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IMF Urges Saint Vincent To Broaden The Tax Base

by Lorys Charalambous, Tax-News.com, Cyprus

21 December 2017


The International Monetary Fund has recommended that authorities in the Caribbean territory Saint Vincent and the Grenadines look to broaden the tax base.

The IMF said the territory's fiscal situation is expected to have worsened substantially in 2017, due to a decline in tax revenue, after exceptionally high receipts were recorded in 2016.

To avoid having to raise tax rates, the IMF said local authorities should contain the wage bill and curb growth in public pensions. On the revenue side, the IMF noted there is ample scope to broaden the tax base, in particular by streamlining tax concessions and exemptions and collecting tax arrears.

Finally, the IMF reinforced the need for the territory to implement new legislation on tax administration, stating that assigning a tax identification number to each taxpayer is critical.

Saint Vincent and the Grenadines's 2017 Budget had included an increase to the value-added tax (VAT) rate and measures to counter stamp duty avoidance. In the area of VAT, the standard rate of VAT was hiked from 15 percent to 16 percent, and the rate for accommodation and other tourism related activities was increased from 10 percent to 11 percent.

Other VAT changes include an increase to the registration threshold to XCD300,000 (USD111,111), with effect from May 1, 2017; a decrease in the VAT rate on berth rentals in any marina or shipyard from 16 percent to 11 percent; and the removal of VAT on biodegradable packaging and food containers.

To address various stamp duty mitigation strategies, the Stamp Act was proposed to be amended to make it clear that duty is payable on all conveyances or re-conveyances to a third party.

TAGS: compliance | tax | value added tax (VAT) | tax compliance | Saint Vincent and the Grenadines | banking | budget | International Monetary Fund (IMF) | legislation | tax rates | tax breaks

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