St Kitts To Review Tax Exemptions
by Mike Godfrey, Lowtax.net, Washington
26 March, 2014
The International Monetary Fund (IMF) has advised the government of St Kitts and Nevis to limit the number of tax exemptions the territory offers to improve the efficiency and fairness of the tax regime.
On March 19, 2014, the Executive Board of the IMF completed the seventh and eighth reviews of St Kitts and Nevis's economic performance under a program supported by a 36-month Stand-by Arrangement (SBA). Following the completion of the review, Min Zhu, Deputy Managing Director and Acting Chair of the IMF, stated:
"While there have been significant advances in structural reforms, greater effort will be needed to implement the remaining planned reforms to generate further efficiencies in the public sector and foster private sector growth. Priority should be given to measures to enhance revenues by strengthening tax administration and limiting tax exemptions, and to streamline public expenditure, including through civil service reform."
Zhu urged St Kitts and Nevis to build on the progress it has made under its IMF-supported program. He also said that "the bulk of revenues from the Citizenship by Investment program should be saved to build buffers, facilitate a faster decline in debt, and finance productive capital projects."
In February 2013 the IMF publicized a list of fiscal policy commitments that the Caribbean territory made as part of its IMF-supported fiscal consolidation program. The majority of measures focused on improving tax compliance rates and enhancing tax administration. The government said it would rethink which sectors should be eligible for tax exemptions, reduce consumption tax rates, and consider the revocation of the current tax holidays and instead offer greater accelerated capital depreciation concessions.
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