Commencement: 1 July 2003

republic of vanuatu 

DEBITS TAX aCT
nO. 26 OF 2002

Arrangement of Sections

PART 1 – PRELIMINARY

1	Interpretation
2	Administration
3	Debits to be expressed in currency of Vanuatu

PART 2 –IMPOSITION AND PAYMENT

4	Imposition and payment of debits tax
5	Amount of tax
6	Payment of tax 
7	Recovery of tax by financial institutions
8	Returns

PART 3 –ASSESSMENTS

9	Assessments 
10	Reduction or increase in tax liability
11	Validity of assessments
12	Objections
13	Appeal to Supreme Court
14	Implementation of decisions

PART 4 –OFFENCES AND INSPECTION POWERS 

15	Failing to pay tax or provide returns 
16	False statements
17	Records
18	General power to inspect records

PART 5 –MISCELLANEOUS

19	Refunds 
20	Recovery of tax 
21	Set off 
22	Indemnity
23	Regulations
24	Commencement

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Assent 		31 December 2002
Commencement 	1 July 2003

republic of vanuatu

DEBITS TAX aCT
nO. 26 OF 2002

An Act to impose and collect a debits tax in respect of taxable debits made to certain accounts kept with financial institutions, and for related purposes

Be it enacted by the President and Parliament as follows-

PART 1 - PRELIMINARY

1	Interpretation

In this Act, unless the contrary intention appears:

account means an account kept in Vanuatu with a financial institution.

account holder means the person in whose name, or either or any of the persons in whose names, the account is kept, whether or not the person or persons are residents of Vanuatu.

assessment means the ascertainment of debits tax payable under this Act.

debits tax means the debits tax imposed by this Act.  

Director means the Director of Customs.  

exempt account means:

(a)	a general ledger account of a financial institution, being an account used only for the internal purposes of the financial institution; or

(b)	an account that is included in a kind or class of accounts that are prescribed by the regulations as exempt accounts.

exempt debit means:

(a)	a debit of any interest made to an account; or 

(b)	a debit of any fees or charges made to an account by a financial institution for services provided by the financial institution to the account holder; or 

(c)	a debit that is made solely for the purpose of reversing a credit previously made to an account; or

(d)	a debit that is made for the purposes of recovering from an account holder an amount equal to an amount of debits tax that a financial institution has paid; or

(e)	a debit that is included in a kind or class of debits that are prescribed by the regulations as exempt debits.  

financial institution means a financial institution licensed under the Financial Institutions Act No. 2 of 1999.

Minister means the Minister responsible for finance.  

officer means:

(a)	a person who is a Customs officer within the meaning of the Customs Act No. 15 of 1999; or

(b)	any person authorised by the Director to carry out or undertake functions or duties of an officer for the purposes of this Act;

person includes an individual, any statutory body, company or association of persons corporate or unincorporated.

records means all papers, books, registers, computer or electronic files, tapes, discs, films, videos, sound tracks or any other devices in which information is recorded or stored.

regulations means the regulations made under this Act

taxable account means an account other than an exempt account.  

taxable debit means a debit made to an account other than an exempt debit.

2	Administration

(1)	The Director is responsible for the general administration of this Act.

(2)	The Director may delegate to an officer all or any of the Director’s functions or powers under this Act.  However, the Director must not delegate the power of delegation.

(3)	A delegation:

(a)	must be made in writing; and 

(b)	may be made either generally or subject to express limitations or conditions; and

(c)	may be given for a specified period, but may be revoked at any time by the Director.  

(4)	The Director remains responsible for actions deemed under a delegation.

(5)	The Director may continue to perform a function or exercise a power that has been delegated.

3	Debits to be expressed in currency of Vanuatu
If a debit is made to an account in a currency other than the currency of Vanuatu, a reference in this Act to the amount of the debit is a reference to the amount of the debit expressed in terms of the currency of Vanuatu at the time the debit is made to the account.

PART 2- IMPOSITION AND PAYMENT OF DEBITS TAX

4	Imposition of tax

A debits tax is imposed on each taxable debit of not less than 1,000 Vatu made to a taxable account.

5	Amount of tax

The amount of debits tax payable in respect of each taxable debit made to a taxable account is the amount set out in the Debits Tax Amounts Table in the Schedule.

