Anthony Klan | May 06, 2008
THE Vanuatu Government will scrap its secretive company law provisions within months as part of a legal overhaul aimed at abolishing the Pacific nation's reputation as an international tax haven.
The Vanuatu Financial Services Commission said the country would replace its company law secrecy provisions - which allow for the creation of companies with hidden owners and undisclosed cash deposits - by the end of the year.
The move follows the arrest last week of 58-year-old Vanuatu-based Australian businessman Robert Agius, who is accused of masterminding a $100million offshore tax scam involving more than 400 people.
VFSC commissioner George Andrews, who declined to comment on any matters before the courts, said yesterday that under proposed new legislation, the Pacific nation would crack down on all Vanuatu businesses that provided foreigners with local tax-haven accounts.
"Our aim is to get genuine investors in and try to steer crooks out of Vanuatu," Mr Andrews told The Australian.
"We've been associated with this stigma for a long time and we now aim to get away from being a tax haven.
"We want to develop into some form of financial hub getting away from this financial secrecy business."
According to the Australian Taxation Office, about $5 billion flows from Australia to international tax havens each year, with about $350 million of that destined for Vanuatu.
Mr Andrews said that under the new legislation, all Vanuatu businesses that provided company and trust formation services would be regulated, with those companies required to obtain a licence to operate.
He said the VFSC would have "advanced powers" to enable it to co-operate and share information with foreign regulatory authorities.
The overhaul is expected to involve the abolition of Section 125 of the Vanuatu International Companies Act, whereby companies and banks are not allowed to release information about private client accounts to any third parties without the consent of account holders or a local court order.
The crackdown is an about-face for the VFSC, whose website as recently as yesterday was spruiking the ease by which offshore accounts could be created in Vanuatu and the nation's lack of taxes and company reporting requirements.
The VFSC's website also currently provides a list of "reputable" brokers who specialise in setting up offshore accounts.
That list includes contact details for PKF Vanuatu, the firm from which Mr Agius allegedly operated the $100 million offshore tax scam.
Vanuatu's crackdown on off-shore companies is expected to hit major Australian banks Westpac and the ANZ, which issue thousands of offshore bank accounts in the Pacific nation each year.
As revealed by The Australian, those banks created up to 90 per cent of the accounts established by Mr Agius's PKF Vanuatu.
Six of the 33 international tax havens identified by the OECD are in the Asia-Pacific region - the Cook Islands, the Marshall Islands, Nauru, Niue, Samoa and Vanuatu.
