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Brief News 29 May 2017 Amended

Small Business Modelling (Business Planning) Workshop begins today

The Small Business Modelling workshop jointly coordinated by VCCI and Cann Business Enterprises of Australia begins its week long training today Monday 29 May 2017 for its May 2017 group of recipients.

The workshop provides training and advice on business planning, basic bookkeeping and simple marketing subjects making them simple for the grassroots business starters. It also focuses on what to do to start a business and how to sustain simple management of a newly established small business.

The workshop is facilitated by Allan and Shirley Cann who are directors of Cann Business Enterprises and have been working together with the VCCI for the last four years.

If you are interested in attending this workshop from Monday 29 May 2017 to Friday 2 June 2017 from 5pm to 7pm in the evening at VCCI, please come to register your name at VCCI Reception office, or call on 27543 or email [email protected]

 

NSA DIALOGUE PACER PLUS 31 MAY 2017

The Vanuatu Chamber of Commerce and Industry (VCCI) wish to remind all businesses on behalf of Pacific Islands Trade Secretariat a Circular, the Australia, New Zealand and 12 Forum Island Countries concluded negotiations on the Pacific Agreement on Closer Economic Relations Plus (PACER Plus) in Brisbane on 20 April 2017.  The Agreement will be signed in Nuku’alofa, Tonga on 14 June 2017. In advance of the signing, the Pacific Islands Forum Secretariat (PIFS) and the Office of the Chief Trade Adviser (OCTA), with the financial support of the Australian and New Zealand governments, will be convening the Seventh NSA Dialogue Workshop on PACER Plus at the Warwick Le Lagon Hotel in Port Vila, Vanuatu, on Wednesday 31 May 2017 from 8am to 6pm.

VCCI position is for Vanuatu firstly to undertake an independent analysis on the potential impact/ benefits of Pacer-Plus based on the market access offers, secondly to determine how many billions of vatu this trade agreement is to generate each year to the Vanuatu Government to ensure all products and services developed and produced locally are in compliance with the requirements to be sold domestically and in the markets of Australia and New Zealand, and thirdly allow national Parliament’s the ability to debate PACER-Plus membership before making any commitments.

If you are interested to attend this workshop to represent the interests and needs of the Vanuatu Chamber of Commerce and Industry and all local businesses, please confirm your attendance to VCCI Reception by phone 27543 or by email at [email protected]

 

Invitation to all businesses to the Electronic Pacific Procurement System for Disasters by Pacific Local Supplier Engagement Initiative

The Introduction and testing of e-Pacure (electronic Pacific procurement system for disasters) by Pacific Local Supplier Engagement Initiative will be conducted from 9am to 12pm on Thursday June 1st 2017 at the Melanesian Hotel.

You are cordially invited to an information awareness session, and to participate in the testing trial of the new web-based disaster procurement program that Pacific Local Suppliers Engagement Initiative, under the Australian Red Cross Society with Vanuatu Red Cross Society, are developing. You are invited to join and come along with the members of the Logistics Cluster Procurement Focus Group (Red Cross, the National Disaster Management Office, World Vision, Oxfam, CARE) as well as 15 major Vanuatu businesses who are suppliers of vital disaster relief goods, namely Tools and Hardware; Building Supplies; and Plumbing products.

This event will take place at 9am to 12pm on Thursday June 1st at the Melanesian Hotel. A buffet lunch will be provided.

Please Click the Links to view and download:-

We would be grateful if you could confirm your attendance by close of business on Tuesday 30th May 2017 by return email to below address, to assist in planning of catering arrangements

Yours sincerely,

Madam Jacqueline Deroin de Gaillande                 Luke Johnston

Chief Executive Officer                                        Adviser

Vanuatu Red Cross Society                                Mobile: +678 7744917  

                                                                                     Email: [email protected]

 

Export Capability Building Workshop 21 July 2017

Pacific Trade and Invest (New Zealand) in conjunction the Vanuatu Chamber of Commerce and Industry (VCCI), will be conducting a free one day workshop to assist business owners In Vanuatu who are thinking of entering the export market particularly to New Zealand.

The workshop is aimed at businesses that are currently selling products in Vanuatu and that see the export market as a growth opportunity. The objective is to increase business owner’s knowledge and build their capability to be successful in the export market.

This workshop is the first step in a 6 step Pacific Path to Market programme that culminates in several participating companies participating in a Trade Mission to NZ in March 2018 to showcase their products, to see the NZ market themselves and to meet potential buyers.

What:                         Export capability building workshop

When:                       Friday 21 July 2017 from 8.30am to 4.30pm

Where:                       Melanesian Hotel, Port Vila

How:                         Register you name with VCCI by phone 27543 or email

[email protected]

 

PIPSO sign MOU with HACCP Australia (Fiji) Ltd

The Vanuatu Chamber of Commerce and Industry have been advised that the Pacific Islands Private Sector Organisation (PIPSO) met with HACCP Australia (Fiji) Ltd at the PIPSO Office in Suva where they jointly signed a Memorandum of Understanding (MOU) on 10 May 2017 in Suva, Fiji.

Under the MOU, both PIPSO and HACCP Australia (Fiji) Ltd will work together to assist companies in the Pacific that wish to attain HACCP certification for their products that are to be sold domestically and internationally.

HACCP stands for Hazard Analysis Critical Control Point is an internationally recognized system for reducing the risk of safety hazards in food. A HACCP System requires that potential hazards are identified and controlled at specific points in the process. This includes biological, chemical or physical hazards. Any company involved in the manufacturing, processing or handling of food products can use HACCP to minimize or eliminate food safety hazards in their product.

Pacific based companies and organisations will benefit from the joint efforts of PIPSO and HACCP Australia to actively assist them in meeting and maintaining HACCP based Food Safety Management Programme objectives in a cost effective and consultative manner. This will be done through the provision of expert technical resources, guiding tools and resources as well as awareness to local businesses of the benefits and methodology of HACCP certification.

The collaboration is based on a genuine spirit of partnership in which both organisations will enhance and complement the efforts of the other whilst strengthening their own areas of expertise and skill, whilst utilizing local resources.

Positive impact on Pacific businesses will be further magnified by both PIPSO’s network and support combined with HACCP Australia (Fiji) international expertise and networks. This partnership is essential to assist businesses to meet business opportunities under various trade agreements especially with the recently endorsed Pacer Plus.

While trade agreements open markets, complying with market entry requirements like HACCP certification is crucial. This partnership will further explore how HACCP assessment and certification costs can be reduced by working with clusters of businesses and the engagement of local experts who have been thoroughly trained in the area of Food Safety Standards.

The MOU outlines several areas of collaboration and support between PIPSO and HACCP Australia as well as core activities that will be jointly undertaken.

The MOU was signed by PIPSO Chair Mr. Howard Politini and HACCP Australia (Fiji) Ltd Director, Mr. Martin Stone. 

VCCI AGM 2017 & OTHER NEWS

CHAMBER OF COMMERCE AGM

The Vanuatu Chamber of Commerce and Industry (VCCI) held its Annual General Meeting on Thursday night at the Chamber’s offices.

The annual report, which sets out the accomplishments of the Chamber in 2016, was distributed and can be accessed on the website of the Chamber.

Chamber President Tom Bayer noted noted that all businesses which hold a current Business License are automatically a member of the Chamber.

The annual accounts for 2016 were still with the auditors, and will be circulated to the members when received. The Council was authorized to consider them and if acceptable, to approve and sign them.

There were several Council seats which were to be filled for a two year tem, and the elected Councilors are: Tourism: Bryan Death and Simon Troman; Finance: Tom Bayer and Michael Firmeri; Manufacturing: Cornelia Wyllie; Small Commerce: Jim Batty and Joseph Brun; Shipping: Lawerence Cameron. There was no nomination for the Council seat representing Public Utilities, so it remains vacant.

