The Rise And Fall Of International Tax Haven Vanuatu

Are we entering the end of remote, offshore tax havens? With the publication of the investigative journalism Paradise Papers, which unmasked how the wealthy and powerful hide their assets, international regulators are cracking down all over the world.

This Businessweek article looks at the impact of that crackdown on the economies of former tax havens, by shining a light on Vanuatu, a remote archipelago in the South Pacific. Formerly a tax haven, Vanuatu has been sanctioned by the Financial Action Task Force, an intergovernmental body created by the Group of Seven leading industrial countries, and put on its "Grey list", which also includes Iraq, Syria, and Yemen. According to the article, "the action effectively turned Vanuatu banks into financial pariahs".

These sanctions, however, will not just hurt the powerful and wealthy, according to Vanuatu Prime Minister Charlot Salwai. "Its effect," he said, "will be felt on imported food, such as rice, and fuel."

This article details Vanuatu's rise and fall as an international tax haven, and the island's current struggle to recover in the aftermath of regulators. As journalist Brian Bremner writes, 

"For Vanuatu, there’s no turning back. One way or another, it faces disruptive change today as surely as it did back when James Michener was stationed here as a young U.S. Navy officer during World War II. The noose is tightening on tax havens, and Salwai or his successors will need to find new strategies to attract overseas talent and capital. For this remarkable Bali Hai-like nation of azure lagoons, hidden waterfalls, and volcanic lava-showers, a second act can’t come soon enough."