6	Payment of tax

Debits tax imposed on a taxable debit made to a taxable account must be paid to the Director by the financial institution with which the account is held not later than 14 days after the end of the month in which the taxable debit was made to the taxable account.

7	Recovery of tax by financial institutions

(1)	On the payment by a financial institution of debits tax in respect of a taxable debit made to a taxable account kept with the financial institution:

(a)	the account holder is liable; or

(b)	if there are 2 or more account holders, those account holders are jointly and severally liable;

to pay to the financial institution an amount equal to that tax.

(2)	The financial institution may recover the amount referred to in subsection (1) from the account holder, or from either or any of those account holders, as a debt due to the financial institution, in a court of competent jurisdiction.

(3)	If an amount of debits tax has been refunded to a financial institution in accordance with the provisions of this Act, the account holder is not, or account holders are not, liable to pay to the financial institution under subsection (1) any amount in respect of that amount of refunded debits tax.  

8	Returns 

(1)	If, in any month, a taxable debit is made to a taxable account kept with a financial institution, the financial institution must, not later than 14 days after the end of that month or such later date as the Director allows, provide to the Director a return relating to those taxable debits.  

(2)	A return must be:

(a)	if the Director agrees to the return being in the form of an electronic file or a disc, tape or other device from which information required to be contained in the return is capable of being reproduced, in that form; or 

(b)	in any other case, in a form approved in writing by the Director.  

(3)	A return must contain such information as the Director specifies in writing is required to be contained in the return.  

PART 3 –ASSESSMENTS

9	Assessments

(1)	The Director may at any time make an assessment of the amount of debits tax that is payable in respect of taxable debits made to taxable accounts to which a return provided under section 8 relates.

(2)	The Director may make an assessment, whether or not a financial institution or an account holder has requested the assessment.  The Director must comply with any request that is made.

(3)	If a request is made by a financial institution, the request must be made in writing within 30 days after the day on which the return was provided to the Director.  

(4)	An assessment (whether or not requested by a financial institution) does not affect the liability of a financial institution to pay debits tax under section 6.  

(5)	The Director may amend an assessment to prevent avoidance of tax or to correct an error.

(6)	As soon as practicable after an assessment is made or amended, the Director must give notice in writing to the financial institution or the account holder, or both, of the assessment or amendment and of the amount of debits tax payable or refundable in accordance with the assessment or amended assessment.  

10	Reduction or increase in tax liability

(1)	Subject to subsection (2), if a person's liability to debits tax is reduced following an assessment or an amended assessment, the Director must as soon as practicable:

(a)	refund the amount of any debits tax overpaid; or

(b)	apply the amount of any debits tax overpaid against any liability of the person to the State and refund any part of the amount that is not so applied.

(2)	Any amount of debits tax that has been overpaid must not be refunded to a financial institution or applied against a liability of the financial institution to the State unless:

(a)	the amount of debits tax overpaid has not been recovered by the financial institution from an account holder; or

(b)	the amount of debits tax overpaid has been recovered from an account holder and the Director is satisfied that that amount has been or will be refunded to that account holder by the financial institution.

(3)	If a person's liability to debits tax is increased following an assessment or an amended assessment, the person must pay the additional debits tax to the Director within 14 days after the date of the notice given under subsection 9(6).

11	Validity of assessments

The validity of an assessment is not affected by reason that a provision of this Act has not been complied with.

12	Objections

(1)	A person dissatisfied with an assessment may, within 60 days after 	service on the person of notice of that assessment, lodge with the Director an objection stating fully and in detail the grounds on which the person relies.

(2)	The Director must consider the objection and may either allow it or disallow it wholly or in part.

(3)	The Director must give notice in writing of his or her decision to the objector.

13	Appeal to the Supreme Court 

(1)	If the Director disallows an objection in whole or in part under section 12, the person who made the objection may appeal to the Supreme Court.

(2)	The Supreme Court may:

(a)	confirm, reverse or modify the decision appealed against, and make such orders and give such directions to the Director as may be necessary to give effect to the Court’s decision; or

(b)	refer the matter back to the Director with directions to reconsider the whole or any specified part of the matter.

(3)	If an appeal to the Supreme Court is pending in relation to an assessment, the appeal pending does not in the meantime interfere with, or affect, the assessment and debits tax is payable and may be recovered as if no appeal was pending.

