The Republic of Vanuatu is a Pacific Island Nation located in the South Pacific Ocean. The archipelago, which is of volcanic origin, is some 1,750 kilometres (1,090 miles) east of Northern Australia, 540 kilometres (340 miles) northeast of New Caledonia, east of New Guinea, southeast of the Solomon Islands, and west of Fiji.
Vanuatu was first inhabited by Melanesian people. The first Europeans to visit the islands were a Spanish expedition led by Portuguese navigator Fernades De Queiros, who arrived on the largest island in 1606. As the Portuguese and Spanish monarchies had been unified under the king of Spain in 1580 (following the vacancy of the Portuguese throne, which lasted for sixty years, until 1640, when the Portuguese monarchy was restored), Queirós claimed the archipelago for Spain, as part of the colonial Spanish East Indies, and named it La Austrialia del Espíritu Santo.
In the 1880s, France and the United Kingdom claimed parts of the archipelago, and in 1906 they agreed on a framework for jointly managing the archipelago as the New Hebrides through a British–French Condominium. An independence movement arose in the 1970s, and the Republic of Vanuatu was founded in 1980.
The four mainstays of the economy are agriculture, tourism, offshore financial services, and cattle raising. There is substantial fishing activity, although this industry does not bring in much foreign exchange. Exports include copra, kava, beef, cocoa, and timber, and imports include machinery and equipment, foodstuffs, and fuels. In contrast, mining activity is unsubstantial.
Financial Services are an important part of the economy. Vanuatu is a tax haven, that until 2008 did not release account information to other governments or law-enforcement agencies. International pressure, mainly from Australia, influenced the Vanuatu government to begin adhering to international norms to improve transparency. In Vanuatu, there is no income tax, withholding tax, capital gains tax, inheritance tax, or exchange control. Many international ship-management companies choose to flag their ships under the Vanuatu flag, because of the tax benefits and favorable labor laws (Vanuatu is a full member of the International Maritime Organization (IMO) and applies its international conventions). Vanuatu is recognized as a "flag of convenience" country. Several file-sharing groups, such as the providers of the KaZaA network of Sharman Networks and the developers of WinMX, have chosen to incorporate in Vanuatu to avoid regulation and legal challenges. In response to foreign concerns the government has promised to tighten regulation of its offshore financial center. Vanuatu receives foreign aid mainly from Australia and New Zealand.