REGISTRATION FOR VAT

The Department of Customs and Inland Revenue summarizes VAT registration as follows:

VAT is an indirect consumption tax imposed at the rate of 12.5% on most goods and services supplied in Vanuatu by registered persons in the course of a taxable activity. It is also imposed on most goods imported into Vanuatu. Some supplies are specifically exempted from VAT, while others are zero-rated (i.e. treated as taxable supplies but at a rate of 0%).

A VAT registered person (whether they be an importer, manufacturer, wholesaler or retailer) is required to account for VAT on the value of each taxable supply they make, however they are entitled to recover this amount from the consumer as part of the cost of the goods or services supplied. In addition, the registered person is entitled to deduct any tax paid on supplies made to them by another registered person.

VAT is charged only on supplies made by registered persons. A person must be registered for VAT if they carry on a taxable activity and their total taxable supplies in any 12-month period exceeds, or is expected to exceed, VT4 million.

There are two ways in which registered persons can account for VAT - on the invoice (accruals) basis or the payments (cash) basis. Accounting on the invoice basis means that both output tax (tax on sales, or outputs) and input tax (tax on supplies received, or inputs) must be accounted for in the taxable period in which the supply is made (i.e. accordingly to the “time of supply” rules”). Under the payments basis, VAT is accounted for in the taxable period in which the person receives payment in respect of taxable supplies made, and makes payment in respect of taxable supplies received.

Registering for VAT is free and it usually takes up to 5 days processing your registration.