Key Takeaways
- Foreign-owned companies in Vanuatu must keep accounting records and books in line with recordkeeping duties set out in the Companies Act.
- Annual financial statements should be prepared following the accounting standards and principles that apply to the company.
- Audit requirements depend on turnover thresholds, with additional rules for licensed and regulated entities.
- Records must be kept in a specified location for a set retention period, and poor recordkeeping can lead to penalties and other consequences.
Accounting and Bookkeeping Obligations for Companies in Vanuatu
Every company formed in Vanuatu must keep accounting records that reliably reflect its financial position. This is a recordkeeping duty rather than a filing duty: accounting and bookkeeping in Vanuatu rests on maintaining adequate books, not on submitting them to a government office, and the rule applies to both domestic companies and offshore International Companies. The supervisory authority is the Vanuatu Financial Services Commission, which administers the Companies Act 2012 alongside the older offshore framework.
This article explains what records you must keep, where you may keep them, how long to retain them, when an audit becomes mandatory, and what happens if you fall short. It is written for foreign owners and their advisers who control a Vanuatu entity from abroad and need to keep its books in order without a local finance team.
The Legal Basis: Companies Act Recordkeeping Duties
Two parallel regimes govern companies here, and which one binds you depends on how your entity was formed. Domestic companies fall under the Companies Act No. 25 of 2012, which replaced the former Companies Act [CAP 191]; offshore International Companies sit under the International Companies Act [CAP 222], first enacted in the early 1990s and amended most recently by the International Companies (Amendment) Act No. 30 of 2018.
The core accounting obligation is short and broad. It requires every Vanuatu company to keep accounting books and records sufficient to reliably reflect its financial position, and to preserve original documents, registers, and minutes.
Supervision and the company registry both sit with the Vanuatu Financial Services Commission, established in December 1993 under the VFSC Act [CAP 229]. Its Registration Department handles incorporations and maintains the statutory framework that underpins these duties.
A further power matters for foreign owners. The Companies (Amendment) Act No. 27 of 2018 lets the Registrar, by written notice, require a company to hand over information on its beneficial owners, its members, and its audited accounting records and financial statements.
Even where no routine filing applies, the Registrar can compel production of your accounting records and financial statements by written notice. Keeping your books current is therefore not optional, regardless of whether anyone asks to see them in a given year.
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Which Accounting Records and Books Must Be Kept
The statute does not hand you a long prescribed list. It sets a standard: records adequate to show the financial position of the business, supported by the underlying source documents.
In practice, that means keeping the items any competent authority would expect to inspect:
- General ledger
- Cash receipts and payments records
- Bank statements
- Invoices and contracts
- A register of shareholders
- Minutes of board and member meetings
No regulation prescribes anything more granular than "adequate records reflecting financial position." There is also no requirement for an International Company to produce a consolidated group report.
For offshore entities, one structural feature is worth understanding. Changes of officers and accounts are not placed on the public record, so the burden of holding complete, retrievable books falls entirely on you and your service provider rather than on a public registry.
Applicable Accounting Standards and Principles
No Vanuatu legislation requires an ordinary domestic company or a standard International Company to apply IFRS or any other named accounting standard. The duty is framed around the substance of the records, not the framework used to prepare them.
That gap does not extend to regulated sectors. Licensed insurers and insurance brokers must prepare annual accounts under generally accepted accounting principles or international standards, per the Reserve Bank of Vanuatu's Prudential Guideline No. 4, and the Commission's licensing guidance for regulated entities points to international auditing standards as the working baseline for comparability.
For an unregulated entity, no standard is legislated. Advisers commonly recommend IFRS for Small and Medium-sized Entities, or local GAAP, as a prudent baseline, but you should treat that as good practice rather than a statutory obligation.
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Preparing Annual Financial Statements
The two regimes diverge sharply here, and the distinction is the single most useful thing for a foreign owner to absorb.
An International Company does not file financial statements with the registry or any government authority. It has a public file but is not required to lodge an Annual Return, and audits are not mandated; the obligation is to keep accounts detailing the financial position, which may be held in any country.
Domestic companies carry a heavier load. A company incorporated under the Companies Act No. 25 of 2012 must prepare annual accounts and file them with the Financial Services Commission together with an annual return, and larger or public companies may have to submit audited accounts to the Registrar.