The seats representing Agriculture and Women’s Groups, currently filled by 1st Vice President David Russet, and Rona Garae will be decided at the first meeting of the new Council.

The President advised the meeting that 2017 is a difficult year for the VCCi due to the government reducing budgeted allocation for the VCCI by Vt5,000,000 (a 20 per scent reduction), which means that some services may have to be suspended or cancelled.

Mr. Bayer thanked the outgoing Council and General Manager Astrid Boulekone for their outstanding contribution in 2016.

URBAN WATER REFORM CONSULTATION MEETING 22 MAY 2017

The Vanuatu Chamber of Commerce and Industry (VCCI) advise all businesses that the newly established Department of Water Resources (DoWR) within the Ministry of Lands is exploring the options to continue with the reform of the institutional arrangements for the delivery of urban water supply in Vanuatu.   In support of this process, the Department of Water Resources (DoWR) would like to invite your kind participation, all local businesses, in a consultation meeting at The Melanesian at 2.00 pm on Monday the 22 of May, 2017 chaired by the Hon. Minister for Lands and Natural Resources to solicit your feedback on potential reform paths for the urban water sector in Vanuatu. The Vanuatu Water Policy – Institutional Urban Options document which will be discussed at the meeting is available from VCCI Reception by email at [email protected]

For more information, please contact Erickson Sammy, Director, Department of Water Resources, Private Mail Bag 9001, George Pompidou, Port Vila, Vanuatu, (Work) +678 33435/ +678 5333820 , (Mob) +678 7791593, (VoIP) 3978, email [email protected], https://mol.gov.vu/index.php/en/water

NSA DIALOGUE PACER PLUS 31 MAY 2017

The Vanuatu Chamber of Commerce and Industry (VCCI) advise all businesses on behalf of Pacific Islands Trade Secretariat a Circular, the Australia, New Zealand and 12 Forum Island Countries concluded negotiations on the Pacific Agreement on Closer Economic Relations Plus (PACER Plus) in Brisbane on 20 April 2017.  The Agreement will be signed in Nuku’alofa, Tonga on 14 June 2017. In advance of the signing, the Pacific Islands Forum Secretariat (PIFS) and the Office of the Chief Trade Adviser (OCTA), with the financial support of the Australian and New Zealand governments, will be convening the Seventh NSA Dialogue Workshop on PACER Plus at the Warwick Le Lagon Hotel in Port Vila, Vanuatu, on Wednesday 31 May 2017. If you are interested to attend this workshop to represent the interests and needs of the Vanuatu Chamber of Commerce and Industry and all local businesses, please confirm your attendance to VCCI Reception by phone 27543 or by email at [email protected]

 

PACER PLUS PETITION

VCCI has been advised that PANG (Pacific Network on Globalisation) has released a new report on PACER-Plus (Pacific Agreement on Close Economic Relations Plus between Vanuatu and Pacific Islands States and Australia and New Zealand) titled “A Peoples’ Guide to PACER-Plus: Understanding what it is and what it means for the people of the Pacific Islands”.

The report covers the history of the negotiations and breaks down what the impacts will be in the Pacific in easily understandable language.

The report can be found on http://www.pang.org.fj/media/PANG%20Trade%20Documents/For%20Upload/17

Ahead of the Ministerial in June 2017 to sign PACER-Plus, they have launched a petition calling on Ministers to withdraw from the agreement. In particular the petition calls on Ministers to:

  • Not sign any PACER-Plus agreement as it currently stands;
  • Immediately release the texts of PACER-Plus, including the market access offers;
  • Undertake independent analysis on the potential impact/ benefits of Pacer-Plus based on the market access offers.
  • Allow national Parliament’s the ability to debate PACER-Plus membership before making any commitments.

The petition can be found on https://www.change.org/p/calling-on-our-pacific-leaders-to-withdraw-from-pacer-plus and they are aiming to present it to Ministers in Tonga.

You can sign and promote it as possible before Friday 9th June 2017.

Income Tax Position by Thomas Bayer – Representative of Private Sector

As the private sector representative on the Revenue Review Committee I wish to indicate my support of the VCCI proposals included in their submission to the Committee in preference to the recommendations of the Committee as a whole.

I acknowledge the need for modernisation of tax laws and administration in Vanuatu to help increase public revenues to support sustainable economic growth. However, at the same time, tax system adjustments should ensure overall efficiency and minimize market disruptions. Therefore it is important to have an open discussion among stakeholder groups about alternative means of reaching the goals and objectives set by the government.

There are two critical issues that needs to be highlighted with the current process of Review undertaken by the Government. The Review committee did not seek broad input during review process as consultations were presentation of decisions already taken by the Committee. The review process also lacked the involvement of independent economists to evaluate the implications of introducing income and corporate tax on the economy. Impact study should have been conducted and evaluated by at-least three independent economists to ensure transparency and well-informed decision making process.

I agree with the VCCI/VFCA and support the Guiding Principles suggested in the Consultation Paper put forward by the Revenue Review Team in September 2016. However, I also take the view that the proposed tax reforms are in conflict with most of these principles.

Key Issues – It is expected that the shortfall in potential revenue through proposed tax reform will be greater than that modelled by Revenue Review due to size of shadow economy (30-50% GDP of Vanuatu) leading to low compliance. In addition, introducing complex taxes will incur significant tax administration costs that are currently underestimated in the model by Revenue Review. Corporate income tax collection process would be inefficient as a large share of businesses would contribute insignificantly to corporate income tax collections while cost of administration would be borne by all tax-payers. The principle of equity and fairness is not accomplished by the proposed reforms as 97% of personal income tax burden would be borne by 9% of the working population. Furthermore, Foreign Direct Investment is expected to be severely hit as a result of the introduction of taxes leading to lower economic growth and employment rate.

Abolishing fees and charges will only benefit those who will no longer need to pay them and not the public at large. There will not be any material gain to the businesses as the introduction of income and corporate tax will increase cost structure of businesses. Reducing import duties will have little benefit on prices as businesses will increase prices to compensate for income tax and majority of reduced import duties will be retained by large retailers and importers. Income and corporate taxes are claimed to not be fair and effective because of their progressive tax rate structure, and the tax burden will be carried by only a small percentage of the population. Household data shows that majority of households spend all of their income on consumption, hence VAT is already progressive and easier to administer without causing any economic disruption and VAT ensures that everyone who purchases goods or services subject to VAT, contributes to government revenue.
Recommendations – In view of the above issues, I support the VCCI alternative proposal to augment government revenues. Increasing VAT rate to 17.5% and reducing 50% of the proposed offsets along with VAT exemptions on first necessity items would ensure comparable revenue inflow and progressivity. These measures supplemented by land value tax, reduction of import duties and sale of unproductive government assets will produce net proposed surplus similar to the model proposed by Revenue Review. In addition, the expenditure changes suggested by Revenue Review must be reconsidered.

Hidden Agenda –Revenue Review claims that the tax reform is focused around improvements to the financial system of Vanuatu and for funding public sector services. However, in reality, I agree with the VCCI that the reform is primarily driven by the hidden agenda of the Government and OECD countries. As Vanuatu is not collecting information regarding Tax Identification Number, transactions and balances of Vanuatu citizens, third parties are interested in pushing these reforms to acquire this information. Such a reform would be costly to implement, and not beneficial to Vanuatu. The benefits would be obtained by other countries through Common Reporting Standard system (CRS) without cost.

The future of Vanuatu’s Offshore Financial Centre is now clouded. With the introduction of personal and corporate taxes, Vanuatu would lose its competitive position as a low tax jurisdiction and offshore financial companies would completely disappear.

