What You Need to Know About Vanuatu Payroll Tax

Payroll in Vanuatu is unlike anywhere else in the Pacific: there is no income tax and no PAYE, so the only deduction from your employees' wages is their VNPF contribution. As of January 2026, that rate jumped from 4% to 6% for each party, bringing the total to 12%. This guide covers the updated rates, the monthly filing process, and what you need to know as an employer.

1. What is Payroll Tax?

Payroll tax in Vanuatu is unique because the country has no income tax or PAYE system. There is no tax withheld from employee wages for income tax purposes. The main payroll obligation is contributions to the VNPF (Vanuatu National Provident Fund), a compulsory retirement savings scheme.

As of 1 January 2026, the new VNPF contribution rate is 12% total, split equally between employer and employee at 6% each. This is an increase from the previous 8% total rate.

2. Who does it apply to?

This usually applies to:

All employers in Vanuatu with one or more employees
Employees earning wages, salaries, or other remuneration
Both ni-Vanuatu citizens and foreign workers employed in Vanuatu
Temporary and casual workers
Government and public sector employers

3. Why does it matter?

Understanding payroll tax helps you:

Stay compliant with tax laws
Avoid penalties and late fees
Keep proper records
File and pay correctly
Plan your cash flow better

4. How does it work?

Here's the basic process:

Register as an employer with the VNPF
Register each employee with the VNPF to get their membership number
Calculate each employee's gross wages for the pay period
Deduct the employee's VNPF contribution (6%) from their gross wages
Calculate the employer's VNPF contribution (6%) on the same gross wages
Submit the VNPF contribution schedule listing all employees
Remit the total VNPF contributions (12%) by the due date
Keep records of all contributions made

5. What forms are involved?

VNPF Contribution Schedule - Monthly schedule listing each employee, their wages, and VNPF contributions
VNPF Employer Registration Form - Form to register as an employer with VNPF
VNPF Employee Registration Form - Form to register new employees and get their VNPF membership numbers
VNPF Online Employer Portal - Digital portal for submitting schedules and making payments

6. What information do you need?

Before handling payroll tax, make sure you have:

VNPF employer registration number
VNPF membership numbers for each employee
Gross salary and wage details per employee
Records of allowances, overtime, and bonuses
Employee personal details (name, date of birth, identification)
Bank account details for remittance
Access to the VNPF employer portal

7. Important deadlines

VNPF contributions: Due monthly, typically by the 14th of the month following the pay period
VNPF schedule submission: Submitted monthly with the contribution payment
Year-end requirements: Reconcile all VNPF contributions for the year, verify employee membership details are correct

8. Common mistakes to avoid

Using the old 4% rate instead of the new 6% rate for each party (effective 1 January 2026)
Calculating VNPF on net wages instead of gross wages
Not registering new employees with VNPF before submitting contributions
Missing the monthly contribution deadline and incurring penalties
Not keeping proper records of contributions made for each employee
Forgetting that there is no PAYE or income tax to withhold in Vanuatu
Not updating payroll systems to reflect the new 12% total contribution rate

9. Simple example

You employ a worker in Port Vila earning VUV 80,000 per month gross.

VNPF Calculation (per month):

Employee contribution: VUV 80,000 x 6% = VUV 4,800
Employer contribution: VUV 80,000 x 6% = VUV 4,800
Total VNPF: VUV 9,600

Employee take-home pay (per month):

Gross: VUV 80,000
Less VNPF (6%): VUV 4,800
Take-home: VUV 75,200

Note: There is no income tax or PAYE deduction. The only deduction from the employee's pay is the VNPF contribution.

Total employer cost (per month):

Salary: VUV 80,000
Employer VNPF (6%): VUV 4,800
Total: VUV 84,800

10. FAQ

Q: Is there income tax or PAYE in Vanuatu? A: No. Vanuatu has no personal income tax, so there is no PAYE to withhold from employee salaries. VNPF is the only mandatory payroll deduction.

Q: What changed with the VNPF rate in 2026? A: Effective 1 January 2026, the total VNPF contribution rate increased from 8% to 12%. Both employers and employees now contribute 6% each (previously 4% each).

Q: Is VNPF mandatory for all employees? A: Yes. VNPF contributions are mandatory for all employees in Vanuatu, including foreign workers.

Q: Can employees withdraw VNPF funds early? A: VNPF allows early withdrawal only under specific conditions like retirement, permanent emigration, total disability, or housing assistance.

Q: What happens if I pay VNPF late? A: VNPF imposes penalties for late contributions. The penalty increases with the length of the delay.

11. Final takeaway

Vanuatu's payroll is simpler than most countries because there is no income tax or PAYE. Your main obligation is the VNPF contribution at 6% each for employer and employee, remitted monthly.

Caption

What you need to know about Vanuatu Payroll Tax: With no income tax, your main payroll obligation is VNPF at 6% each (employer + employee), totaling 12% as of 2026.

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