St Vincent And The Grenadines Introduces VAT

by Amanda Banks, Tax-News.com, London

07 May 2007

The government of St Vincent and the Grenadines has said that the new value-added tax system, which went into effect on May 1, will broaden the tax base while creating more neutrality, equity and fairness in the current tax system.

The introduction of VAT in the jurisdiction means the abolition and replacement of five different consumption taxes, which were charged at rates of up to 55%, with one tax at a standard rate of 15%. The government said it has been able to introduce VAT at a lower rate because the tax base has been widened to include most goods and services, some of which were beyond the scope of the previous tax system.

The government said that exported goods will become more competitive as exporters receive credit for their inputs and VAT on exports will be zero-rated.

The government said: "The VAT Implementation Unit seeks to broaden the tax base, providing neutrality, equity and fairness in the current tax system for the development of St. Vincent and the Grenadines."

A number of items are zero-rated under the VAT system, including food, petrol and diesel, exercise books and newspapers, computer hardware and accessories, and certain medical supplies.

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