We hope that the arguments presented against the proposed tax reforms will be closely examined to facilitate an open public discussion of major concerns of stakeholder groups which are not being fairly represented currently.

This is the view taken by the Private Sector Representative on the Vanuatu Revenue Review Committee in relation to the introduction of an income tax, Thomas Bayer, President of Vanuatu Chamber of Commerce and Industry (VCCI). He supports the recommendations put forward by the VCCI in their formal submission and does not support the recommendations of the Vanuatu Revenue Review Committee in respect to the proposed income tax. VCCI has not yet received a reply from the Vanuatu Revenue Review Committee in response to its VCCI public proposal.

VCCI Brief News 15 May

 PACER PLUS & OTHER TRADE AGREEMENTS MEETING TUESDAY 16 MAY 2017

 

VCCI advise local businesses that the Meeting on PACER-Plus Trade Agreement, MSG TA3, China Trade Agreement with Pacific Island countries including Vanuatu, and Vanuatu New Caledonia Trade Agreement will be held on Tuesday 16 May 2017 at 3pm at VCCI.

For more information on the meeting, please contact VCCI at 27543 or by email at [email protected]

 

PRIVACY WORKSHOP 16 MAY 2017

 

Privacy workshop will discuss online privacy-related issues at the local and national level, bringing together key stakeholders for a solution-driven discussion on the following issues:  increase end-user awareness and making privacy tools available to citizens, especially to digital natives in Vanuatu and the Pacific, develop appropriate frameworks for online privacy in small island economies, and provide guidance on privacy issues around emerging technologies.

 

The initiative is motivated by recent developments in Asia-Pacific as online privacy is a growing concern. According to the 2016 annual survey of the Internet Society on policy issues in the Asia-Pacific, cybersecurity and privacy replace e-commerce and cloud computing in the top five most monitored policy areas. The survey also reveals that 59% of the respondents believe that their privacy is not sufficiently protected when they use the Internet, and 52% believe that Internet security-related policies do not align with their right to privacy.

 

In recent years, Small Island developing states (SIDS) in the Pacific such as Vanuatu has witnessed an uptick in Internet use due to increased international connectivity, more government enacting universal access provisions and more providers for Internet services. More Internet users mean that more people need to be aware and educated of the importance of Online Privacy. For countries like Vanuatu, a major holdback to the country’s pursuance of its digital financial inclusion agenda is due to the issue of online privacy and personal data protection.

 

For its significance to businesses, it will enable them to share their perspective and concerns and ensure that these are taken into consideration as Vanuatu develops policies and guidelines on online privacy.

It will also help them understand better emerging privacy issues that may have implications on the way they conduct business, especially online. It will also provide them with tools, advice they can use to prevent privacy risks like online fraud, data breaches etc

 

Co-hosted by the Office of the Government Chief Information Officer (OGCIO) and the Telecommunications and Radio-communications Regulator (TRR) of Vanuatu, the one-day workshop will be a combination of panel discussions and roundtable sessions.

 

Date: 16 May 2017

Time: 9.30am to 5pm

Venue: National Convention Center

The Privacy Workshop is opened to local businesses.

VCCI ANNUAL GENERAL MEETING POSTPONED TO 18 MAY 2017

 

The Vanuatu Chamber of Commerce and Industry (VCCI) advise that the Annual General Meeting will be held on Thursday 18 May at 5pm at VCCI Conference Room.

The Agenda will include a welcome by President, approval of Minutes of AGM held on 26 May 2016, matters arising from the Minutes, Annual Report Year 2016, Financial Statements for the Year Ended 31/12/2016, Auditors Report, election of Council Members, and major issues affecting Businesses: update on Income Tax. Light refreshments will be served after the meeting.

All Businesses who have a Business License, are automatically members of VCCI and are invited to attend.

The Councillor positions for the sectors of Tourism, Finance, Small Commerce, Shipping and Public Utilities are vacant. If your business operates in one of these economic sectors and you are interested in becoming a VCCI Councillor, please contact now the VCCI Reception for more information by phone on 27543 or by email at [email protected]

 

Export Capability Building Workshop 21 July 2017

 

Pacific Trade and Invest (New Zealand) in conjunction the Vanuatu Chamber of Commerce and Industry (VCCI), will be conducting a free one day workshop to assist business owners In Vanuatu who are thinking of entering the export market particularly to New Zealand.

The workshop is aimed at businesses that are currently selling products in Vanuatu and that see the export market as a growth opportunity. The objective is to increase business owner’s knowledge and build their capability to be successful in the export market.

This workshop is the first step in a 6 step Pacific Path to Market programme that culminates in several participating companies participating in a Trade Mission to NZ in March 2018 to showcase their products, to see the NZ market themselves and to meet potential buyers.

The topics covered during the workshop will be:

  • The attributes of a successful export company.
  • The attributes of a successful export product.
  • What you should understand about your customers.
  • The power of your packaging and how to use it to your advantage.
  • The NZ market – size, segments and consumers.
  • Market access regulations and your supply chain.
  • Setting prices for your products.
  • Tips on selling your products.
  • How to select a distributor and manage the relationship.
  • Identifying the capability gaps that need to be addressed.

What:                         Export capability building workshop

When:                       Friday 21 July 2017 from 8.30am to 4.30pm

Where:                     Melanesian Hotel, Port Vila

How:                         Register you interest with VCCI – phone 27543 or email

[email protected]

 

 Bali Process Government & Business Forum 2017

 

If you, a local business man or business woman, are interested in attending the Bali Process Government and Business Forum 2017 to work with government Ministers from the 45 member countries of the Bali Process and UN member organisations to eradicate modern slavery, such as, human trafficking and forced labour, launched in Perth, Australia, from 24 to 25 August 2017, please advise VCCI Reception on 27543 or contact by email at [email protected]

 

PRIVATE SECTOR PART OF VANUATU DELEGATION COP23

 

The National Advisory Board on Climate Change and Disaster Risk Reduction (NAB) under the Ministry of Climate Change of Vanuatu, through its United Nations Framework Convention on Climate Change (UNFCCC) Taskforce, is expanding its UNFCCC Engagement program in the lead up to Conference of the Parties COP23 to be held from 6 to 17 November 2017, in Bonn, Germany.

This year Vanuatu is looking to build a national delegation towards COP23 that will harness the scope of expertise and experience available across all government sectors, national academia, and private sector and civil society partners. The Taskforce is specifically requesting private sector representatives with expertise in climate finance and mitigation. Funding is provided by funding donors in the Climate Change sector.

If you, a local business man or business woman, are interested in Climate Finance and Mitigation, have an expertise in these two areas, and are willing to be part of the Vanuatu Delegation to attend the 23rd United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP23) from 6 to 17 November 2017, in Bonn, Germany, please call now VCCI Reception on 27543 or contact by email at [email protected] to register your name and contact details.

PACER Plus Update News & Brief News

PACER PLUS TRADE AGREEMENT AND OTHER AGREEMENTS MEETING ON 9 MAY 2017

As you may have seen from the recent media, the text of PACER Plus has been agreed to by Australia, New Zealand and 12 Forum Island Countries FICs including Vanuatu (PNG has withdrawn and Fiji appears to have been un-accommodated in attending).

The full details of the deal are, unsurprisingly, still a secret. The agenda of the Ministerial did however have an item for a release of the text and a “communications strategy” however none of that has been made public.

Whilst there is much fanfare about the conclusion of negotiations, it is unclear just what materially has changed from the other ‘conclusion’ of the texts at last year’s Ministerial in August – most likely FICs market access offers have been finalised. Fiji’s absence indicates that there was no shifting by Australia and NZ in the text on the infant industry protects and the ‘Most-Favoured-Nation’ clause.

