INVESTMENT CONSIDERATIONS

GOVERNMENT POLICY

The overall aim of Government policy is to create and foster economic growth. To date, the governments of Vanuatu have achieved a track record of reasonably sound economic management with an emphasis on finanancial stability.

Vanuatu encourages and welcomes foreign investment. In order to facilitate foreign investment the Government has enacted a Foreign Investment Act to create a favourable environment for private sector operations. This major change promises to relieve many of the hurdles previously encountered.

The Government has comprehensively reviewed Vanuatu's foreign investment policy. Documents relating to Economic Reform and proposals to restructure the Public and Private sectors were introduced to Parliament in early 1998. In July 1998 the Government passed the Foreign Investment Act which provided for the establishment of the Vanuatu Foreign Investment Board. The Board will encourage the formulation of a more transparent and open investment environment as well as faster processing of investment applications. Taxation arrangements and budgetary reforms are also being reviewed which could result in significant changes to the current arrangements.

RESTRICTIONS ON FOREIGN INVESTMENT

The Government of Vanuatu has an 'open regime' policy. Therefore, foreigners should enjoy all the same rights and be subject to the same obligations as a national engaged in similar activity. There are only a few special activities from which foreigners are exempt and most industries are open to foreign investment. A list of Reserved Investments restricts certain business operations to Ni-Vanuatu only.

REPATRIATION OF CAPITAL AND PROFITS

As there are no exchange controls in Vanuatu, foreign companies are free to repatriate profits and any income earned. Accounts may be opened in most major currencies.

TAXATION

There are no personal or company taxes levied in Vanuatu. However in regard to tourism there is a 'Hotel and Licensed Premises Tax' of 10% of gross turnover in regard to hotels, motels and restaurants. There is also a Value Added Tax (VAT) of 12.5% imposed on gross turnover of US$30,400 or more.

INVESTMENT PROTECTION

Foreigners are afforded the same protection as residents under the Constitution of Vanuatu, but they are excluded from participation in any political activity. Currently Vanuatu is not a party to any international agreements/codes regarding foreign investment, although negotiations are in process concerning an agreement with the United Kingdom.

INVESTMENT INCENTIVES

Incentives are mostly applied on a project-by-project basis. The primary incentive for investment in Vanuatu is its status of 'Tax Haven' which allows freedom from corporate tax, income tax, estate duties and non-capital gains tax. In addition, the country is free of withholding tax and does not have any treaties or double taxation agreements with other countries. Particular encouragement is given to industries involving tourism, fishing and processing of agricultural or marine products.

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