Nauru (pronounced nah-oo'-roo) in the South Pacific Basin is one of the world's tiniest nations with a total land area of just over 8 square miles. This South Sea island was first visited by Captain John Fearn of the whaler "Hunter" in 1978, who called it "Pleasant Island". To find Nauru on the map look for an ink spot approximately 2,500 miles northeast of Sydney, Australia.

British Law Provides Foundation for Nauru Companies Law

Nauru is a member of the British Commonwealth of Nations, but not the U.N. The only English is written. Nauru is administered by a president chosen by the popularly elected 18-member legislative council.

Nauru's government has never made much of an effort to promote Nauru's no tax haven status. Press enquiries are never answered, visas are virtually unobtainable, and foreigners can't purchase land. Transportation services are horrible. Approximately 18 banks, one hotel and one insurance company service the island.

Nauru enacted corporation and trust laws in 1972 to make itself attractive as a modern financial center. Incorporation costs about $900 company in good standing. Nauru trusts and companies can be used to hold land overseas, manage stock portfolios, and avoid inheritance and estate duties. There are probably only a few hundred companies registered in Nauru at this writing.

Nauru is one of the few tax havens that allow corporations to move in or out without dissolution. A corporation organized anywhere can change its domicile to Nauru by notifying the Nauru Registrar of Corporations that the original jurisdiction permits the transfer.

Nauru is a stable democracy with an independent judiciary. Nauru has no capital city. Nauru has no currency of its own and uses the Australian dollar as a legal tender. Australian tax authorities have blacklisted the country because of its tax haven status.

No Tax Haven Paradise

Nauru does not impose any taxes. Nauru has not signed any income tax treaties with any nation.


Citizenship is limited to native Nauruans, who number about 9,000 and are chiefly of Polynesian, Micronesian, and Melanesian descent. They speak Nauruan, a language unrelated to the Polynesian or Micronesian linguistic families. Nauruans pay no taxes and enjoy free education, health care, and other social services. Many jobs, especially in the phosphate industry, are held by foreign contract laborers.


Nauru's prosperous economy is based on the export of phosphate rock, which is expected to cease in the mid-1990s. To provide for a secure economic future, the government has invested much of the phosphate revenue overseas in projects ranging from a skyscraper in Melbourne to phosphate plants in the Philippines and India. The country imports most foodstuffs and virtually all manufactured goods. Phosphate mining has rendered most of the island barren and unsuitable for agriculture without massive imports of topsoil. Nauruan attempts to purchase another Pacific island  have foundered on the question of sovereignty.


First visited by British navigators in 1798, Nauru was annexed by Germany in 1888. Following World War I the island was mandated to Britain, New Zealand, and Australia by the League of Nations. Occupied by the Japanese during World War II, the island later became a UN trusteeship administered by Australia. Phosphate mining made Nauru increasingly uninhabitable, so it was long thought that the people would have to be resettled elsewhere. They insisted on independence, granted in 1968. The government then took control of the phosphate industry and increased its profits.

Nauru's population is now estimated to be about 9,000 and are a mixture of Polynesian and Melanesian. Christianity is Nauru's main religion.

Nauruans are said to be looking for a new island to move to because their own tiny isle has been devastated by over mining of phosphate ore. According to the Offshore Financial Review, Australia may decide to relinquish sovereignty of Curtis Island, and if this happens Nauru may become the first tax haven to transfer itself to another island.

The Setting Up of a Bank

Nauru offers the possibility of setting up a bank with no requirement for local directors or any local presence apart from a registered office and company secretary in Nauru. These services would normally be provided by a management organization.

Nauru will accept applications for unrestricted licenses or for in-house type banks but in practice the authorities are unwilling to grant unrestricted licenses to anybody other than an existing bank and would also impose a requirement that the applicant set up an office and associated infrastructure in Nauru. The capital requirements for an  in-house bank are low - USD 100,000 - and the time scale is in the order of one to three months.

A Nauru in-house bank is prohibited from dealing with anybody other than associated companies and individuals but it would be possible for your client to set up a finance company which conducted a broader range of activities. For example, the finance company could take deposits from third parties and would then deposit the money with the bank. Any literature which was drafted could make clear reference to the fact that the finance company was a wholly owned subsidiary of XYZ Bank Ltd. and contain further details about the bank. The costs for obtaining this type of license would be in the order of USD 20,000 and the time-scale would be one to two months. (Courtesy of New Providence Press: Tax Havens of the World).

Latest: Nauru elects fourth president this year (2003). Click here for more information.

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