The default balance date for a domestic company is 31 March, unless the directors adopt another date in line with the regulations. The annual return itself is the return required under section 127 for domestic companies, or section 377 for overseas companies registered locally.
The mechanics, deadline, and fee of the annual return are covered in our dedicated Annual Return article. Here, the point is narrower: a domestic company must attach its annual accounts to that return, whereas an International Company files no accounts at all.
Where Accounting Records Must Be Kept and for How Long
Location rules differ by entity type. An International Company may keep its accounts in any country and may also prepare or maintain its books inside Vanuatu through local accountants, bookkeepers, trust companies, or management firms. A domestic company must hold proper accounting records at its registered office, or at another place accessible to its officers and auditors.
Retention is more uniform in practice. Accounting records must be kept properly and preserved for at least seven years.
| Requirement | International Company (CAP 222) | Domestic company (Act No. 25 of 2012) |
|---|---|---|
| Keep adequate accounting records | Yes | Yes |
| File accounts with the registry | No | Yes, with the annual return |
| Where records may be kept | Any country | Registered office or accessible location |
| Retention period | Seven years (prevailing standard) | At least seven years |
| Produce on lawful request | Yes | Yes |
The seven-year rule is stated for domestic entities; no separate retention period for International Companies appears in the source material. Treat seven years as the prevailing standard absent specific guidance. In every case, records must be capable of being produced to competent authorities on lawful request.
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Audit Requirements and Turnover Thresholds
Most foreign-owned structures never reach a statutory audit. International Companies are not required to audit their accounts or to file financial statements with any authority, which removes the audit question entirely for the typical offshore holding or trading vehicle.
For domestic companies, a clear turnover trigger applies.
- Annual turnover above VUV 20 million (roughly USD 170,000) makes an audit mandatory; the financial statements must be audited and filed.
- Below that figure, no statutory audit is required for a domestic private company.
- Larger or public companies may have to prepare, and in some cases submit, audited accounts regardless.
The Companies Act 2012 also governs how an auditor is appointed and who qualifies, and it gives a court power to appoint an auditor on a shareholder's request. The auditor must be a firm separate from your registered office and registered agent.
Regulated businesses face stricter audit duties that override the general position; those are set out in the section on licensed entities below.
Bookkeeping in Practice: Setting Up and Maintaining Your Books
An International Company cannot be incorporated directly by an individual. Formation runs through a VFSC-licensed registered agent, and that agent is your natural first point of contact for arranging bookkeeping or record preparation.
The practical rules are flexible. Books may be maintained in any currency and, for an International Company, in any country; no statute dictates the software, the chart of accounts, or the language, provided records remain legible and comprehensible to a competent authority. A domestic company has less latitude on location, since its records must be accessible at or from the registered office.
One feature shapes the whole exercise. Vanuatu levies no income tax, so bookkeeping here is not driven by tax returns; it is driven by the statutory recordkeeping duty and, for regulated entities, by AML and CFT obligations.
That changes the real-world stakes of clean books. Correspondent banks in Australia, New Zealand, and Singapore increasingly demand verified compliance documentation, including certified financials, before they will process cross-border payments for a Vanuatu entity, so well-kept accounts often determine whether the company can move money at all.
Penalties and Consequences of Poor Recordkeeping
The direct sanction for failing to keep accounting records is a daily charge. An International Company that does not maintain its records faces a penalty of USD 25 per day, running from the date the breach is disclosed until it is fixed.
Persistent default carries graver outcomes.
- An International Company that fails to meet its compliance obligations, including failure to maintain a registered agent or to provide updated beneficial ownership information, may be struck off the register.
- Striking off does not extinguish liabilities; under section 112 of the International Companies Act a struck-off company may be restored by court order, and obligations can persist through the dormant period.
- Where annual fees go unpaid, the fee rises by a penalty of 10 percent of the amount due for each month or part-month outstanding, recoverable by the State in court.
Breaches of AML and CFT duties sit on a separate and more serious track. Wilful or repeated non-compliance can bring fines, licence revocation, or prosecution under the Financial Transaction Reporting Act, and a failure to keep records or undertake due diligence, or any false or misleading statement, exposes the offender to a fine not exceeding VT 1,000,000 or imprisonment for up to one year.