The signing ceremony is scheduled for 16 June 2017 in Tonga which still provide time to raise your concerns with Vanuatu government and call on them not to sign.

VCCI demand it is Vanuatu rights to have an international trade lawyer funded by Vanuatu Government reviewing the PACER Plus until Vanuatu private sector and civil society are satisfied that PACER Plus is in Vanuatu’s interest and does not constraint its potential for development.

Further the External Trade Department of Vanuatu is to submit to the Vanuatu Private Sector and civil society the projected total revenues in billions of vatu that Vanuatu will be able to generate through the PACER Plus Trade Agreement so that Vanuatu private sector and civil society are satisfied that PACER Plus is in Vanuatu’s interest and does not constraint its potential for development.

VCCI advise local businesses that the Meeting on PACER-Plus Trade Agreement, MSG TA3, China Trade Agreement with Pacific Island countries including Vanuatu, and Vanuatu New Caledonia Trade Agreement will be held on Tuesday 9 May 2017.

Any manufacturers, exporters, any businesses of any economic industry sectors including services, and all businesses interested to hear more about these trade agreements PACER-Plus Trade Agreement, MSG TA3, China Trade Agreement with Pacific Island countries including Vanuatu, and Vanuatu New Caledonia Trade Agreement and ask their questions, are welcome to come to VCCI to attend this meeting on Tuesday 9 May 2017 at 3pm.

You can confirm your attendance and get more information on PACER Plus Trade Agreement by contacting VCCI at 27543 or by email [email protected]

 

 VIPA CONSULTATION IN MAY 2017 

The Vanuatu Investment Promotion Authority (VIPA) Consultation meeting on the review of both the VIPA Act [CAP 248] and the National Investment Bill in order to make amendments to CAP 248 initially scheduled for 28 April 2017, will be postponed to a later date in May 2017.

VCCI apologise for the inconvenience this change has caused.

VIPA will hold meetings with the Ministry of Tourism, Trade, Commerce, Industry and Ni Vanuatu Business prior to meeting with the Private Sector.

VCCI will advise all businesses accordingly on the date, time and venue of the upcoming VIPA Consultation Meeting with the Private Sector.

 

VCCI ANNUAL GENERAL MEETING POSTPONED TO 18 MAY 2017 

The Vanuatu Chamber of Commerce and Industry (VCCI) apologise to advise that due to the delay in receiving the audited accounts, the Annual General Meeting will be postponed to Thursday 18 May at 5pm at VCCI Conference Room.

The Agenda will include a welcome by President, approval of Minutes of AGM held on 26 May 2016, matters arising from the Minutes, Annual Report Year 2016, Financial Statements for the Year Ended 31/12/2016, Auditors Report, election of Council Members, and major issues affecting Businesses: update on Income Tax. Light refreshments will be served after the meeting.

All Businesses who have a Business License, are automatically members of VCCI and are invited to attend.

The Councillor positions for the sectors of Tourism, Finance, Small Commerce, Shipping and Public Utilities are vacant. If your business operates in one of these economic sectors and you are interested in becoming a VCCI Councillor, please contact now the VCCI Reception for more information by phone on 27543 or by email at [email protected]

 

REGISTER YOUR BUSINESS WITH PIPSO

If you operate a business in Agribusiness, or you are a Coconut business or supplier, the Pacific Islands Private Sector Organisation (PIPSO) based in Suva developed its new website last year and one of the goals of this website is to increase the business profiles of businesses from the Pacific, provide information to investors and match making with regional and international businesses.

Your agribusiness profile will feature the services and products that your company provides as well as links to your own website or social media. This is a great marketing opportunity for your agribusiness

This brief business profile will be visible to all visitors to PIPSO’s websites. This is a free publicity and advertisement of your business to the world as well as to donors and developments partners

If you are interested in registering your business in the agribusiness portal, please do so by just going to PIPSO website by clicking on this link:

http://www.pipso.org.fj/for-pacific-businesses/agribusinesses/register-agribusiness/

If you wish to be listed in the Directory of Coconut Businesses and Suppliers of PIPSO, you can contact PIPSO by email directly on the PIPSO website webpage:

http://www.pipso.org.fj/for-pacific-businesses/coconut-business-suppliers/

This Directory aims to contribute to strengthening coconut industry in the Pacific region by providing a ‘one stop shop’ searchable database for all organisations involved in coconut value chains. This directory is searchable by product, country and key words and will assist you identify producers, traders, processors, exporters and farmer organisations who are involved in the production, development and trade of coconut products.

The Directory was developed through the Coconut Industry Development for the Pacific (CIDP) programme, a joint initiative of the Pacific Community, the ACP Secretariat, and the European Union (EU), and is supported by PIPSO.

Further to that, PIPSO will be introducing an innovation financing facility to assist businesses in the agribusiness sector this year. It would be considering companies that are registered in the agribusiness portal to submit application for this facility.

You can contact Kristyn Lobendahn by email at [email protected] at PIPSO, if you have any queries on how to register your agribusiness and coconut business online.

The Vanuatu Chamber of Commerce and Industry is the National Private Sector Organisation (NPSO) in Vanuatu and is a member of PIPSO.

2017 Road Show Guangdong Le Lagon 27 April 2017 & other meetings

2017 Road Show of Guangdong Premium Products at Le Lagon on 27 April 2017

The Vanuatu Chamber of Commerce and Industry advise all businesses that the China Council for the Promotion of International Trade Guangdong Committee (CCPIT Guangdong) Trade delegation currently visiting Vanuatu in April 2017, will organize a Road Show in Port Vila. They would like to invite all businesses in Vanuatu to attend the “2017 Road Show of Guangdong Premium Products in Pacific Islands – Port Vila” to be held on Thursday 27 April 2017 from 10am to 2pm at Warwick Le Lagon, Port Vila.

The enterprises of the delegation are mainly from the sectors of building materials, construction, tourism, energy conservation, homeware, furniture, real estate, cross board e-commerce, footwear, beverage, etc.

During the road show activity, they will exhibit their products and would like to meet with the Vanuatu enterprises to look for mutual business opportunities.

More information on the programme, exhibits and enterprises present in the Road Show is available from the VCCI office.

This event has been made possible through the support of the Vanuatu Chinese Association of Undertakings Committee (Inc.) based in Port Vila.

If you are interested to attend this event, please confirm your attendance to VCCI Reception by phone on 27543 or by email at [email protected]

 

VIPA CONSULTATION 28 APRIL 2017

The Vanuatu Chamber of Commerce and Industry advise all businesses that the Vanuatu Investment Promotion Authority (VIPA) will conduct a consultation meeting on the review of both the VIPA Act [CAP 248] and the National Investment Bill (see attached documents) done by the International Finance Corporation (IFC), World Bank Group. As you are fully aware, both legislations have been having issues, therefore the Investment Bill did not make it to parliament.

The VIPA management would like to undertake further reviews on both legislations in response to some demands and therefore request your assistance in this first consultation process.

The meeting will be held on Friday 28 April 2017 at 9am at the VNPF Conference Room to get your views on the documents.

As background information, the main reason the National Investment Bill did not reach  Parliament – there was not enough consultation undertaken by IFC, the Bill content is not reflecting what VIPA is supposed to be doing. On this reason, past Minister(s) have rejected the Bill. Recent calls from the VIPA Board was to do a review of the VIPA Act [CAP 248] and leaving the Investment Bill aside.

In the discussion, we will have a look at both documents, then decide what to do in terms of making amendments to CAP 248. For more information, please contact VCCI by phone on 27543 or by email at [email protected]

 

Applications open for 2017 Fisheries/Agriculture Training in China

The Vanuatu Chamber of Commerce and Industry is looking for a business to be the VCCI nominee to participate in a three-week fisheries and agriculture training program in China, 28 June to 12 July 2017, which is a partnership between the Chinese Ministry of Agriculture and Pacific Islands Trade & Invest (China).