14	Implementation of decisions

(1)	If the decision of the Supreme Court becomes final, the Director must not later than 60 days after that decision becomes final, take such action, including amending the assessment concerned, as may be necessary to give effect to that decision.

(2)	For the purpose of determining when a decision of the Supreme Court becomes final: 

(a)	if no appeal is lodged within the period for lodging an appeal, that decision becomes final at the end of that period; or

(b)	if an appeal is lodge within the period for lodging an appeal, that decision becomes final when the decision of the Court of Appeal is made.

(3)	If an appeal to the Court of Appeal is pending in relation to an assessment, the appeal pending does not in the meantime interfere with, or affect, the assessment and debits tax is payable and may be recovered as if no appeal was pending.

PART 4 –OFFENCES AND INSPECTION POWERS

15	Failing to pay tax or provide returns

(1)	If a financial institution refuses or fails to pay any debits tax payable under this Act, the financial institution is guilty of an offence punishable on conviction by a fine not exceeding 50 million Vatu.

(2)	If a financial institution refuses or fails to furnish any return as and when required by or under this Act, the financial institution is guilty of an offence punishable on conviction by a fine not exceeding 50 million Vatu.  

16	False statements

If a person:

(a)	knowingly or recklessly:

(i)	makes a statement to an officer that is false or misleading in a material particular; or

(ii)	omits from a statement made to an officer any matter or thing without which the statement is misleading in a material particular; or

(b)	intentionally misleads or attempts to mislead an officer in relation to any matter under this Act;

the person is guilty of an offence punishable on conviction by a fine not exceeding 5 million Vatu, or imprisonment for a term not exceeding 5 years, or both.

17	Records

(1)	A financial institution must:

(a)	keep in Vanuatu sufficient records in English, French or Bislama so as to enable an officer to ascertain the financial institution’s liability to debits tax; and 

(b)	retain in Vanuatu those records for a period of at least 5 years or such longer period as the Director determines in writing.  

(2)	If a financial institution contravenes paragraph (1)(a) or (b), the financial institution is guilty of an offence punishable on conviction by a fine not exceeding 50 million Vatu.  

18	General power to inspect records

(1)	Despite anything in any other Act, an officer has at all times full and free access to all records, whether in the custody or under the control of a financial institution, a public officer or a body corporate or any other person, for the purpose of inspecting any records which the Director:

(a)	considers necessary or relevant for the purpose of collecting any debits tax; or

(b)	considers likely to provide any information otherwise required for any such purpose;

and may make extracts from or copies of any such records, and may remove and retain any such records for this purpose.

(2)	Records obtained under subsection (1) and the information contained in such records must be used by an officer only for the purposes of enforcing the provisions of this Act.

(3)	An officer who contravenes subsection (2) is guilty of an offence punishable on conviction by a fine not exceeding 1 million Vatu, or imprisonment for a term not exceeding 2 years, or both.

(4)	An officer may for the purpose of any inspection under this section require any person:

(a)	to give all reasonable assistance in the inspection; and

(b)	to answer all proper questions relating to any such inspection either orally, or, if an officer so requires, in writing, or by statutory declaration, and for that purpose may require the person to attend at such premises as nominated by the officer.

(5)	A person who fails to comply with paragraph (4)(a) or (b) is guilty of an offence punishable on conviction by a fine not exceeding 1 million Vatu, or imprisonment for a term not exceeding 2 years, or both.

PART 5 –MISCELLANEOUS

19	Refunds

(1)	Subject to subsections (2) to (5), if a financial institution has paid any amount in excess of the amount of debits tax payable under this Act, the Director must:

(a)	refund the amount paid in excess to:

(i)	the financial institution; or

(ii)	if the financial institution has recovered that amount from an account holder, the account holder; or

(b)	apply that amount against any liability of the financial institution or the account holder to the State and refund any part of that amount not so applied.

(2)	An application for a refund of an amount of debits tax:

(a)	may be made by the financial institution or the account holder if the amount has been recovered by the financial institution from the account holder; or

(b)	is to be made by the financial institution if the amount has not been so recovered.

(3)	A person must apply in writing to the Director for a refund stating fully and in detail the grounds of the refund.

(4)	An application for a refund must be made not more than one year after the day on which the excess was paid.

