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Today’s Top Headlines

Turks And Caicos VAT Delay Refused

by Amanda Banks,, London

25 January 2013

The UK's Minister for the Overseas Territories, Mark Simmonds has rebuffed a request from the Turks and Caicos Islands' (TCI) new Premier, Rufus Ewing, that the implementation of the islands' new value-added tax (VAT) regime be deferred to allow time for the development of an alternative.

In a letter to Ewing, Simmonds pointed out that the Turks and Caicos Islands government had had an opportunity since it assumed power to come up with a viable alternative to VAT. He stated that "tinkering with the current disparate and unsatisfactory mix of taxes would not address the underlying weakness and unfairness of these and would not offer a credible alternative to VAT." He added:

"As I have previously set out, I think you have a choice between pressing ahead with the introduction of VAT from April 1, 2013, or making a clear commitment to introducing a credible alternative to VAT such as a property or income tax. I believe that, at this stage, the best option for Turks and Caicos is to press ahead with the implementation of VAT."

"The introduction of VAT in the Turks and Caicos Islands would provide the government with a sustainable and reliable revenue stream by broadening the tax base and addressing the unfairness that many businesses pay little or no tax, in some cases because of excessive tax concessions granted by previous administrations."

He suggested that the government could commit to reviewing VAT after one year, but opined that "a property or income tax would be likely to attract opposition at least as strong as VAT."

Simmonds highlighted that value-added taxes are being adopted across the Caribbean, and that the territory would retain its competitive advantage after the implementation of VAT. "If VAT is implemented as planned TCI will have the lowest rate of VAT in the region (after Haiti) and the highest turnover threshold for the registration of businesses for VAT. TCI will not have the property, corporate and income taxes of most other jurisdictions and the tax system will be simpler, broader and fairer."

TAGS: tax | business | value added tax (VAT) | fiscal policy | international financial centres (IFC) | Turks and Caicos Islands | offshore

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