The program is designed to strengthen understanding of the latest research, technical innovation and practical applications to add value to Pacific Islands fisheries and agriculture.  Amongst the areas to be covered for fisheries will be tuna processing, cold chain logistics, aquaculture technology, quality, safety and traceability systems. In agriculture, the course will examine vegetable production and processing, mushroom development and tropical pest control. The course is hosted by the Chinese Ministry of Agriculture, which covers all costs of approved participants.

Last year, twelve fisheries and agriculture businesses and government experts participated in the annual training course, drawn from Vanuatu, Tonga, Samoa, Fiji and the Cook Islands.

You will note that the business participant is to have 1 to 2 investment projects and 1 to 2 trade products for export in agriculture and or fisheries.

If you are interested, please contact the VCCI Reception by phone on 27543 or by email at [email protected] to fill in the application form to be submitted before Friday 5 May 2017.

 

VCCI ANNUAL GENERAL MEETING ON 4 MAY 2017

VCCI advise local businesses that the Annual General Meeting of the Port Vila Chamber of Commerce and Industry will be held on Thursday 4 May 2017 at 5pm in the Conference Room of the Chamber of Commerce. The Agenda will include a welcome by President, approval of Minutes of AGM held on 26 May 2016, matters arising from the Minutes, Annual Report Year 2016, Financial Statements for the Year Ended 31/12/2016, Auditors Report, election of Council Members, and major issues affecting Businesses: update on Income Tax. Light refreshments will be served after the meeting. Business License Holders are automatically members of VCCI and are invited to attend.

The Councillor positions for the sectors of Tourism, Finance, Small Commerce, Shipping and Public Utilities are vacant. If your business operates in one of these economic sectors and you are interested in becoming a VCCI Councillor, please contact now the VCCI Reception for more information by phone on 27543 or by email at [email protected]

 

PACER PLUS TRADE AGREEMENT AND OTHER AGREEMENTS MEETING POSPONED TO 9 MAY 2017 AND OTHER MEETINGS

VCCI advise local businesses that the Meeting on PACER-Plus Trade Agreement, MSG TA3, China Trade Agreement with Pacific Island countries including Vanuatu, and Vanuatu New Caledonia Trade Agreement, is postponed to Tuesday 9 May 2017. Any manufacturers, exporters, any businesses of any economic industry sectors including services, and all businesses interested to hear more about these trade agreements PACER-Plus Trade Agreement, MSG TA3, China Trade Agreement with Pacific Island countries including Vanuatu, and Vanuatu New Caledonia Trade Agreement and ask their questions, are welcome to come to VCCI to attend this meeting on Tuesday 9 May 2017 at 3pm. You can confirm your attendance and get more information on PACER-Plus Trade Agreement by contacting VCCI at 27543 or by email [email protected]

PACER PLUS TRADE AGREEMENT AND OTHER AGREEMENTS MEETING POSPONED TO 9 MAY 2017 AND OTHER MEETINGS

VCCI wishes to advise local businesses that the Meeting on PACER-Plus Trade Agreement, MSG TA3, China Trade Agreement with Pacific Island countries including Vanuatu, and Vanuatu New Caledonia Trade Agreement, is postponed to Tuesday 9 May 2017. Any manufacturers, exporters, any businesses of any economic industry sectors including services, and all businesses interested to hear more about these trade agreements PACER-Plus Trade Agreement, MSG TA3, China Trade Agreement with Pacific Island countries including Vanuatu, and Vanuatu New Caledonia Trade Agreement and ask their questions, are welcome to come to VCCI to attend this meeting on Tuesday 9 May 2017 at 3pm. You can confirm your attendance and get more information on PACER-Plus Trade Agreement by contacting VCCI at 27543 or by email [email protected]

 

VIPA CONSULTATION 28 APRIL 2017

Vanuatu Chamber of Commerce and Industry wishes to advise all businesses that the Vanuatu Investment Promotion Authority (VIPA) will conduct a consultation meeting on the review of both the VIPA Act [CAP 248] and the National Investment Bill done by the International Finance Corporation (IFC), World Bank Group. As you are fully aware, both legislations have been having issues, therefore the Investment Bill did not make it to parliament. The VIPA management would like to undertake further reviews on both legislations in response to some demands and therefore request your assistance in this first consultation process. Attached are copies of  both documents.  The meeting will be held on Friday 28 April 2017 at 9am at the VNPF Conference Room (venue to be confirmed) to get your views on the documents. As background information, the main reason is the National Investment Bill did not reach  Parliament – there was not enough consultation undertaken by IFC, the Bill content is not reflecting what VIPA is supposed to be doing. On this reason, past Minister(s) have rejected the Bill. Recent calls from the VIPA Board was to do a review of the VIPA Act [CAP 248] and leaving the Investment Bill aside. In the discussion, we will have a look at both documents, then decide what to do in terms of making amendments to CAP 248.

Click to view and download National Investment Bill Act and FULL VIPA ACT Cap 248

 

VCCI ANNUAL GENERAL MEETING ON 4 MAY 2017

VCCI wishes to inform local businesses that the Annual General Meeting of the Port Vila Chamber of Commerce and Industry will be held on Thursday 4 May 2017 at 5pm in the Conference Room of the Chamber of Commerce. The Agenda will include a welcome by President, approval of Minutes of AGM held on 26 May 2016, matters arising from the Minutes, Annual Report Year 2016, Financial Statements for the Year Ended 31/12/2016, Auditors Report, election of Council Members, and major issues affecting Businesses: update on Income Tax. Light refreshments will be served after the meeting. All Business Licence Holders are invited to attend.

The Councillor positions for the sectors of Tourism, Finance, Small Commerce, Shipping and Public Utilities are vacant. If your business operates in one of these economic sectors and you are interested in becoming a VCCI Councillor, please contact now the VCCI Reception for more information by phone on 27543 or by email at [email protected]

 

 

 

INCOME TAX VANUATU and a bit more (a few thoughts.)

Vanuatu is an Island State and has similar problems as a land locked state but more-so it has to be understood that this geographic fact cannot be changed and therefore special consideration should be given to the ways that the country can survive and nourish under a tax regime and also be protected by selective tariffs to develop it Financial independence taking into account the difficulties of what being an Island state entails.

Recent world events have occurred with major first world economics reversing their income tax regimes this includes among other things, the exit of the U.K. from the EU and reduction of taxes eventually considering a similar tax haven approach, the Trump win in the USA where he has promised tax cuts by 50%  with a corporate rate at 15%. He plans to stimulate the economy and to impose duty tariffs to bring jobs back to America and to get out of free trade agreements.

This has not just occurred in the U.S.A. but also since then, Australia and New Zealand have announced plans for large tax cuts as well. These actions have been made with two aims, one to stimulate development and the other to remain competitive in attracting investment.

This recent change in events has turned the financial policies of many western countries upside-down compared to their long  pushed doctrine of imposing taxes on incomes and profits and places more emphasis on taxes like Vanuatu’s VAT.  This change in policy contradicts the recent proposal for Vanuatu to introduce Income tax, rendering the arguments presented to impose tax empty, as the consultants themselves will now be faced with this in their own countries to adapt to a degree where Vanuatu is at the moment. Also, in the case of multilateral institutions, they will need to rewrite the International monetary philosophy.

The most effective way to increase government revenue and to maintain growth is to:

  • Ensure all contribute to the VAT procedure which allows tax to flows on to all through the Reverse Multiplier System throughout the country. Many honest businesses comply with the VAT system but :
  • Attention should be paid to those who blatantly avoid proper adherence through non-disclosure of sales avoiding VAT particularly for those businesses working on a cash basis.
  • Better compliance and a modest increase in the VAT rate would give the government the additional revenue it needs while maintaining growth and investment.

