There are very few places on Earth like Vanuatu. This idyllic, breath-taking island in the Pacific Ocean, 1,750 kilometers from Australia, remains one of Mundo´s favorite jurisdictions.

And why is that?

Besides all the marvelous things you may expect to find in a paradise-like island white-sanded beaches, crystal clear water, ideal climate all year long and so on so forth– Vanuatu has something that you won´t find very easily in other places: freedom.

The people of Vanuatu maintain a close relationship to nature, keeping values that are long lost in the western world. Transparent democracy, absence of tax, high levels of freedom, natural products and clean drinkable water are some of the reasons why Vanuatu is considered one of the happiest places on earth. 

For those who admire Ayn Rand, we have some news. There is a place on earth that can be closely compared to Rand´s Galt´s Gulch and that is, undoubtedly, Vanuatu. The ni-Vanuatu have been Anarcho Capitalists since the dawn of time. In tribal village customary law, the right to property and to the fruit of one´s labor is as old as time itself.

Each family farms its own plot of land, fishes in the ocean, plants cash crops and barters, sells or consumes them in a system of almost idyllic exchange. In such a system everyone works, no one goes hungry and the people do not believe in social welfare, centralized government, handouts, taxes or socialism. This is why attempts to tax ni- Vanuatu by various governments have dismally failed.

This is due to a fortunate combination of different factors: human rights protected by and entrenched in the Constitution (as well as all the ICCPR rights), a council of leaders to turn to in case of needing protection of fundamental human values. 

With a population of only 292,773 and an expat community of around 8000 people, one would think that Vanuatu is just like any other island nation with limited business opportunities. But this is not the case. Vanuatu is a sleeping giant in terms of its economic potential and the only thing that has stooped it from waking thus far is the size of its local airport and therefore limited transport opportunities.

This is all about to change very rapidly as the new international airport is meant to come on force this year in 2020. This means that there will be direct flights from China, Europe and other destinations since larger planes can be handled from now on.

The reasons why Vanuatu is one of the world’s best kept business secrets can fill a small book, however, we only name a few of them.

Mundo´s country rating is essentially a freedom index whereby our team of specialists rate a combination of freedoms which include freedom from violence and personal attacks, financial freedom from high taxes, business freedom from government interference and especially from socialism and communism. 

Political Stability: 10

Vanuatu scores 10 on Mundo’s list precisely because it virtually has no centralized government and therefore very little possibility of a totalitarian or communist regime in the future. The island nation has a system of customary constitutional protection by a body of chiefs. This keeps it organic, generally free from the big-brother-type rule.

The true story behind Vanuatu’s Citizenship program could fill a book, our Mundo expert and writer was actually there when it happened but briefly. A very interesting mathematical genius, Stefan Mandel, was famous for wicking out a way to win the Lotto 22 times by cracking the Lotto probabilities sequences and forming a syndicate to basically bet on every possibility.

He did this by meeting with one of Einstein’s former assistants and using the Faber Nachi Code to basically crack The Lotto in Australia and America. In fact, Australian government actually passed a subsequent special law forbidding him to do this and tried to throw him out of the country by illegally attacking him through the securities commission. But that is another story.

Stefan came to Vanuatu with his wife and started to help the Vanuatuan people with health, agricultural and other projects and noticed that there was something quite unique in Vanuatu that was lost in most other places: freedom. Stefan fell in love with Vanuatu for the same reasons that Mundo has and worked closely with Vanuatu’s people and chiefs.

Residency in Vanuatu is surprisingly easy to acquire. Any foreign individual who wishes to obtain residency only has to provide proof that he has access to means of income, from personal savings or pensions and place an approximate amount of aud $50,000 in a Vanuatu account. Although designed primarily for the retired and semi-retired, this program suits anyone and is not age restricted.

The expat who chooses Vanuatu as a first or second home will definitely not be disappointed. In addition, Efate, Vanuatu’s capital, boasts numerous international high-quality restaurants and over five international banks (and some smaller offshore banks).

Vanuatu also offers access to two international schools, and a small but intensely socially active population of international expats. Those with an appetite for outdoor activities and adventure won’t be disappointed in Vanuatu, having access to some of the best fishing, diving and sailing in the Asian Pacific.

In this section I will talk about my personal´s friend case. I´ll call my friend James, although that is not his real name, and for obvious reasons, some details of my story will be slightly changed in order to protect my friend’s privacy.

James is from Canada and from an early age he was working really hard at his father´s company. His father was a successful sportsman, who, upon retirement funded his own sport outfit brand. He was successful and managed to open a second store (a branch) in one of Canada’s major cities.

When James took up the business, he made some serious changes towards the growth of the brand and the products it offered. As a consequence, the business grew immensely which meant it was time to consider something very important: a global tax strategy.

I was living in Panama at the time and James was on vacation with his family. I remember we were sitting in a beach front restaurant in the tropical paradise Bocas del Toro and we discussed James’s options. That´s when I decided to introduce him to one of our citizenship experts at Mundo Offshore.

As we have pointed out before, Vanuatu is one of the freest countries in the world. This is partly because in Vanuatu there is no income tax and almost no taxes whatsoever, except for import duties, tax on rental income and stamp duty on some property transactions. If tax residency is properly established in Vanuatu, you will be free of foreign and local income tax as well.

