The VAT registration is determined by whether the person is conducting a taxable activity or not. The meaning of “taxable activity “is crucial for both registration purposes and in establishing whether a person must account for VAT on specific supplies made by them. A taxable activity for VAT includes:
- any activity that is carried on continuously or regularly;
- involves the supply of goods and services to another person;
- consideration (payment) is received for that supply;
- the supply does not necessarily have to be for profit and
It includes (but is not limited to) any such activity carried on:
- in the form of a business, trade, manufacture, profession, association, club, or
- by any government agency
Through the VAT Office audits and compliance enforcement activities, the Office established that some registered persons did not derive any taxable income for years i.e. ever since registered for VAT and were mainly on refund situations. Based on the nature of the business activities as indicated in the VAT registration applications, these businesses should have started to generate taxable income shortly after being registered for VAT purposes.
It is an offence under section 51(1)(c) of the VAT Act No. 12 of 1998 for a registered person to make any false return, false statement or false declaration or gives any false information, knowing it to be false or being reckless as to whether it was false, or intentionally misleads or attempts to mislead the Director in relation to any matter under this Act.
The VAT Office encourages the registered persons in these situations to come forward and discuss the matter and get it right from the start before it is too late. The Office has and will continue to impose heavy fines and penalties on those registered persons identified in this category by the Office.
Furthermore, as parts of the modified registration process the Office has introduced additional compulsory checks and verifications.
- Thorough background work on the applicant will be carried out;
- All relevant documents will be thoroughly reviewed and verified;
- Compulsory registration check site visits will be conducted;
- Compulsory initial interview with the contact person will be executed;
- In-depth reviews of Business Plans and Cash Flow Statements will be carried out.
All pending applications as determined due to delayed commencements of taxable activity will only be held for (6) six months and where no further communication and/or enhancement of a taxable activity is evidenced the application will not be considered for VAT registration. The applicant will have to reapply as a new application once all the requirements of a taxable activity and the relevant conditions to register for VAT purposes are satisfied.
For more information on any VAT issues, please contact the VAT Office by phone: 00(678) 24573 and 00(678) 37517 (Santo), visit us at our Office in Carnot Street, Port Vila or email us at
