What You Need to Know About Vanuatu Sales Tax (VAT)

Vanuatu has no income tax, no corporate tax, and no capital gains tax, which makes VAT at 15% the government's primary revenue source and your most important compliance obligation. Registration is mandatory once your annual taxable turnover exceeds VUV 4,000,000, and returns are filed monthly using booklets issued by the DCIR. Here is how to handle VAT correctly in a country where it is essentially the only tax on your business activity.

1. What is VAT?

VAT (Value Added Tax) is Vanuatu's consumption tax charged on the supply of most goods and services. The standard rate is 15%. It is administered by the Department of Customs and Inland Revenue (DCIR). VAT is collected at each stage of the supply chain, and registered businesses can claim back VAT paid on business purchases (input tax) against VAT collected on sales (output tax). Vanuatu does not have an income tax or corporate tax, which makes VAT the government's primary source of tax revenue.

2. Who does it apply to?

This usually applies to:

Businesses with annual taxable turnover above VUV 4,000,000 (mandatory registration)
Businesses below the threshold that choose to register voluntarily
Importers of goods into Vanuatu
Suppliers of taxable goods and services
Hotels, restaurants, and tourism operators
Government bodies and organizations engaged in taxable activities

3. Why does it matter?

Understanding VAT 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 for VAT with the DCIR when your turnover exceeds VUV 4,000,000
Charge 15% VAT on all taxable goods and services you sell
Issue tax invoices for every taxable sale
Keep records of all VAT collected (output tax) and VAT paid on purchases (input tax)
Calculate your net VAT liability (output tax minus input tax)
File your VAT return with the DCIR by the due date
Pay the net VAT amount
If input tax exceeds output tax, apply for a refund

5. What forms are involved?

VAT Return - Monthly or quarterly return filed with the DCIR showing total sales, purchases, output tax, and input tax
VAT Return Booklet - Issued by the DCIR to registered businesses for tracking and filing returns
Tax Invoice - Required for every taxable sale (must include VAT registration number, date, description, and VAT amount)
Credit Note - Issued when adjusting a previous sale
VAT Registration Application - Form to register for VAT with the DCIR

6. What information do you need?

Before handling VAT, make sure you have:

VAT registration number from the DCIR
Business licence number
Complete sales records with VAT amounts
Purchase invoices showing VAT paid
Import documentation with VAT paid at customs
Bank statements for reconciliation
Records separating taxable, zero-rated, and exempt supplies

7. Important deadlines

Filing frequency: Monthly (businesses with annual taxable supplies under VUV 8,000,000 can apply for quarterly filing)
Payment deadline: VAT returns and payments are due by the 28th of the month following the taxable period
Year-end requirements: Reconcile all VAT input and output records, ensure all monthly returns are filed, settle any outstanding VAT liabilities

8. Common mistakes to avoid

Not registering for VAT when your turnover exceeds VUV 4,000,000
Charging VAT on exempt supplies (like financial services)
Not issuing proper tax invoices with all required details
Claiming input tax credits on private or exempt expenses
Filing returns late and incurring penalties
Confusing zero-rated supplies (exports) with exempt supplies
Not keeping records for the required retention period
Assuming no tax obligations because Vanuatu has no income tax (VAT still applies)

9. Simple example

You run a tour operator in Port Vila with monthly sales of VUV 500,000.

VAT on sales (output tax): VUV 500,000 x 15% = VUV 75,000
Total charged to customers: VUV 575,000

During the same month, you pay for fuel, supplies, and vehicle maintenance worth VUV 200,000 plus VAT.

VAT on purchases (input tax): VUV 200,000 x 15% = VUV 30,000

Your net VAT payable to DCIR:

Output tax: VUV 75,000
Less input tax: VUV 30,000
Net VAT due: VUV 45,000

You file your VAT return and pay VUV 45,000 by the 28th of the following month.

10. FAQ

Q: Do I need to register for VAT if my turnover is below VUV 4,000,000? A: Registration is not mandatory below the threshold, but you can register voluntarily. This lets you claim input tax credits on your purchases.

Q: Does Vanuatu have any other taxes besides VAT? A: Vanuatu has no income tax, corporate tax, or capital gains tax. VAT is the main tax on business activity. Employers also contribute to the VNPF (Vanuatu National Provident Fund).

Q: What supplies are zero-rated? A: Exports of goods and services from Vanuatu are generally zero-rated. You charge 0% VAT but can still claim input tax credits.

Q: What penalties apply for late filing? A: The DCIR charges penalties for late filing and late payment. Interest accrues on unpaid VAT from the due date.

Q: How do I file my VAT return? A: VAT returns can be filed using the VAT return booklet issued by the DCIR or through their office in Port Vila.

11. Final takeaway

VAT at 15% is the primary tax on business transactions in Vanuatu, so filing your monthly return by the 28th and keeping proper tax invoices is essential for compliance with the DCIR.

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What you need to know about Vanuatu Sales Tax (VAT): Understand the 15% rate, registration threshold, and monthly filing to keep your Vanuatu business VAT-compliant.

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