Government VAT collections for 2025 show a significant gap between what is collected from imports and what is collected within the country.
Out of VT 15.6 billion collected in Value Added Tax by the Customs Department in 2025, more than VT 9.1 billion came from imported goods, while only VT 6.5 billion was collected from domestic VAT.
Director of Customs and Inland Revenue, Harold Tarosa, described this as a concern, noting that domestic VAT should normally match or exceed what is collected from international trade.
“We should match up a little bit with our international collections, but so far domestic VAT is underperforming by 34.3 percent. This means we are collecting more from imports but not collecting equally enough from domestic businesses. I appreciate the efforts by the Government through the Ministry of Finance and the Honourable Deputy Prime Minister to step up reforms. This is why tax reform initiatives are underway to automate point of sales systems. Hopefully by next year, every VAT registered business will be inside a point of sales system, and we should see an increase in domestic VAT collection to match what we receive from international trade,” he said.
Despite this gap, overall government revenue for 2025 exceeded its annual target. An additional VT 778 million was collected, bringing total revenue to VT 25.6 billion.
However, Import Duties, Excise and Fees did not meet their targets, falling short by VT 1 billion and collecting only VT 7.7 billion.
“Many large development projects came in, and the government supported them through exemptions. This caused a drop in import duty collections, which is why we fell short by one billion vatu,” Tarosa explained.
Other revenue areas performed well, including Non-Tax Revenue collected through business licenses, vehicle registration, and road tax.
Efforts are continuing to strengthen revenue collection systems, with plans for shops in Port Vila to soon use a Sales Monitoring System that will allow Customs to better monitor sales and improve VAT collection.
