IMF urges St Vincent and Grenadines to Improve Tax Compliance
The International Monetary Fund (IMF) has called on the authorities in St Vincent and the Grenadines to take steps to improve tax compliance.
Tax compliance in the Caribbean territory has declined by about 20 percentage points since 2008 to the current estimated level of 65 percent, the IMF said.
This reflects several factors, including lax enforcement of tax laws, weak auditing capacity at the Inland Revenue Department (IRD), and lack of progress in establishing post-clearance auditing and risk management at the Customs and Excises Department (CED). This has also resulted in a significant build up of tax arrears, including value-added tax (VAT) arrears (estimated at about 1.5 percent of GDP as of September 2012).
The government is seeking assistance from the IMF in boosting auditing capacity, which it recognizes as being critical to ensuring tax compliance.
The IMF also urged the government to eliminate discretionary tax exemptions. The IMF also encouraged the authorities to implement market-based property taxes and increase control over the largest taxpayers by further strengthening the Large Taxpayer Unit.
The authorities agreed that there was scope to reduce tax exemptions and pointed out that they were already working on proposals to streamline these exemptions.
Source: lowtax
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