The introduction of an income tax system to Vanuatu will lead to disinvestment.

VAT does not require massive numbers of staff or does it require professional help (to a degree) to do returns.  A vital need though is for the Revenue Department to recruit compliance Officers who can read and write foreign languages other than Bislama, French and English.

The flow-on effect of the VAT system and the Development Incentives in Rural Areas

The cash economy and contribution to GDP in rural areas is vital to the country’s growth and is only stimulated by the wants of rural people.  This means the incentive to produce comes from the desire to obtain something of need or luxury.

Such income comes from Copra, Cocoa, Kava, Coffee, Marine products, Agriculture and Services.

Rural people who have the means to do so, generally will produce enough cash flow to service their economic needs. If the cost of obtaining this includes VAT, then they contribute to Government revenue but also contribute to the country’s GDP through rural development and support the national economy.

Development of the rural economy and its contribution to the county’s GDP is a must for economic Independence. It is an essential element of developing the rural economy beyond subsistence living but at the same time not underestimating the need to be in partnership with the informal economy.

Therefore it is incorrect to say that the rural populace should not have VAT  but instead pay Income Tax as that will not happen and that will further narrow the tax base and government revenues and push the tax burden back to urban societies only.

As a check on this, if the cost of imported goods such as rice as an example etc., becomes too expensive for a rural consumer, then they will then revert back to consuming local product such as kumala and other traditional root crops instead of rice. This can be the same case across the board such as fishing, local housing, and other activity in the informal non cash economy so the rural population will be no worse off relatively. The informal economy in itself is a vital part of, but an unmeasured contributor to the GDP.

Most businesses in Vanuatu are small and mainly are run by a one key investor and family members.

The compliance with all rules regulations including VAT and other licenses usually comes back to that one key person and the burden of administrative tasks that he or she has to do, in many cases outweigh the time spent on actually running the business.

In many cases, these jobs have been delegated to staff but not the responsibilities and considerable time has to still be spent ensuring all is correct. If income tax is introduced, this will again place a bigger burden on Management to the detriment of their business management.

Another important point is that for income tax for businesses, it is expected that most companies in Vanuatu make large profits. That is definitely not the case for most small to medium businesses run only on break- even levels and even at losses where they only survive with the owners borrowing money to keep them afloat. This means that there would be zero income for the government with corporate tax in these cases which is the majority with a few exceptions for those with monopolies and well- founded control over brands.

It must be recognized and realized that Vanuatu is a small developing country and cannot be expected to take on first world larger economy systems which require a lot of man power and support costs to service them.

Also their economies and tax systems are based on paid employment of most of their population with the aim of having less than 10% only out of work. Whereas Vanuatu only has a small percentage of the population in paid employment with around 80% of the population in rural areas with little or no paid employment.

As mentioned beforehand, these first world countries are now cutting back on their tax regimes and Vanuatu should question why in relation to the push to introduce Income Tax and Profits Tax here.

Another factor restricting growth in some countries is the effect of Free Trade Agreements like the MSG and Pacer Plus trade agreements.  The only real benefits which flow from this are to the larger countries in the group i.e. with the former Fiji and Papua New Guinea and with the latter Australia and others in that proposed loop.

The situation is like this; in the case of MSG trade agreement, those countries have larger populations compared to the other smaller members. Also they have had the advantage of being able to develop businesses which have passed the critical level of production to be sustainable, have satisfied their domestic markets, and are in a position to sell (or dump) excess capacity to other member countries taking advantage of duty free import status.

This may look good at first sight but in affect precludes smaller states being able to reach the stage of developing their own industries and surviving to grow within, if local production efforts are faced with cheaper imports from the larger members.

This example can be extended to the effect of larger agreements with metropolitan Powers or subscription to International Trade Agreements but Vanuatu must look at its current level of development where it needs to have some tariff protection for both to raise revenue and on the other hand assist in growing locally based businesses within the country.

Whilst cheaper imports in the short term may look good, it can delay domestic production of certain items and shackle small countries forever to be just consumers without entrepreneurs being able to develop under the umbrella of a selective tariff regime that will keep them in business until the domestic market volume gets to the stage where it can invest and stand on its own feet and compete with imports.

These arguments support the maintenance of selective import duties to encourage infant industries which can be developed over time and also gives the government revenue as well.

So in conclusion, thoughts are, forget about income tax, sharpen up and broaden compliance with VAT and be very cautious with trade agreements.

VCCI wishes to remind local businesses that there will be a Meeting on PACER-Plus Trade Agreement, MSG TA3, China Trade Agreement with Pacific Island countries including Vanuatu, and Vanuatu New Caledonia Trade Agreement, at VCCI in April 2017. Any manufacturers, exporters, any businesses of any economic industry sectors including services, and all businesses interested to hear more about these trade agreements PACER-Plus Trade Agreement, MSG TA3, China Trade Agreement with Pacific Island countries including Vanuatu, and Vanuatu New Caledonia Trade Agreement and ask their questions, are welcome to come to VCCI to attend this meeting on Thursday 20 April 2017 at 3pm. You can confirm your attendance and get more information on PACER-Plus Trade Agreement by contacting VCCI at 27543 or by email [email protected]

 

How PACER-Plus undermines the Peoples Plan for Development

The recently released ‘Vanuatu 2030 The People’s Plan: National Sustainable Development Plan 2016-2030‘ is the perfect lens with which to evaluate PACER-Plus and what it means for Vanuatu’s development aspirations to determine whether PACER-Plus should be signed or not signed.

The People’s Plan very clearly states that for Vanuatu, development is defined as being “more than just acquiring material wealth”. It goes on to state that “The country was founded on Melanesian values of respect, harmony, unity and forgiveness. These values shape our cultural heritage, which is the country’s strength…. Our development must be firmly anchored to these values that holds our society together.”

Further, “Ni-Vanuatu resoundingly called for a balance between the social, environmental and economic pillars of sustainable development, with our cultural heritage as the foundation of an inclusive society.”

Free Trade doesn’t match the Vanuatu Reality

Free trade however pushes a view of the world that prioritises economic outcomes which is the antithesis to Melanesian indigenous values as outlined in the Peoples Plans. Traditionally ‘free trade’ is applied to food and goods but it also includes many other aspects like services and investment. It requires all countries (including Vanuatu) to open their doors to every other country’s products and remove any protections for their own. Free trade theory argues that government support for industries or taxes on imports artificially changes the price of goods or services and ultimately make everyone worse off by protecting inefficient industries.

Loss of Government Revenue will Undermine many Development Goals

Under PACER-Plus Vanuatu is scheduled to make cuts to its import taxes. These cuts will kick in when Vanuatu graduates from being a Least Developed Country, currently scheduled for 2020. Current estimates have these cuts wiping out USD$6million to USD$8million per year of government revenue when they come into effect, the equivalent of the 2014 budgets for the Ministries of Land and Natural Resources and Tourism, Trade, Commerce and Ni-Vanuatu Business.

The People’s Plan makes many references to ensuring that limited resources are used most effectively, ensuring that essential services like health, education, and infrastructure are provided to all. Yet, but agreeing to PACER-Plus and the cuts that Vanuatu will be forced to make to border taxes will make those laudable goals even harder to achieve.

Already there are ongoing discussions about raising government revenue in Vanuatu, PACER-Plus will make those discussions even harder by cutting tariff revenue and putting more pressure on already resource strapped government departments.

