BASSETERRE, ST. KITTS, FEBRUARY 27TH 2013 (CUOPM) – The economy of St. Kitts and Nevis continues to improve with the twin-island nation expected to have comfortably met the 2012 programme target in respect of reducing the fiscal deficit and could register a surplus of nearly two percent in 2013.
The International Monetary Fund (IMF) publicized a list of fiscal policy commitments that the Federation of St. Kitts and Nevis has made for 2013 as part of its IMF-supported fiscal consolidation programme.
In its report, the Washington-based international financial institution reported that tax receipts markedly improved during 2012 on the back of a strong direct tax-take and non-tax revenues from the Citizen by Investment Programme.
Looking ahead, the territory’s authorities pointed out that the 2013 Budget envisages higher revenues, the curtailment of current expenditure and increased capital expenditure. The budget targets a surplus of 1.7% of gross domestic product (GDP) in 2013, which will aid the territory to continue to reduce the deficit. In exchange for continued IMF support, St. Kitts and Nevis authorities have outlined a number of tax measures to be implemented over the medium term to bring the territory’s finances onto a more sustainable footing,” said Tax News.com.
It said that the majority of measures will focus on improving tax compliance rates and enhancing tax administration.
St. Kitts and Nevis will look to strengthen audits, particularly of large taxpayers, and increase oversight of the newly-introduced value-added tax regime (VAT).
The Federation plans to further integrate information technology in its tax administration processes, including by enhancing its online tax return filing platform to make it more user friendly, and introducing automated audit capabilities.
Authorities have also outlined plans to undertake legislative reform, including harmonising the Tax Administration Procedures Act with the VAT Act to extend best practices in enforcement of other taxes.
In addition, authorities intend to align the provisions of the Small Business Act, the Fiscal Incentives Act, the Hotels Aid Act and the Special Resorts Development Act with international best practices.
The Government has detailed plans to further broaden the tax base, to include a thorough review of customs duties, and tax expenditures (which are estimated to amount to around 2 percent of GDP).
The Government is to rethink which sectors should be eligible for tax exemptions, reduced consumption tax rates, and proposals to revoke current tax holidays in favor of greater accelerated capital depreciation concessions.
It noted that in 2009, St. Kitts and Nevis had the most significant public debt among its Caribbean peers, at 185% of gross domestic product, and the third largest in the world as a percentage of its economy.
Following the introduction of a value-added tax, considerable tax reform and debt restructuring, the Government expects to soon be able to announce that it has reduced its debt to below 100%, into double figures.