Reporting Standard (CRS) requires participating jurisdictions to:

1. Require their financial institutions to collect information on foreign-resident account holders
2. Automatically exchange that information with the account holder's country of tax residence annually

Over 110 jurisdictions participate in CRS automatic exchange. This covers virtually all major financial centres, including all EU member states, UK, Channel Islands, Switzerland, Cayman, BVI, Singapore, UAE, Hong Kong, and most Caribbean jurisdictions.

Vanuatu's Non-Participation

As of 2025, Vanuatu has not implemented CRS and does not automatically exchange financial account information under CRS. Vanuatu is one of a small number of jurisdictions (including Paraguay, Guatemala, and a handful of others) that have not committed to CRS automatic exchange.

This means:

• Financial accounts held at Vanuatu banks or financial institutions are not automatically reported to foreign tax authorities under CRS
• Foreign taxpayers (other than US persons subject to FATCA) with Vanuatu accounts do not have those accounts automatically disclosed

What this does not mean:

• Vanuatu does not cooperate with foreign authorities on mutual legal assistance requests (it does)
• Vanuatu accounts are invisible to FATF or foreign law enforcement (they are not)
• Vanuatu is exempt from FATCA (US persons with Vanuatu accounts must still self-report under FBAR and Form 8938)

The Practical Significance

For non-US individuals with Vanuatu bank accounts: CRS automatic exchange is the mechanism by which most foreign tax authorities discover undisclosed offshore accounts. Non-participation means this mechanism does not apply to Vanuatu.

Tax compliance note: having a Vanuatu account does not legally exempt an account holder from home country tax reporting obligations. UK residents, for example, must report all foreign income and gains to HMRC regardless of whether CRS exchange occurs. Non-participation in CRS reduces the probability of detection, not the legal obligation to disclose. HPT Group advises all clients to maintain full tax compliance in their home jurisdiction regardless of where they hold assets.

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Banking in Vanuatu

Domestic Banking Sector

Vanuatu's banking sector is regulated by the Reserve Bank of Vanuatu (RBV). Licensed banks include:

Bank	Ownership	Services
ANZ Vanuatu	Australian (ANZ Group)	Retail and commercial banking
Westpac Vanuatu	Australian (Westpac Group)	Commercial banking
Bred Bank (Vanuatu)	French Pacific (Bred/Banque Populaire)	Commercial banking
National Bank of Vanuatu	Government-owned	Retail banking
Vanuatu Agricultural Development Bank	Government-owned	Agricultural lending

For offshore company banking, ANZ Vanuatu and Bred Bank Vanuatu are the primary options. Both have Pacific correspondent relationships but limited access to major US or European correspondent banks.

Limitations of Vanuatu Banking

Limitation	Impact
Limited correspondent network	USD payments may route through Australian or French correspondents; delays possible
Enhanced scrutiny by global banks	Vanuatu is a high-risk jurisdiction in many global banks' risk models
Volume limitations	Not suitable for high-volume international transfers
Industry restrictions	Crypto, gaming, and high-risk industries face significant barriers

For clients requiring robust international banking (multi-currency, global SWIFT access, high transaction volumes), Vanuatu banking is generally inadequate. Clients typically bank in a more accessible jurisdiction (Singapore, Malta, Cyprus) and use the Vanuatu IC for holding purposes.

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The VFSC and Regulatory Framework

VFSC-Licensed Activities

Businesses requiring VFSC licensing in Vanuatu include:

• Company registrars and service providers
• Forex dealers and securities dealers
• Investment advisers
• Insurance companies and agents
• Banks (under the International Banking Act)

Vanuatu has developed a niche in online forex and securities brokerage licensing. Several hundred retail forex brokers hold Vanuatu (VFSC) licences, attracted by the relatively accessible and cost-effective licensing framework compared to FCA, CySEC, or ASIC authorisation.

Note: VFSC regulation is generally considered lower tier compared to major financial centre regulators. VFSC-regulated entities are often not accepted by major prime brokers, institutional counterparties, or clients in the EU/UK who require a higher standard of regulation.

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The Citizenship Connection

Vanuatu and Corporate Formation

Vanuatu's CBI programme (the Development Support Programme — DSP) and its company formation sector are administratively separate but commercially linked. Many clients who obtain Vanuatu citizenship also establish Vanuatu entities, using the combination of:

• Vanuatu citizenship (for visa-free travel and passport utility)
• Vanuatu residency (for tax residency purposes, qualifying the individual as a Vanuatu tax resident — zero income tax)
• Vanuatu company (for business or holding purposes, benefiting from the zero-tax environment)

For Vanuatu tax residency to be substantive, the individual must genuinely establish their tax residence in Vanuatu — meaning actual physical presence and life connections. Nominal Vanuatu residency combined with continued residence in a high-tax jurisdiction does not change the tax liability in the home country.

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Vanuatu vs Other Pacific Offshore Options

Feature	Vanuatu	Marshall Islands	Samoa (pre-2022)	Cook Islands
Annual govt fee	USD 300	USD 450	USD 200	USD 350
CRS participation	No	No	No	No
FATCA (US persons)	Yes (agreements)	Yes (Compact)	Yes	Yes
CBI programme	Yes (DSP, fastest)	No	No	No
VFSC forex licensing	Yes (accessible)	No	No	No
Banking access	Limited (Pacific only)	Limited	Limited	Limited

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Considerations and Limitations

Not a Secrecy Jurisdiction

Vanuatu is not a secrecy jurisdiction in the pre-2000 sense. FATF membership means Vanuatu must maintain AML/CFT standards and cooperate with international law enforcement. The non-CRS status is a legitimate feature of the current regulatory landscape, not a mechanism for concealment.

FATF Status

Vanuatu has been periodically subject to FATF review. It was listed on the grey list in 2016 and removed after implementing reforms. Maintaining FATF compliance is important for Vanuatu's continued functioning as a financial centre.

Home Country Tax Obligations Remain

For UK, European, Australian, and most other home country taxpayers: income and assets must be reported regardless of where they are held. The CRS non-participation simply means the home tax authority is less likely to discover non-compliance, not that non-compliance is lawful.

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HPT Group and Vanuatu Structure Advisory

HPT Group advises clients on Vanuatu International Company formation in the context of broader international structuring strategies. We advise on the interaction between Vanuatu company formation, Vanuatu citizenship through the DSP programme, and Vanuatu tax residency, ensuring that clients understand the full legal and tax implications of Vanuatu structures in their specific home country context. We emphasise full tax compliance in all home jurisdictions and structure Vanuatu arrangements accordingly. Contact HPT Group to discuss how a Vanuatu IC might fit within your overall structure.