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Inland Revenue receives further Orders on VAT exemptions due to tropical Cyclone Pam

1) Exempt Customs duty and VAT on building and construction materials

2) Exempt Customs duty and VAT on planting materials including seeds and gardening tools

Accordingly the Department of Customs and Inland Revenue prepared conditions for suppliers and instructed them to reduce their selling price by the appropriate tax percentages for further two months (14th April 2015 to 12th June 2015). The general public is again reminded that these reductions are not discounts given by the suppliers and the suppliers are required to clearly indicate that the reduction is due to tax and duty exemptions as per the Council of Ministers Decisions.

The VAT Office has provided the Suppliers with clear applications of the Directions as outlined in the Ministerial Orders No. 25 and 29 of 2015. The conditions provided to the suppliers include:

  •  The exemptions only applies to planting materials including seeds and gardening tools, and to building and construction materials;
  • Must be strictly in conjunction with damages/devastation caused by cyclone Pam;
  • Is effective from 14th April 2015 to 12th June 2015;
  • Customer contact details including the place of supply of the exempted items/products/materials must be kept by the local supplier;
  • Invoice and receipts covering details of the exempted supplies and associated cost must be kept by the suppliers.

The VAT Office in a letter to the suppliers has specified the building & construction materials, garden tools that are exempted and defined planting materials. The VAT Office has also put in place two short term plans to accommodate the Directions issued to the Director.

 PLAN 1A – Focus on Compliance and Monitoring

  • Compliance and Monitoring exercise will continue until 31st May 2015;
  • VAT Audit activities will be suspended until 31st May 2015;
  • Continuous Spot Checks on all retail businesses;
  • Continuous checks on all hardware suppliers;
  • Continuous checks on all agricultural product suppliers;
  • Uplifting of relevant sales reports from the suppliers to identify possible suspected cases;
  • Spot Check visits to all construction sites;
  • Spot Check Visits to all motor vehicle rental companies, VAT registered accommodation providers (those not affected by cyclone Pam) to verify their income recording.

PLAN 1B – the U-Turn Approach

From 1st June 2015 the VAT Office will totally focus on enforcement activities taking a U-Turn Approach from Plan 1A. 

Industries identified through our risk assessments will be audited under specific audits and the periods targeted will be February, March, April and May 2015.

For more information on any of our articles published in our weekly column, please contact the VAT Office by phone: 00678 24573 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it.