This means, even if your foreign bank reports back to Vanuatu under the CRS, you will be legally free of taxation. Ergo you can have millions of dollars in your bank account and still be legally tax free. We recommend that you also take into consideration the legislation of the country your business is based on, or other countries you may reside in, as you may be subject to taxes there. 

Vanuatu recognizes two main types of entities, which are the international business company and the domestic business company. The first is basically a standard IBA modelled on the major offshore jurisdictions and only allows the corporations to trade internationally. It is extremely easy to establish these types of companies which do not require accounts or local directors.

The second allows the company to trade locally, invest in real estate and undertake business both domestically and internationally. It is in many ways more flexible but takes more effort to establish. However, without going into much detail, if properly established, it will contribute to the creation of relationships with local banks, thus facilitating the acquisition of loans and trading relationships.

Since Vanuatu does not recognize income tax, both entities do not pay any tax on profits (there is value added tax on certain internal transactions such as rental income, however). 

Given that Vanuatu has not fully implemented ITEAS or double taxation treaties with anyone (except Australia), it is a perfect jurisdiction to hold funds, provided that you have sufficient due diligence and source as Vanuatu is very careful to protect its banking industry from bad money. However, for that same reason, it is not a good jurisdiction to use for trading, since most Vanuatu banks are moving away from the “offshore banking” towards wealth management.

Banks in this territory seek and indeed require a personal relationship and a personal reason to invest such as, perhaps, real estate investment or family funds. The time taken to establish a personal relationship with your banker pays dividends, as Vanuatu banks have never frozen assets, had never experienced collapses or been subject to liquidity problems. In fact, I have not heard of any cases, where deposit holders have experienced problems, except for, perhaps, slow customer service. 

Vanuatu is in the process of establishing a trust regime which will make it on par with jurisdictions such as Nevis and the Cook Islands. The trust, legal, accounting and banking professions are highly qualified and able to administer complex trust structures.

However, Vanuatu should not be used, at this stage, as a trust jurisdiction, since the Vanuatu trust law is copied from English law, with all its pitfalls as the so-called “sham trusts” and “statute of frauds”. Therefore, Vanuatu companies should be held by foreign trusts, such as for example, the Caymans, Cooks or Belize.

There is, however, a new trust legislation which is about to be enacted which will be very similar to the Cook islands trust or Nevis Trust in terms of its asset protection qualities. When this is passed and it is in train at time of writing, Vanuatu will be on par with the best trust destinations on earth. 

Vanuatu promotes investment via VIPA (Vanuatu Investment Promotion Authority), which grants foreigners permits to invest in projects, as well as giving support and concessions. In addition, whilst the economy is small due to the scarce population, export oriented industries such as organic farming (cattle, fruit, coffee) , fishing , tourism and development can be extremely profitable due to lack of competition.

The labor force is young and mostly capable with wages starting at around $2 an hour. This makes running resorts and other small businesses quite profitable. The writer knows many small businessmen, from tour operators to restaurateurs, who, visit their businesses once a week to collect the pay check without putting too much effort or spending too much time. 

You may be wondering, what are the downsides of Vanuatu?

Well, there are currently no high-quality medical facilities on the island so all emergency operations require evacuation to nearby Australia. In addition, the aforementioned country is also trying very hard to stop Vanuatu as a zero tax destination, by undertaking various projects and using “experts” to convince Vanuatu´s leaders of the benefits from taxing the hell out of their own population.

Fortunately, these projects have not prospered so far, but Australia has put in place a plan to make Vanuatu dependent on aid money, so they can control them better, acting as Vanuatu’s “Big Brother”. But thankfully, “Custom” kicks in when such issues are debated by the leaders in a peaceful atmosphere, while they drink some fine Cava and patiently go over the proposals of the colonists. 

Mundo Offshore is often asked to identify the perfect plan B passport. Now, with the latest coronavirus scare and the global financial meltdown, Vanuatu, while it’s still available, scores a perfect ten out of ten on our list.

Vanuatu is not only extremely competitive on price and outbids almost all other CBI programs, but it also has very private banking (for citizens), no tax exchange (for citizens), no extradition (for citizens), and zero tax on worldwide and local income (for citizens).

Apart from the above, it has no real government control or surveillance (no government really), no armed police force (actually not much of a police force at all), excellent banking, accounting, financial, and wealth management services, and it’s considered to be the 4th happiest place on earth. 

The small archipelago of Vanuatu may not be the first country that comes to mind for banking and brokerage services but over the years it has made a name for itself. Aside from having

no Income tax - only consumption tax, so a territorial tax system that make it ZERO tax on worldwide income, and business-friendly policies, Vanuatu has become one of the premier destinations for financial services, brokerages. These are just a few of the reasons why Vanuatu should be at the top of your list and we will break down some of the advantages this small island nation has to offer. 

Vanuatu Covid-19 News

With the Covid-19 pandemic ongoing, Vanuatu is in a difficult situation as tourism is a significant source of revenue. As such, the government must decide between maintaining strict quarantine measures and reactivating the economy. To date, Vanuatu has a low Covid-19 infection rate, and only one person is reported to have died from the virus. Unfortunately, the government’s resources have been stretched to the limits, and only about 10% of the population has been fully vaccinated. While rates have improved, it will be some time before a majority of the population is able to be vaccinated. 

However, it is not all bad news as the country has made strides in diversifying its economy.