Payroll is vital to any business. When you make your company global, you have to consider an unfamiliar set of tax laws and employee registration processes. Rather than navigating these legal concerns on your own, you can work with Globalization Partners. With Vanuatu payroll outsourcing, we’ll keep up with local regulations while you mitigate risk.
Taxation Rules in Vanuatu
Often recognized as a tax haven, the island nation doesn’t require income tax on individuals making below VT 750,000 a year. If an employee makes between this amount and VT 3,500,000, their income tax will be 10 percent on these amounts. Anyone whose income is greater than VT 3,500,000 pays 17 percent. Employers are responsible for deducting these tax amounts from each paycheck.
Payroll also includes deductions for the National Provident Fund, which requires a contribution from the employer and employee. Both parties contribute 4 percent to offer an 8 percent total. These deductions support the country as a whole and primarily provide for retirement. This fund also covers special death benefits, migration, and incapacitation.
Vanuatu Payroll Options for Companies
When you set up payroll as an international company, you have a few options for how you choose to handle it. Your choices include:
- Internal department: If you decide to establish a subsidiary in Vanuatu, you can set up an internal payroll department. While this option is feasible for larger businesses with many resources, it may not be ideal for a company just starting their expansion. This method is the most expensive.
- External payroll processing company: When you have an entity in the country, you can operate your payroll externally with a processing company. This option requires less time and money, but your business will be held liable for any legal mistakes the company makes.
- Remote management: The most economical choice is handling your payroll through your parent company. While this method is possible for smaller businesses, it requires carefully distinguishing employment regulations, and you’ll still be legally responsible for any mistakes.
- Globalization Partners: As your global PEO, we’ll hire your employees through our subsidiary and add them to our payroll. This way, you’ll have the support of our legal team, and you’ll shift all liability to us.
How to Set Up a Payroll in Vanuatu
How you set up payroll depends on the method you choose. If you opt for an internal department, you’ll first need to establish a subsidiary in the country. This process requires a series of government clearances and fees, and it may take a significant amount of time before the process is complete. Setting up a bank account and getting a tax identification number (TIN) are also crucial parts of this process.
Regardless of whether you establish a subsidiary or manage payroll remotely, you’ll need to register your employees with the provident fund and gain access to their TIN to make payroll deductions.
Upon termination, Vanuatu employees are entitled to a severance package based on the length of their employment and their pay schedule. Employees who have provided service for a year or longer and get paid monthly receive a month of pay for every year of work.
Workers who get paid on a smaller interval than a monthly schedule receive 15 days of pay for every year of service. According to their pay schedule, when an employee has worked for less than a year, they receive one-twelfth of their pay for every month. Employees can also trade in unused vacation leave for payment.
Payroll Processing Company in Vanuatu
Trust Globalization Partners to handle extensive payroll regulations in your country of expansion. We’ll make sure your employees receive the paychecks they deserve with no legal risk for you. Talk to our team today to learn more.