Start Up Requirements
What other agencies expect from you.
In the last edition, VIPA captured the general processes of starting up a business in Vanuatu. This week we look at other processes required to setting up a business in Vanuatu by other key line agencies working with VIPA and reforms that VIPA has undertaken to make your plight to invest in Vanuatu easier.
Business Requirements from Key agencies
The Vanuatu Financial Services Commission is the first stop for investors wishing to invest in Vanuatu. VFSC is responsible for the registration of companies who wish to operate in Vanuatu and they are also responsible for the regulation and supervision of non-banking financial services such as insurance companies, business investments and trust companies. A copy of your registration for a company name is required by VIPA as part of the documents supplied with your application.
Once your VIPA application is deemed successful and you have received an FIAC, the following steps can be achieved simultaneously. The Department of Immigration is responsible for issuing residency permits for investors intending to reside in the country. VIPA application forms require you to specifically list the number of shareholders in a business or company who intend to reside in Vanuatu for a period of 12 months or longer. Foreign investors will follow regular application processes for obtaining a residency permit with its regular costs.
Foreign investors wishing to employ foreign residents to work in their business or company must ensure that the positions covered are technical positions such as managerial posts or areas of expertise that cannot be sourced locally. VIPA aims to ensure growth in capacity building and training for local employees to ensure a strong and capable workforce therefore training and transferral of skills and knowledge by an expatriate counterpart is important. A training plan for Ni-Vanuatu employees is also a required document for the VIPA FIAC approval. Work permits for a foreign employee must be obtained from the Department of Labour.
Prospective investors must also apply for a business license after obtaining a FIAC and this will be done with the Department of Customs and Inland Revenue. The department is responsible for issuing business licenses to investors in accordance to the activity outlined in the VIPA application. Business licenses differ in relation to the threshold level therefore different fees are issued by the department. You must also register for VAT at the department for any business whose taxable turnover for the month and the last (or next) 11 months exceeds (or expects to exceed) 4 million vatu is required under the Act to pay VAT.
The final step is to register your employees with the Vanuatu National Provident Fund. It is bounded by law that any persons earning a monthly income of 3000vt or more must be paid must be registered by their employee. Registering an employee with the VNPF ensures retirement benefits for them through an 8% shareholding percentage for each eligible member. This ensures that the investment you bring works well to develop and improve the livelihood of local workers.
VIPA’s reforms; ensuring continued FDI inflow
VIPA kick-started 2016 by administering certain reforms which included the removal of the 5 million vatu outlay. A bank statement was a key document part of the application checklist for new FDI applications. The bank statement should confirm that a prospective foreign investor has capital, either in cash or assets, to determine their financial ability in starting up a business.
In the process of improving its Ease of Doing Business rankings VIPA removed the threshold level of an investment allowing more foreign investors to invest in Vanuatu. For small scale investments, the 5 million vatu outlay provided difficulties in setting up business however the removal now opens up to more investments in crucial sectors of the economy.