One of the best tropical island destinations in the South Pacific is the Republic of Vanuatu. What is their secret to success? Their secret is Vanuatu tax residency. As a result, you can escape the global income tax net and live in tropical bliss. Indeed, life in the Vanuatu tax haven is free from all income tax, capital gains tax, wealth tax and inheritance taxes.
How can you get the Vanuatu tax benefits? Vanuatu citizenship is your first class ticket to tax free paradise. Therefore, qualified applicants can join the Ni Vanuatu living in the happiest place on earth. Additionally, Vanuatu citizens travel visa free to 130+ countries.
Think about it. Vanuatu offers a COVID free, relaxed tropical island lifestyle in paradise where you can eliminate all income tax. What more can you ask for?
There are a few methods used to obtain Vanuatu tax residency, but acquiring Vanuatu citizenship is most effective. You can be the judge, here is everything you need to know.
Discover The Vanuatu Tax Haven
How to Obtain Vanuatu Tax Residency
Prior to 2015 and the introduction of the Vanuatu citizenship program, Vanuatu tax residency was temporary and required frequent renewals every 12 months. As a result, outsiders could come to Vanuatu but they had to live there with perpetual uncertainty.
- Employment in Vanuatu – This temporary tax residency required applicants to find employment in Vanuatu. However, proof was also required to show that no Ni Vanuatu could perform that type of work.
- Retired with Remittance – Retirees could qualify with a minimum monthly remittance to the island.
- Investor Visa – Or alternatively, one could still qualify for an investor’s visa with a minimum USD $50,000 equivalent invested into a local enterprise.
- Vanuatu Citizenship by Investment – Since 2015, the new residency solution provided by the Vanuatu government is the Vanuatu citizenship by investment program (CIP).
Indeed, the first three options lack the security and longevity that Vanuatu citizenship provides. By using one of these options, it allows your country of origin to continue to impose their income tax on you. Plus, you must also consider the logistics of migrating to Vanuatu. Indeed, physical residency in Vanuatu is not always a practical solution.
Thanks to the Vanuatu CIP, qualified applicants can now acquire Vanuatu tax residency without residing on the island (if they choose not to), receiving local remittance, investing in a local enterprise or finding local employment.
Vanuatu Tax Haven Benefits
Of all the world’s tax havens, Vanuatu is the easiest tax haven to describe. This is because Vanuatu’s income tax laws can be summed up in two words “No Tax”. Additionally, “No Tax” applies to both individuals and corporations.
Indeed, income tax is not politically viable as a revenue source for the Vanuatu government. This is because in Vanuatu, as an independent country, they have never imposed any income tax. As a result, new citizens can feel secure in the longevity of Vanuatu’s no income tax regime.
- Income Tax 0%
- Capital Gains Tax 0%
- Wealth Tax 0%
- Inheritance Tax 0%
- Business Tax 0%
However, the reality of the situation is that all tax haven governments must have some form of revenue to survive. Indeed, government revenue does provide essential services such as border control, disaster relief, public infrastructure and a stable economy.
It is certainly true that Vanuatu has remained 100% COVID free. Therefore, the Vanuatu government does deserve some credit for things like this.
Vanuatu’s Applicable Local Taxes
To provide local services and maintain infrastructure on Vanuatu these are the primary taxes imposed by the Vanuatu government. The calculation mainly consists of the value added tax (VAT) in addition to import duty, plus a flat government fee.
Vanuatu initially imposed their value added tax (VAT) in 1998 at 12.5%. However, in 2018 the Vanuatu Government raised it by 2.5% to 15%. The VAT rate is still commonly misquoted as 12.5% on most other websites.
For further clarification of the duty rates visit the Vanuatu Customs and Inland Revenue Department website. Unfortunately, the list is too extensive to include here. As an aspiring Vanuatu citizen, this is what you need to be aware of (see table below).
Simply apply the applicable duty rate to the formula and derive the Vanuatu tax rate you will be accountable for.
|Import Duties = Customs Value* x Duty Rate*|
|VAT = (Customs Value + Import Duty) x 15%|
|Total Payment = Import Duty + VAT + VT1,000 Fee|
*Customs Value = cost of goods + freight + insurance, if any.
*Duty rates are available in Customs Tariff.
Excise Tax – Some commodities may also have excise taxes applied per item quantity and weight. Excise is usually used to control certain products such as alcohol, tobacco and firearms.
Export Duty – Calculated on ad valorem basis derived from FOB value. The exception is timber export calculated at 5% + VT3,000 per cubic meter. At this time, timber and coral are the only two products with export duty.
How to Qualify for Vanuatu Citizenship
In 2015, the Vanuatu government established the world renown Vanuatu CIP. As a result, a qualified applicant(s) who makes the prescribed non refundable investment obtains lifetime Vanuatu citizenship.
Essentially, applicants must have no criminal background, legitimate source of funds and a clean bill of health. If so, your new passport can be obtained within 30 days.
A tremendous benefit of the Vanuatu program is the simplified, all inclusive cost structure. The investment price includes everything. In addition, the only other fee that must be submitted is for due diligence. Plus, due diligence is only required for the main applicant.
Therefore, the Vanuatu citizenship program eliminates redundancy in the approval process. Indeed, applicants can potentially save thousands of dollars in processing fees.
|Applicant Categories||Investment Price|
|Married with One Child* ||$165,000|
|Married with Two Children* ||$180,000|
|FIU Due Diligence Fee||$5,000|
*Note: Family members on the application can include the spouse, children below 18, dependent children to age 25 and dependent parents.
