Vanuatu country profile - Overview
- 17 March 2015
- From the section Asia
Vanuatu - a string of more than 80 islands once known as the New Hebrides - achieved independence from France and Britain in 1980.
Most of the islands are inhabited; some have active volcanoes.
Vanuatu is mountainous and much of it is covered with tropical rainforests. Like most of the area, it is prone to earthquakes and tidal waves. In 2015 it was hit by Cyclone Pam which caused widespread damage.
Most of the people live in rural areas and practise subsistence agriculture.
Vanuatu has been spared the unrest which has befallen neighbouring countries such as the Solomon Islands and Fiji, although the largest island, Espiritu Santo, experienced a brief insurrection in 1980.
Local traditions are strong. Women, for example, generally have lower social standing than men and have fewer educational opportunities.
Despite strong growth, the economy has struggled to meet the needs of Vanuatu's expanding population.
The main sources of revenue are agriculture and eco-tourism. Both depend on the weather, and when, as in 1999, cyclones and persistent rain hit Vanuatu, both suffer.
Tax revenue is derived from import duties and from value added tax (VAT), and there is no personal income tax.
Vanuatu tightened up its tax and regulatory systems after the Organisation for Economic Cooperation and Development (OECD) warned that it could face sanctions if lax taxation regimes were exploited by criminals for money-laundering.
By 2011, Vanuatu had made sufficient progress in implementing internationally-agreed tax standards to be removed from the OECD's "grey list" of countries deemed to have not yet gone far enough in curbing harmful tax practices.
Australia, a key donor, has pushed for good governance and economic reform in the islands.