(5)	No amount in excess of VT 150,000 is to be refunded under this Act except with the written approval of the Director General of the Ministry responsible for finance.  

20	Recovery of tax 

(1)	Debits tax payable under this Act by a financial institution is recoverable as a debt due to the State in a court of competent jurisdiction. 

(2)	No statute of limitation bars or affects any action or remedy for recovery of debits tax under this Act.  

21	Set off

If a financial institution has failed to pay in whole or in part any amount of debits tax payable under this Act, the Director may set off against that unpaid debits tax any other amount refundable or payable by the State to the financial institution by or under any other Act.

22	Indemnity

An individual is not liable to an action or other proceeding for damages for or in respect to an act done or omitted to be done in good faith in the exercise or performance, or purported exercise or performance, of a power, function or duty conferred on him or her by this Act.

23	Regulations

(1)	The Minister may make regulations:

(a)	for or with respect to any matter that by this Act is required or permitted to be prescribed; or 

(b)	that is necessary or convenient to be prescribed for carrying out or giving effect to this Act.

(2)	Without limiting subsection (1), regulations may be made prescribing forms and rules or procedure for the ascertainment, assessment and collection of debits tax.

(3)	The Minister must table any regulation prescribing exempt accounts or exempt debits in the Parliament as soon as possible after the regulation comes into force.  

(4)	A regulation referred to in subsection (3) remains in force unless and until the Parliament by resolution disallows the regulation in which case the regulation ceases to have effect from the date specified in the resolution.

24	Commencement

This Act commences on 1 July 2003.

SCHEDULE

Section 5

Debits Tax Amounts Table

Item	Amount of taxable debit made to a taxable account	Amount of debits tax payable in respect of each taxable debit made to a taxable account	
1	Not less than VT1,000 but less than VT 9,999
	VT 10	
2	Not less than VT10,000 but less than VT49,999
	VT 20	
3	Not less than VT50,000 but less but less than VT99,999
	VT 30	
4	Not less than VT100,000 but less than VT499,999
	VT 100	
5	Not less than VT500,000 but less than VT999,999
	VT 200	
6	Not less than VT1000,000 but less than VT4,999,999
	VT 300	
7	VT 5,000,000 or more	VT400	

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republic of vanuatu 

bill for the 
DEBITS TAX aCT nO. 26 OF 2002

Explanatory Note

The Debits Tax Bill gives effect to a new tax to replace the cheque tax.  Due to rising government expenditure, pressure has been imposed on the government to find new revenue initiatives.  In this electronic age, new forms of banking have reduced the use of cheques thus eroding a once prominent government source of revenue.  

Part 1
This Part contains the definitions used in the Bill.  The tax applies only in relation to accounts kept with local commercial banks.  The Director of Customs is responsible for the administration of the Act (clause 2).  There is also provision to deal with debits made in foreign currencies (clause 3).  

Part 2
This Part deals with the imposition and payment of the debits tax.  Debits tax is imposed on taxable debits of not less than 100 Vatu made to taxable accounts.  Taxable debits are debits other than exempt debits and taxable accounts are accounts other than exempt accounts (see definitions in clause 1 of the Bill).  Exempt debits include debits of interest and debits of bank fees and charges.  The Minister is also given the power to prescribe additional exemptions to the debits tax (see paragraph (b) of the definition of exempt account and paragraph (d) of the definition of exempt debit).  These regulations must be tabled in Parliament (see clause 22).  

The local commercial banks are required to pay the debits tax in accordance with the amounts set out in the Schedule.  The banks can recover the amounts paid from the account holders.  The banks are also required to lodge monthly returns.

Part 3
This Part gives the Director the power to make an assessment of debits tax eg to prevent an avoidance of tax.  There is provision for an objection to any assessment and appeals to the courts if a person is not satisfied with the decision on the objection.  An objection or an appeal does not affect the liability of a person to pay debits tax.  

Part 4
This Part sets out offences including for not paying debits tax, providing returns or keeping records.  There is a power for officers to inspect records of the bank and this information is to be used only for the purpose of enforcing the provisions of the Act.  

Part 5
This Part deals with refunds, recovery of tax and provides a general indemnity to officers.  The Minister has the power to make regulations.  The Act will commence on 1 July 2003.

Minister of Finance and Economic Management