The VAT Office would like to remind all VAT registered persons providing credit card services to process customer payments that the fees charged by the respective banks are not claimable for VAT purposes as stated in Clause 1 of the First Schedule in the VAT Act No. 12 of 1998 [Cap. 247].

Most fees charged by a bank are exempt from VAT. Meaning such transactions between the bank and a registered person will not be subject to VAT. 

However, the sale amount which will have the merchant fee deducted from will need to be accounted for in full; since this is what has been charged and collected from the customer. Furthermore, this fee is a credit card administrative fee recovered by the registered person for each credit card transaction. The VAT Office in 2012 through its industry partnership initiative addressed the key issues associated with VAT within the tourism industry that was discussed with the stakeholders in Port Vila and Santo. One of the issues was how to account for credit card transactions. Registered persons are advised that the credit card administration fees/merchant fees, etc are subject to VAT. The registered person may charge 12.5% on the standard merchant fee charged by the bank; this is charged to the customer who decides to make a credit card payment rather than paying in cash. Where a registered person makes a business decision not to charge the 12.5% then the consideration received will be subject to output tax.

Here is what a registered person accounting for VAT on goods and services on credit, debit and charge card sales should do.

  1. If you receive a payment for goods and services by one of the above cards:
  • You must account for VAT at the time of supply on the full price charged to the customer for the goods and services supplied, and
  • If you charge for accepting payment by one of the above cards the charge is further consideration for the supply of goods and services. VAT is chargeable at the standard rate that is at same rate charged for the goods and services which is in Vanuatu at 12.5%.

    2. Charge by credit card companies or banks: 

        The charge made to merchants (retailers, hotels, restaurants & bars etc) by credit card companies or banks are exempt supplies.

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 This email address is being protected from spambots. You need JavaScript enabled to view it.

General Enquiries

Constitution Building, Lini Highway
PMB 9012
Port Vila, VANUATU.

Phone: (+678) 33010
Fax: (+678) 22597