How to Register a Sole Proprietorship (Sole Trader) in Vanuatu

For independent contractors and freelancers, establishing a sole proprietorship in Vanuatu is a practical way to operate a business. The process is relatively simple and inexpensive, offering flexibility and straightforward management. Many small local businesses choose to register as sole traders because it’s often the most accessible route to formalize their work.

However, registration still involves meeting government requirements and maintaining compliance. Common challenges include obtaining the necessary licenses, keeping VAT obligations up to date, and renewing registration when required. On the positive side, sole proprietors benefit from autonomy, low operating costs, and the absence of personal income tax in Vanuatu.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Always verify details with official sources or a qualified professional before taking action.

What is a sole proprietorship in Vanuatu?

In Vanuatu, a sole proprietorship is known as a sole trader. Other terms used are self-employed worker or independent contractor. These all refer to a business run by one individual without forming a separate legal entity.

How does a sole proprietorship (sole trader) work in Vanuatu?

Sole trader vs. other business structures in Vanuatu

Before choosing this structure, it’s worth knowing that there are alternatives such as limited companies or partnerships. These provide different levels of liability protection and tax treatment. The table below compares the sole trader model with a common alternative to help you decide which suits your goals.

Step-by-step guide: How to register a sole proprietorship in Vanuatu

Step 1: Check your eligibility

You must be legally allowed to conduct business in Vanuatu. Citizens and residents can register directly with VFSC.

Foreign nationals must first apply to the Vanuatu Foreign Investment Promotion Agency (VFIPA) for a Foreign Investment Application Certificate, which costs VT 120,000 for the first year and VT 30,000 annually thereafter.

Step 2: Choose your business name

You can use your own name or register a trade name. You can search existing business names using the government's online search tool. To register a trade name, reserve it through VFSC for VT 5,000 before registration. Name reservation can be done online via the VFSC portal.

Step 3: Gather required documents

You will need:

• Copy of passport or Vanuatu national ID
• Proof of address
• Business name reservation certificate
• Completed registration form
• VFIPA certificate (if foreign national)
• Any additional industry-specific license (e.g., tourism or retail)

Step 4: Register with VFSC

Registration is completed online or in person through the VFSC Registry. You’ll need to create a user account, upload your documents, pay the registration fee, and receive a Business Name Registration Certificate. Processing typically takes a day once payment is made.

Step 5: Pay registration fees and contributions

Once your application is approved, pay the necessary fees: VT 10,000 for business name registration, VT 5,000 if you reserved a name, and (if applicable) VT 120,000 for the initial foreign investment certificate. Some industries may require separate municipal or operational licenses. Keep receipts of all payments, as they will be needed for renewals and tax purposes.

Step 6: Complete post-registration obligations

After registration, renew your business annually through VFSC. You must also obtain a Taxpayer Identification Number (TIN) from the Department of Customs and Inland Revenue. If you hire employees, register them under the Vanuatu National Provident Fund (VNPF) and remit monthly contributions. Maintain proper bookkeeping and issue compliant invoices as required under VAT: tax invoices must include your VAT registration number, client details, dates, descriptions, amounts, and VAT components, and all amounts must be stated in Vatu. Always update VFSC if your business name, address, or ownership changes.

Financial and tax obligations for sole proprietors in Vanuatu

You are responsible for:

• Income tax / corporate tax: There is no personal income tax or corporate income tax in Vanuatu. Sole traders pay no direct tax on profits. However, certain income sources, such as property rental or gaming, may be taxed under separate regimes.
• VAT: The standard VAT rate is 15 %. Registration is mandatory once your turnover exceeds VT 4 million per year. VAT returns are typically filed quarterly through the Department of Customs and Inland Revenue.
• Social security / provident fund contributions: Sole proprietors in Vanuatu are not required to contribute to the VNPF for themselves, as participation is voluntary for self-employed persons. However, if they hire staff, they must register as an employer with the VNPF and make contributions equal to 8% (4% paid by the employer and 4% deducted from the employee’s salary).
• Record-keeping: You must keep detailed records in English, French, or Bislama for at least 5 years after the relevant tax period. Records include invoices, receipts, and accounting ledgers.
• Invoicing: If VAT-registered, each invoice must show your VAT number, business and client details, transaction date, description, total amount, and VAT applied. Invoices must be sequentially numbered and stored safely.

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FAQs

What is the minimum capital required to start a sole trader in Vanuatu?
There is no minimum capital requirement. You can start with any amount suitable for your business operations.

Do sole traders need to register for VAT?
Yes, if your annual taxable turnover exceeds VT 4 million. Otherwise, registration is optional.

How much are the standard fees?

The business name registration fee is VT 10,000, while reserving a business name costs VT 5,000. For foreign nationals, obtaining a Foreign Investment Certificate through the Vanuatu Foreign Investment Promotion Agency costs VT 120,000 in the first year and VT 30,000 for each annual renewal. Once your annual turnover exceeds the threshold of VT 4 million, you must also register for VAT, which is applied at a standard rate of 15 % on taxable goods and services.

Can a sole trader hire employees?
Yes. Once you hire employees, you must register with the Vanuatu National Provident Fund (VNPF) and pay contributions (4% employer + 4% employee).

How long does registration take?
Business name registration usually takes less than one day after payment. If you are a foreign investor, obtaining VFIPA approval may add up to 15 working days.

Can foreign nationals register as sole traders in Vanuatu?
Yes, but they must obtain a Foreign Investment Application Certificate through VFIPA before registering with VFSC.

Do sole traders need a separate business bank account?
Not legally required, but highly recommended for clear accounting and audit purposes.

What happens if I stop working as a sole trader?
You should deregister your business with VFSC, file any outstanding VAT returns, and settle final employee contributions or taxes before ceasing operations.

Are there government incentives for new sole traders?
Vanuatu offers no formal tax holidays for sole traders, but the lack of personal and corporate income tax acts as a built-in incentive.

Can I use Deel as a sole trader to get paid by international clients?
Yes. Deel supports payments for sole traders and freelancers in Vanuatu, offering transparent exchange rates and multiple currency options.

Does Deel generate compliant invoices for Vanuatu sole traders?
Yes. Deel provides automatic, VAT-compliant invoices that meet local requirements.

Can Deel help me with taxes as a sole trader in Vanuatu?
Deel provides downloadable payment records and reports to simplify your VAT filing and accounting, though it doesn’t replace professional tax advice.

Does Deel offer contracts for freelancers and sole traders?
Yes. Deel includes locally compliant contract templates for freelancers and independent workers.

Can I access benefits through Deel as a sole trader?
Yes. Deel offers optional health insurance, retirement plans, and other benefits usually reserved for employees—helping you enjoy added financial security.