(Tax News) Caribbean Community member states have benefited from the introduction of value-added taxes, but more reform is needed, says a new paper from the International Monetary Fund.
While additional tax revenue has been collected in those CARICOM member states that have introduced VAT, the IMF said their overall contribution to the tax mix could be much greater.
Zero-rating of domestic supplies, generous exemptions, lower rating of tourism activities, and low registration thresholds have negatively affected the performance of VATs across the region and compromised administrative efforts, the IMF said. The IMF says Caribbean states should look to enhance the efficiency of their regimes.
The IMF has also urged the region to pay closer attention to other major taxes. Challenges include simplifying the personal income tax regimes to simplify compliance and improve compliant rates, such as through withholding tax at sourcing. On corporate income tax, the IMF said Caribbean states could coordinate on the design of these tax systems to ensure there is “no race to the bottom” on rates and to tackle international tax evasion and avoidance.
Despite the many challenges, the IMF said that there is reason to believe that the foundations for real progress are in place. It urged CARICOM members to implement programs to strengthen IT support, audit capacity, and enforcement.
Full report can be found here longres.aspx?sk=43855.0