Businesses that are registered to pay Value Added Tax (VAT) will be committing a criminal offense if they fail to register under the new Vanuatu Sales Monitoring System (VSMS), the Department of Customs and Inland Revenue has announced.

The department is urging more than 3,000 VAT-registered businesses and individuals across the country to complete registration before the end of this month.

Director of Customs, Harold Tarosa, clarified that the VSMS does not introduce any new form of taxation but is designed to strengthen compliance with the existing VAT law, which has been in place since 1978.

“Government has not introduced any new tax. VAT has existed since 1978. What we are doing now is reforming the system with new initiatives to improve how sales are recorded. The Sales Monitoring System will confirm transactions and ensure they are properly reflected in VAT returns filed at the VAT office,” Mr. Tarosa said.

To support implementation, the department will provide SD cards to be installed in cash registers and sales points, enabling all transactions to be recorded in real time.

Mr. Tarosa also stressed that the government is not accessing or controlling company accounting systems, but is only tracking sales transactions to ensure VAT returns are accurate and complete.

Chief Statistician Andy Calo highlighted the wider economic benefits of the system, noting that VAT data contributes around 70% of Vanuatu’s Gross Domestic Product (GDP) calculations.

“Currently, it takes us around nine months to produce GDP figures. Once the VAT Monitoring System is fully operational, we can release preliminary GDP reports within six months,” Mr. Calo explained.

Authorities are reminding businesses that non-compliance will carry serious penalties, as registration under the VSMS is now mandatory for all VAT payers.