Is it true that Vanuatu has no income tax? What taxes do expats actually pay?

Yes, it's true - Vanuatu has zero personal income tax. But let me explain exactly what this means and the full tax picture for expats.

Taxes That DON'T Exist in Vanuatu:

This is real: If you earn $200,000 working remotely from Vanuatu, you pay $0 in Vanuatu taxes. If you sell cryptocurrency for $1 million profit, you pay $0. If you inherit $10 million, you pay $0.

Taxes That DO Exist in Vanuatu:

1. Value Added Tax (VAT): 12.5%

• Applied to most goods and services
• Included in displayed prices
• Similar to sales tax

2. Import Duties: Variable

• Significant on vehicles, alcohol, tobacco
• Contributes to higher cost of imported goods
• Part of why imported items are expensive

3. Business License Fees

• Required for operating businesses
• Relatively modest

Real Impact Comparison:

For someone earning $150,000/year:

The Catch: Your Home Country

Critical consideration: Your home country may still tax you.

US Citizens: The US taxes citizens on worldwide income regardless of where you live. Living in Vanuatu doesn't eliminate US tax obligations (though FEIE exclusion of ~$126,500 helps, and you can claim foreign housing deductions).

Other Countries: Many countries have exit taxes or continue taxing former residents for a period. Some require formal tax residency change.

To benefit from Vanuatu's zero tax:

1. You must establish genuine tax residency in Vanuatu
2. You must properly exit tax residency in your home country
3. Simply holding a Vanuatu passport while living elsewhere does NOT give you Vanuatu tax status

What Counts as Tax Residency?

Vanuatu doesn't have complex tax residency rules (since there's nothing to tax), but for your home country:

• You typically need to physically live in Vanuatu
• Have genuine ties there (home, bank accounts, etc.)
• Spend majority of time there
• Document your move properly

Who Benefits Most:

1. Remote workers with non-US employers
2. Entrepreneurs with location-independent businesses
3. Retirees with investment/pension income
4. Traders/investors (zero capital gains is huge)
5. High-net-worth individuals escaping wealth taxes

Who Needs to Be Careful:

1. US citizens - Still have US tax filing requirements
2. Recent emigrants from countries with exit taxes
3. Those with ongoing home country income - May still be taxed at source
4. People not actually living in Vanuatu - Can't claim benefits

The Bottom Line:

Vanuatu's zero income tax is legitimate and one of the world's best tax environments for individuals. But you must actually live there and properly manage your departure from your previous tax home. Consult a tax professional before making the move to ensure you structure everything correctly.

The tax savings alone can pay for citizenship by investment within 1-2 years for high earners.