Investment Strength

Foreign Investors who are interested in doing businesses in the islands of Vanuatu are welcomed. Vanuatu has an attractive investment environment that is highly competitive in the pacific region. It has an almost absolute industrial calm and a peaceful environment with a high standard of living where investors from all over the world can live and do business for profits and pleasure.

Vanuatu has developed an excellent investment reputation as an all round investment location in the Pacific region. In particular it has:

• Good infrastructure links around the country and the rest of the world
• Easy access to financial services
• Professional support from the Vanuatu Investment Promotion Authority, and other business companies in Port Vila, which makes business relatively an easy thing to do
• Investor friendly tax structure
• Company incorporations and subsequent annual fees are among the lowest in the Pacific

International Strength

Vanuatu's strengths within the context of Pacific are:

• One of the most attractive investment locations in the South Pacific region
• Diplomatic and Trade relations
• Privilege access to major markets
• Membership in regional and international alliances
• Sophisticated modern communication links with the rest of the world
• A stable and peaceful environment makes this country a highly desirable business location

Regional Strength

Vanuatu's regional strengths include:

• Membership to the Melanesian Spearhead Group (MSG), which is a very strong organization formed between the Melanesian countries (Papua New Guinea, Fiji, and Vanuatu.), to trade freely with each other.
• Neighboring traditional trading partners such as Australia and New Zealand as well as New Caledonia. This renders great bonus to the business community in the country.

Socio-political Environment

• The Republic of Vanuatu is a parliamentary democracy. Independence was obtained in 1980 after some 74 years of joint rule by Britain and France.
• After more than 20 years of political Independence Vanuatu has had its share of political instability. However, its democracy is now maturing. The country has developed a good track record of social stability over the years.
• Democracy still has its meaning in Vanuatu, and it is for this reason that investors need not fear.

Investment incentive

National policy

Foreign Investors who are interested in doing businesses in the islands of Vanuatu are welcomed. Vanuatu has an attractive investment environment that is highly competitive in the pacific region. It has an almost absolute industrial calm and a peaceful environment with a high standard of living where investors from all over the world can live and do business for profits and pleasure.

The Government of Vanuatu offers foreign investors an opportunity to operate under one of the most open and liberal systems in the world. The intention is to encourage and welcome foreign investment on the same terms and conditions that are available to investors who are citizens of Vanuatu.

VIPA's primary role is the promotion of Direct Foreign Investment into the Republic of Vanuatu and to provide a service to all foreign investors from initial inquiry to a project's operational stage and even beyond.

It provides general information packages and advice on investment opportunities, incentives and investment procedures in Vanuatu. VIPA is also empowered to facilitate business expansions and variations and to facilitate investors' requests for work permits, residence permits, business licenses and other government approvals. No foreign investor is allowed to do any business in Vanuatu until an approval is given by the Vanuatu Government through the VIPA Board.

Tax Heaven Country

Vanuatu is a tax heaven country. There are no income taxes on company income or employees income, no capital gains taxes, freedom to repatriate capital.

Investment Project

There is no corporate income tax in Vanuatu and, therefore, there is no scope for offering income tax holidays. Nonetheless, to assist investments to become established in Vanuatu, Government does provide certain types of investments with concessions on trades taxes, classified as economic reliefs.

These are listed in Section 1, Schedule III of the Import Duties Act. The section includes goods imported for:

• Tourism development projects;
• Projects which can create more employment opportunities
• Manufacture or processing;
• Fisheries industry equipment.
• Agriculture, horticulture, livestock or forestry projects;
• Mineral exploration and extraction

Reduction of trade taxes includes:

• Production means used in the early period of investment
• Components and maintenance tool
• Material or half-manufactured product used for export products
• Specific product used for the agriculture production

The concessions provide for full exemptions on trade taxes for manufacturing, processing and mineral exploration and extraction of raw materials and capital items. For other sectors, the benefit, in general, is a reduction of trade taxes to not less than 5%. The extent of the reduction is discretionary.

Exports

Generally speaking there are no restrictions on exports from Vanuatu. Under the SPARTECA Agreement, virtually all goods exported from Vanuatu are allowed to enter duty-free into the Australian and New Zealand markets, provided they effectively satisfy the country's quarantine requirements.

Investment Guarantee

Vanuatu entered into an agreement with the United Kingdom for the promotion and protection of their foreign investments in December 2003. Additional investment promotion and protection agreements are currently being developed with the USA, the Peoples Republic of China, Japan, France, Australia, New Zealand and New Caledonia.

Expropriation

Government guarantees that it will not expropriate foreign investments or take measures that will have a similar effect. The exception is expropriation for a designated public purpose and will be done on a non-discriminatory basis. Such expropriation would only occur in accordance with the Vanuatu Foreign Investment Promotion Act No. 15 of 1998, other domestic laws and the principles of international law. Such action would result in the prompt payment of adequate and effective compensation.

Intellectual Property

To protect and safeguard intellectual property in Vanuatu, the Government has passed the Copyright and Related Rights Act No.42 of 2000. However, the legislation has not yet been gazetted. The Act will apply to works, performances, sound recordings, broadcasts and expressions of indigenous culture. In particular, original intellectual creations include artistic, literary, dramatic, musical, audiovisual and collective works. Works are protected by the sole fact of their creation and irrespective of their mode or form of expression, content, quality or purpose.

Non-Discrimination Between Source Countries

Government extends equal treatment to investors from any country in relation to the establishment, expansion and operation of investments. The treatment of any individual is no less favorable than that which is extended to an investor from any other country in a like situation, without prejudice to any and all relevant international obligations.

National Treatment

Except as provided for under the VFIP Act, the Government accords to all foreign investors treatment no less favorable than that accorded to domestic investors in like situations with respect to the establishment, expansion, operation and protection of their investments.

Non-Commercial Risk

Government appreciates that foreign investors’ uncertainty in investing in a new country can be partly alleviated if they have access to some form of internationally recognized investment protection. Consequently, Vanuatu is a member of the Multilateral Investment Guarantee Agency (MIGA), a part of the World Bank Group. MIGA can guarantee against non-commercial risks such as currency transfers, expropriation, and war and civil disturbance (civil risks).

Dispute Settlement

Although Government is aware of the benefits for investment of having access to a range of appropriate dispute settlement mechanisms, resolution through the Vanuatu courts is the only legislative avenue available at this time. Nonlitigious legislation, such as an arbitration law, is not in place. Government is yet to sign and ratify either the Washington Convention on the Settlement of Investment Disputes between States and nationals of other States or the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Historically, however, foreign investors have achieved dispute resolution through the auspices of the International Chamber of
Commerce.
Vanuatu entered into an agreement with the United Kingdom for the promotion and protection of their foreign investments in December 2003. Additional investment promotion and protection agreements are currently being developed with the USA, the Peoples Republic of China, Japan, France, Australia, New Zealand and New Caledonia