Make it Harder to Grow and Support Ni-Vanuatu Businesses

Policy Objective ECO 1.7 aims to “Stimulate economic diversification to spread the benefits of growth and increase economic stability”. Government intervention in the economy can help diversify the economy and allow infant industries to grow and mature until they are ready to stand on their own.

The ability of governments to support and nurture local industries has been a key development right for all industrialised countries. As the former Head of the Macroeconomics and Development Policies Branch, United Nations Conference on Trade and Development (UNCTAD) notes, no country (except Hong Kong, China) has managed to industrialise without going through the infant-industry-protection phase.

Tariff policy is part of a dynamic industrial policy, and tariffs vary depending on the level of development of a country and the needs of various domestic industries. For instance, at an early stage of development, tariffs on labour intensive and resource intensive products are generally raised selectively, after which tariffs move down but tariffs increase on low-technology intensive products.

However, PACER-Plus is fixing a maximum applied level of ALL tariffs, even those that are not being liberalised. This will severely hamper any attempt for a tariff policy supportive of industrialisation and building domestic value chains. This is unacceptable for a ‘development agreement’ and challenges government’s right to develop.

Furthermore there are still ongoing discussions around the proposed Infant Industry Protections in PACER-Plus with Fiji unhappy with the level of protections on offer. Fiji is expected to not sign PACER-Plus because their demands have not been met, a position that Vanuatu should consider in the interest of building a dynamic and vibrate economy.

Policy Objective ECO 4.4 in the People’s Plan aims to “Improve and expand the range of sustainable tourism products and services throughout Vanuatu and strengthen links to local production”. There are many ways to do this but under PACER-Plus Vanuatu will be restricted in its ability to ensure that benefits from investment (like in tourism) are maximised by mandating the use of local inputs. Many developed countries have made investors use local resources (both people and materials) as a way to ensure that the gains and the development of skills and industries are widespread. This means that local content policies that directly or indirectly favour domestic products will be outlawed under PACER-Plus.

PACER-Plus will restrict the use of such policies for investments in both goods and services, removing a pro-development policy for Vanuatu to use.

PACER-Plus ‘benefits’ aren’t enough

Policy Objective ECO1.6 aims to “Require all new trade agreements to demonstrate tangible benefits in the national interest” and this should be applied stringently to PACER-Plus.

Proponents like the Office of the Chief Trade Advisor say it will “inject dynamism into the economies of the PICs” and give them the “significant benefits from international trade”. It is argued that PACER-Plus will lower costs of business through lower tariffs and thus make Ni-Vanuatu companies more competitive allowing them to take advantage of the changes to ‘Rules-of-Origin’ and export more. Even if there are generous changes to the Rules-of-Origin rules goods from ASEAN countries will most likely out compete goods from Vanuatu. Further the quarantine restrictions still place the burden on Vanuatu to prove that they meet Australian and New Zealand standards, something Vanuatu may struggle to do.

As mentioned above, there are many threats that PACER-Plus poses to Vanuatu’s ability to implement the People’s Plan. Even if you take at face value the promises of increased exports and investment (the latter being shown to have little links to signing trade deals) it would signal a prioritisation of the economic pillar over all others.

Creating a stable business environment and regulatory framework (Policy Objective ECO 4.1) is possible without PACER-Plus. Increasing labour mobility (Policy Objective ECO 4.7) to Australia and New Zealand is already happening and currently sits outside of PACER-Plus, and holds no guarantees with the schemes being employer driven.

Any tangible ‘benefits’ that PACER-Plus may appear to provide are greatly outweighed by the costs that will be borne by Vanuatu as it deals with loss of government revenue, loss of policy space to support Ni-Vanuatu industries, and the loss of the right to protect its people and natural resources.

Vanuatu needs to make a decision on PACER-Plus that supports its plan for development. Australia and New Zealand, our neighbours who are key sources for tourism and investment and donor countries, must respect our ability to make these decisions for ourselves.

There will be a Meeting on PACER-Plus Trade Agreement, MSG TA3, China Trade Agreement with Pacific Island countries including Vanuatu, and Vanuatu New Caledonia Trade Agreement, at VCCI in April 2017. Any manufacturers, exporters, any businesses of any economic industry sectors, and all businesses interested to hear more about these trade agreements PACER-Plus Trade Agreement, MSG TA3, China Trade Agreement with Pacific Island countries including Vanuatu, and Vanuatu New Caledonia Trade Agreement and ask their questions, are welcome to come to VCCI to attend this meeting on Thursday 20 April 2017 at 3pm. For more information, you can contact VCCI at 27543 or by email [email protected]

VCCI stand to Vanuatu Revenue Review Committee

The Vanuatu Chamber of Commerce and Industry (VCCI) position on Personal Income Tax (PIT) and Corporate Income Tax (CIT) is outlined in the report Vanuatu Revenue Review, Consultation Feedback of Vanuatu Chamber of Commerce and Industry of November 2016. This analytical study report was submitted formally to the National Revenue Review Committee in a letter dated 25 November 2016 addressed to the Chairman of National Revenue Review Committee, Ministry of Finance and Economic Management. A letter of reminder on this matter was forwarded to the Chairman of National Revenue Review Committee on 1 March 2017. So far, VCCI has not yet received any reply in an official printed written format to its submission. The content of VCCI letter of 25 November 2016 is as follows.

“On behalf of the Vanuatu Chamber of Commerce members and particularly those who work in the International Financial Centre industry, we urge you to re-evaluate the proposed introduction of Personal and Corporate income Tax in Vanuatu. Proposed tax reforms would be absolutely detrimental to the Offshore Financial Centre (OFC) which plays a key role in attracting international businesses and foreign funds to Vanuatu. The financial sector is an essential part of our economy and contributes between two and three percentage points to GDP, providing stable income for a small with limited opportunities. With an active and competitive policy towards international business, tourism, real estate and several other field of investments, it nicely benefits GDP growth. There has been substantial benefits to the nations who have understood and supported the growth of their nation’s Financial Centre, their populations benefiting in a number of ways. We would therefore like to suggest alternative options for the tax reform which are better suited for Vanuatu.

Current Situation

Starting from 2018, Vanuatu will have to exchange information following the CRS (Common Reporting Standard).  Each country will annually automatically exchange with the other country the below information:

  •  the name, address, Taxpayer Identification Number (TIN) and date and place of birth of each Reportable Person:
  • the account number;
  • the name and identifying number of the Reporting Financial Institution;
  • the account balance or value as of the end of the relevant calendar or, if the account was closed during such year or period, the closure of the account.

Currently, Vanuatu is note able to share these details with OECD countries as such information is not being collected. While Vanuatu, like all other nations, has committed to participate, it does not have an income Tax Office and therefore does not have the means to collect such information from its own and foreign citizens residing in the country.

The OECD countries are well-aware of the current financial situation in Vanuatu, including the Volumes of Swift Transfers, currency movements, and inflows and outflows, as all of this is closely monitored by First World Countries. The volumes are relatively low and well within the expected range given the size of Vanuatu economy.

Global agenda of OECD countries

By implementing CRS globally, First World Countries aim to avoid a potential future situation where someone could use Vanuatu to transfer or hold funds. It has become the mission of OECD countries to convince Vanuatu Government that it must set up an Income Tax Office and start collecting and sharing the information with other nations, as intended by the CRS.

The decision to implement Income Taxation in Vanuatu is therefore not made independently, but is primarily guided by First World Countries. For instance, the goal of Australia is to implement Taxpayer identification Number system in Vanuatu and start collecting the data in order to share it annually to avoid any potential asset and wealth transfer from Australia (or any other OECD nation) to Vanuatu after 2018.

