Since, most tour operators are generally registered for VAT purposes, however many suppliers of tourist services are not. This has created some confusion about the correct VAT treatment of such supplies when supplied through a tour operator. 

The Tax Administration Office would like to set light on this issue

and provide the right solution so that it is known and applied cohesively. 

Tourist Services Sold Directly by the Supplier to the Customer

Where tourist services are supplied directly to the customer, the supplier invoices the customer. If the supplier is VAT registered, they are liable to account for VAT on the supply in their VAT return.

Tourist Services Supplied Through Tour Operator

Where the services are supplied through a tour operator, the supplier invoices the operator and charges VAT if they are registered.

Tour operators may choose one of two options for invoicing the customer and accounting for the VAT in their VAT returns:

Option 1 - Tour Operator Accounts for VAT on Commission Income Only

The operator accounts for VAT on their commission income only and makes no VAT claims for payments made to suppliers.  This option is more suitable for a single supply made on behalf of a supplier e.g. the sale of an internal airline ticket on behalf of Air Vanuatu. 

Option 2 - Tour Operator Accounts for VAT on the Value of all Sales Made

The operator accounts for VAT on the value of all sales they make on behalf of the suppliers and then claims back the VAT portion of payments made to those suppliers who are VAT registered.  This option is more suitable for operators who are supplying package tours to customers either directly or through an overseas agent.

In cases where VAT registered tour operators picked up tourist and/or pupils from the different tourist locations and transferring them to resort where they may have not paid on a package tour service but received cash only for the bus fares, this must be accounted for and income received must be receipted and be declared in the VAT return.

Audit to target tour operators 

The Inland Revenue Audit and Compliance team has been tasked to carry out specific audit checks on all tour operators that are VAT registered and those who found to under declare and/or making false sales declaration on their VAT returns will be penalized under offence Section 51 of the VAT ACT No: 12 of 1998 [CAP 247]. 

Section 51(1)(c) states every person who commits an offence under this Act who - 

Makes 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 tax fines as prescribed cite that, on the first such conviction, be liable for a fine up to up to 100,000 vatu. Upon second conviction, be liable to a fine up to vt200,000 For any subsequent offences, the Office will proceed with prosecution actions.

For more information on any of our articles published in our weekly column, please contact the Tax Administration Office by phone: +678 24573 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