Two Step Approval Eliminates Risk
Additionally, the government provides a two tier approval process. For step one, the documents are submitted to the Financial Intelligence Unit (FIU) in addition to the $5,000 due diligence fee.
This initial procedure eliminates any risk of the complete file being rejected at a later stage. Therefore, financial exposure is initially limited to the $5,000 due diligence fee.
|Step One Documents||Step Two Documents|
|Completed and signed DSP form||Medical Certificate|
|Passport Copy (Bio Page, notarized)||6 Color Photos (40mm x 50mm, JPEG file)|
|ID Card or Driving License (notarized)||Birth Certificate (notarized)|
|CV/Personal Profile Summary||Statement of Assets (notarized)|
|Police Clearance Report ||Bank Reference/Statement (main applicant)|
|Employment Verification Letter|
|Marriage Certificate (if applicable)|
|3 Professional references (main applicant)|
|Academic Reference (if applicable)|
After step one is completed, the acceptance letter is received from the FIU (7-10 days). From this point our approval ratio is 100%. As a result, applicants can expect smooth sailing for step two. The remaining step two documents are now collected and submitted in addition to the full investment amount.
The Vanuatu Citizenship Commission sits once per month. Depending on what day of the month your complete file is submitted, you could have full approval within 30 days of the initial application date.
Vanuatu Tax Residency (Reside Locally)
Now that you are equipped with Vanuatu citizenship, the most direct method to establish Vanuatu tax residency is to simply move there. However, new citizens must still be wary of retaining second citizenship.
Indeed, living in Vanuatu and establishing tax residency there will not prevent the United States or other developed countries from taxing their citizens on global income. As a result, renunciation of original citizenship may become essential if you wish to effectively escape the global tax net. Can you do it if the need arises?
“It is difficult if you dare, but if you dare it is not so difficult”Seneca
Dual citizenship provides the illusion of additional security. However, the truth is that by retaining citizenship you are also retaining the tax liability you are trying to escape. Your profits from investments in real estate, stocks or other income sources may still be taxable. Therefore, practical tax planning is essential.
Developed countries with huge current account deficits are indeed desperate for tax revenues. This risk is only set to increase exponentially in the future. As a result, you must be concerned with the future tax laws, not only the current tax laws.
Either way, acquiring Vanuatu citizenship solidifies your Plan B because you have the option renounce. You can now effectively implement your Plan B when the need arises.
Vanuatu Tax Residency (Reside Off Island)
Tax haven benefits can work just as well or even better for non resident Vanuatu citizens. Do you intend to renounce citizenship in your country of origin? It is a wise decision because the illusion that dual citizenship provides extra security is often overshadowed by lingering tax liability.
To reiterate, optimal tax planning is most effective for those who hold one citizenship in a legitimate tax haven country such as Vanuatu. As a result, it is not necessary to reside locally but still get all the tax haven benefits.
However, there is one requirement for this to be effective. The country in which you choose to reside must have a territorial based tax system e.g. it does not impose international income tax on residents. Therefore, since we can assume you will not have any locally sourced income from the country where you spend most of your time, you will be free of all income tax.
It sounds to good to be true, but it is a 100% legitimate tax strategy. Try it and see for yourself!
It is indeed the equivalent of residency with no income tax obligations. For example, Vanuatu citizenship can be used to obtain the equivalent of tax free residency in countries such as Malaysia, Thailand, Singapore, UAE and even Portugal! Choose to reside in one of several dozen territorial taxation countries. If so, you are free of all overseas income tax.
Do what is necessary to acquire the best residency visa(s) (or long stay tourist visa). The expense is limited but it comes with huge benefits! As a tax resident in a territorial taxation country, you have no personal income tax obligations unless the income is sourced locally.
Additional Benefits of Vanuatu Citizenship
Vanuatu does not have any income taxes, however they still provide tax identification numbers (TIN) for new citizens. As a result, new citizens can use their TIN with Vanuatu passport to open new accounts with banks and other financial institutions in Common Reporting Standard (CRS) signatory jurisdictions.
Note that the United States government is not a signatory of the CRS. Therefore, do not confuse the CRS with FATCA or FBAR. US notwithstanding, many countries do participate in CRS as a common reporting standard to eliminate tax evasion. This includes the majority of legitimate tax haven countries such as Vanuatu.
We will also help you to obtain a Vanuatu ID card and proof of address in Port Vila. There are indeed additional benefits of Vanuatu citizenship.
Are you interested in Vanuatu offshore company formation? Would you also like to establish offshore banking for your business in Vanuatu? Additionally, let us help you to open a personal bank account in Vanuatu. Our post citizenship services are all inclusive and we are happy to assist.
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Eliminate Income Tax with Credible Solutions
My partners and I have 35+ years of experience working with the best citizenship by investment programs including Vanuatu. In addition, we are well integrated with the government agencies and local property developers.
Our objective is to give you the necessary tools to receive the tax haven benefits that you deserve. As a result, we will do it at the lowest cost in the most efficient manner.
The solutions we offer are time tested. Additionally, we have walked in your shoes. Our tax residency solutions are backed by the world’s best second citizenship. Therefore, you can acquire economic freedom with security.
Protect your assets, your wealth and your future! Contact me today to begin your new life as a global citizen.