First World Countries do not want Vanuatu to benefit and are not concerned about Vanuatu wealth, our nation’s future and the interests of our people. The entire Vanuatu tax reform is based on making CRS system work globally at the expense of our citizens. TINs would have to be issued to all Ni Vanuatu residents aged 18 or older (it will effectively be a Social Security Number). This means that Vanuatu will have to bear the massive costs of issuing around 200 thousand of these numbers, just so that – 10 thousand of them could be monitored by OECD countries.

Tax reform decisions should be made independently

Vanuatu Government should primarily take into account the interests of Vanuatu, just like the US Government is looking at US citizens’ interests first. Vanuatu is ready to cooperate and to work with other nations to be a good planet citizen and participate openly to fight corruption, money laundering, crime, terrorism – as long as this is not affecting negatively the people of Vanuatu.

Vanuatu must decide independently, for its own national interest if Corporate Income Tax (CIT) and Personal Income Tax (PIT) is a positive policy and the best way to raise money for public expenditure. This decision should note be dictated behind closed doors by our neighbours and by First World Countries which have their own agenda instead of Vanuatu interests at heart.

Vanuatu does not need CIT and PIT system to achieve compliance and transparency

We agree that Vanuatu and all its financial institutions must be FATCA compliant, in line with CRS-2018. We also agree that we should have measures in place to show that we are monitoring our economy and cash flows within the country. However, introduction of CIT and PIT is not necessary to achieve these goals. The two subjects are often wrongly mixed up, and this can be demonstrated by the fact that none of the 18 countries with no PIT are on the FATF list of high-risk and non-cooperative jurisdictions except Vanuatu:

High-risk and non-cooperative jurisdictions: Countries with no PIT:
AfghanistanBosnia and HerzegovinaDemocratic People’s Republic of Korea

(DPRK)

Iran

Iraq

Lao People’s Democratic Republic

Syria

Uganda

Vanuatu

Yemen

AndorraAnguillaBahamas

Bahrain

Bermuda

British Virgin Islands

Brunei

Kuwait

Maldives

Monaco

Oman

Qatar

Saudi Arabia

St. Kitts & Nevis

Turks and Caicos

United Arab Emirates

Vanuatu

As shown in the table above, Vanuatu is not on FATF list based on its CIT or PIT legislation as it has nothing to do with it. Vanuatu will still be on the ‘grey list’ even after implementation of CIT and PIT as these subjects are not related.

Vanuatu has everything to lose and nothing to gain from introducing income taxes

The future of the Vanuatu Offshore Financial Centre is not clear. The offshore sector, directly and indirectly, represents a large share of economy, with around 5,000 registered institutions offering a wide range of offshore banking, investment, legal, accounting, insurance and trust company services. However, with the introduction of PIT and CIT, Vanuatu would lose its competitive position as a tax jurisdiction and the OFC could completely disappear. The OFC seems to be already written off by the Revenue Review committee without saying it out loud.

Bringing money from Offshore Financial Centre businesses positively contributes to our nation’s development as is not affecting the local economy while at the same time helps raise public revenues. While the taxes collected from the Offshore Financial Centre (OFC) businesses are relatively small and cannot be the main source of funding for our government, it would be irrational to completely dismiss them. In fact, modernizing the Offshore Financial Centre by following successful countries such as Cayman, Singapore, Hong Kong, BVI, Luxemburg, Belize, Jersey, Mauritius, Bermuda, etc. could bring a lot of additional revenues to the government from International Corporations, forex dealers, residency, and other sources.

There are a number of countries that are offering similar tax jurisdiction benefits to international businesses as it is wise to do so. It is a way to demonstrate a small nation’s independence and self-reliance as well as a tool to attract foreign investments and bring skilled talent who would otherwise not be there. Hundreds of expats living in Vanuatu are directly or indirectly related to the OFC. The setup has been in place in Vanuatu since 1970, and it should be protected and nurtured by the government. It should not be written off for nothing based on ideology of foreign advisers.

Strategic positioning

Vanuatu is currently one of the few countries that does not have formal TINs and does not collect income data on individuals and corporations. Within the next few years this could become a real asset for Vanuatu. This could help establish strong and unique strategic positioning as a tax jurisdiction by offering freedom and independence in a World which is closing down, and everything is becoming standardized and uniform. Such unique jurisdiction would help attract many new foreign investors in the coming years, potentially many more than we have seen previously.

Residential taxation VS Territorial taxation VS no personal income tax

Currently, Vanuatu is in the group of 18 countries and territories which do not impose Income taxation. On the other end of the spectrum, there is a large number of large and developed economies which have territorial Income taxation.

 

The proposition led by Australia specialists advocates for a tax regime that will directly move Vanuatu from one end of the spectrum to the other, without any consideration for our country size, tax jurisdiction positioning, and implications for the Offshore Financial Centre.

 

Residential taxation should not be considered

It is the current proposition to move Vanuatu from No Income Tax to the other end of the spectrum, by implementing a worldwide source tax (Residential taxation base).

If Vanuatu decides to implement Income tax, it should firstly move to a group of countries that tax only local income and not foreign income i.e. territorial taxation.

Territorial taxation is the “middle ground” between No Income Taxes and Residential taxation. It is implemented in a number of countries which are similar to Vanuatu: French Polynesia, Marshall Islands, Micronesia, Palau, Tuvalu, Singapore, Hong Kong, Seychelles and 25 others. Territorial taxation could one day be the first step to introduction of income taxes as it would not kill foreign investment and tax jurisdiction attractiveness overnight.

Conclusions and final recommendations

We strongly urge the Revenue Review Committee to reconsider Vanuatu tax system changes now proposed by foreign advisors.

The Vanuatu tax reform decisions are not being made independently – they are guided by First World Countries which do not have the interest of the Vanuatu nation as a priority. The reforms are not a good fit for our country and will negatively affect the people of Vanuatu.

We would like the Government to review alternative systems for raising public revenue. Modernizing the Offshore Financial Centre could help bring in additional public revenues. Together with other fiscal reforms such as raising VAT rate, reviewing business license and fees, and potentially introducing land value taxation, it would help bring the needed public revenues.

Strategy Labs of Europe has completed an independent study on Vanuatu taxation alternatives. It concludes that raising VAT to 17½% and other adjustments would raise more revenue than Income Tax and not scare off Foreign Direct Investment. This study can be downloaded from www.revenuereview.gov.vu Click on SUBMISSIONS then the first entry from the VCCI, which is entitled Vanuatu Revenue Review Feedback. Signed, Thomas Bayer, President of VCCI”

After struggling with the tropical cyclone Pam in 2015 and international airport runway infrastructure works in 2016, in 2017, all existing local businesses are currently planning an exit strategy to restructure their businesses with reduced employment, relocate overseas, or close down the business operations and cease to exist, to anticipate the negative impacts the introduction of Personal Income Tax and Corporate Income Tax would cause to the economy of Vanuatu. At the 5th Australia-Vanuatu Business Forum in Port Vila on 28 February 2017, it was anticipated that Foreign Direct Investment (FDI) trends in Vanuatu would drop following the introduction of Personal Income Tax and Corporate Income Tax in Vanuatu. It is also anticipated that goods and services’ prices would sharply increase to cover the costs of personal income tax and corporate income tax.

If Vanuatu is not yet ready for the introduction of Personal Income Tax and Corporate Income Tax to be paid by only 10,000 people out of a population of more than 280,000 people, what would be the options left for Vanuatu to pay for its national expenditure?

Vanuatu is to look for and focus on alternative tax options and strengthening its systemic commitment to free markets, friendly regulatory systems and very strong rule of law to finance its education, health, security, infrastructure development, foreign affairs, national debt, area council and provinces.

Vanuatu’s competitive advantage is to develop its economy, education, health, security, infrastructure development, foreign affairs, area councils and provinces, and pay its national debt by choosing this innovative step forward of no income tax, compared to regional Pacific Island countries.