Beyond the statute, the commercial penalty is often the sharpest. Entities that cannot produce certified financials or current beneficial ownership declarations are seeing account closures and refusals of banking service.
Special Cases: Licensed and Regulated Entities
Some activities, including banking, insurance, legal services, and company management, require separate licensing and sit under the Reserve Bank of Vanuatu or additional VFSC oversight. The accounting duties for these businesses are heavier and more specific than the general rule.
| Entity type | Key obligation | Deadline / frequency |
|---|---|---|
| Securities dealer (VFSC-licensed) | File annual report with the Commission; consolidate where a subsidiary exists; independent IT audit | Within 90 days of balance sheet date; IT audit at least annually |
| Insurer / insurance broker (RBV) | Submit annual audited accounts under accepted or international standards | No later than six months after financial year end |
| AML/CFT reporting entity | Internal controls for due diligence, suspicious transaction reporting, record retention, staff training | Ongoing |
| CRS-reporting financial dealer | Register for a TIN, notify the reporting obligation, report via the MDES portal | Annual |
A securities dealer must use an auditor separate from its registered office and agent, mirroring the domestic rule. CRS-reporting dealers file through the MDES portal and face a fine not exceeding VT 1,000,000 or up to one year's imprisonment for non-compliance.
Overseas companies that establish a place of business locally form a further category. Their annual return is governed by section 377, and they must comply with the registration and recordkeeping duties in Part 10 of the Companies Act.
Conclusion
For most foreign owners, the bottom line is reassuring: an International Company in Vanuatu files no accounts and faces no audit, yet must still keep complete, retrievable books for at least seven years and produce them on lawful request. The lighter regime is a recordkeeping discipline, not an exemption from one.
Decide early which side of the line your entity sits on, because a domestic company crossing VUV 20 million in turnover, or any licensed business, inherits real filing and audit deadlines that the offshore structure avoids. Match your bookkeeping to that status, and to the certified-financials demands your correspondent bank is likely to make.
How Expanship Can Help Your Business in Vanuatu
Expanship sets up and maintains the accounting records your Vanuatu company needs to satisfy the statutory recordkeeping duty, prepare annual accounts where they are required, and meet the certified-documentation requests that correspondent banks now make. The same team handles the wider compliance picture for a foreign-owned entity, from formation through ongoing administration.
- Company incorporation and structuring through a licensed registered agent
- Registered agent and registered office services
- Ongoing compliance monitoring and filing management
- Accounting, bookkeeping, and preparation of financial records
- Economic-substance and beneficial-ownership support
- Introductions to banking partners for account opening
To discuss your entity's recordkeeping and reporting position, contact Expanship Vanuatu.
Frequently Asked Questions
No. An International Company does not submit financial statements to the registry or any government authority and is not required to file an annual return. It must still keep accounts that detail its financial position, and those accounts may be held in any country.
Audits are mandatory for a domestic company whose annual turnover exceeds VUV 20 million, roughly USD 170,000, and for larger or public companies in some cases. International Companies are not required to audit their accounts at all, and regulated entities such as insurers and securities dealers follow stricter sector-specific audit rules.
Records must be maintained properly and preserved for at least seven years. This period is stated for domestic companies, and it should be treated as the prevailing standard for International Companies as well, since no separate retention period is specified for them.
An International Company may keep its accounts in any country and may also use local accountants or management firms to maintain them within Vanuatu. A domestic company must hold its records at its registered office or another location accessible to its officers and auditors.
An International Company that fails to maintain its records is charged a penalty of USD 25 per day from the date the breach is disclosed until it is corrected. Continued non-compliance can lead to the company being struck off the register, and unpaid annual fees attract a further penalty of 10 percent per month.
No named standard such as IFRS is legislated for ordinary domestic companies or standard International Companies. Regulated entities are different: licensed insurers must use generally accepted or international standards under the Reserve Bank's Prudential Guideline No. 4, and advisers often recommend IFRS for SMEs as a prudent baseline for unregulated businesses.
Legal Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change, and the application of laws can vary widely based on specific facts and circumstances.
Readers should not act upon this information without seeking professional counsel tailored to their individual situation. Expanship and its authors disclaim any liability for actions taken or not taken based on the content of this article.
For specific advice regarding your business setup, compliance requirements, or any legal matters, please consult with qualified legal and tax professionals in the relevant jurisdiction.
