The new Budget of Caribbean territory Saint Vincent and the Grenadines includes company and income tax cuts and a three-month tax amnesty.
The standard rate of company tax is to be reduced by 2.5 percent to 30 percent. This reduction is matched by a reduction in the marginal rate of personal income tax from 32.5 percent to 30 percent.
The income tax rate for hotels, previously 30 percent, is to be reduced to 29 percent.
The standard deduction for personal income tax is to rise from XCD18,000 (USD6,668) to XCD20,000 (USD7,409). This means the first XCD20,000 earned by Vincentians will not attract any income tax.
To plug the revenue gap from these tax cuts, the territory's Inland Revenue Department has been instructed to pursue tax delinquents with "renewed focus and vigor." Of particular concern, the Government says, is the failure of businesses and employers to remit VAT, PAYE, and withholding taxes to the Government.
In order to give non-compliant taxpayers an opportunity to pay taxes due, a three-month tax amnesty has been announced, ending on May 15, 2018. During the three months, tax debtors are encouraged to negotiate payment plans and settlement options with the Inland Revenue Department, in exchange for a waiver of a percentage of interest and penalties.
At the expiration of the tax amnesty, the Department will take action against taxpayers who have failed to negotiate appropriate arrangements to settle their tax arrears or who have breached the terms of their payment plan. The budget provides for the hiring of three additional High Court bailiffs, who will be assigned exclusively to assist the Department to strengthen their collection efforts.
In last year's budget, VAT was increased by one percent to fund a new contingencies fund to provide a buffer against the fiscal risks associated with intense adverse weather events. To provide further money for the fund a climate resilience levy will be imposed on all "stay over" visitors in hotels, apartments, and short-term rentals of XCD8 (USD2.96) per night.
With effect from May 1, 2018, the vehicle surcharge on motor vehicles older than four years will be increased.
Domestic customers who consume 150kWh units or more monthly will be required to pay VAT. Currently the VAT exempt threshold is 200kWh.
Beyond tax cuts and tax collection efforts, the Government intends to push through a number of reforms to improve administrative efficiency and equity in the tax system, including the enactment of a modern Tax Administration Procedures Bill and amendments to the Income Tax Act. These measures are intended to address organizational bottlenecks, close loopholes, clarify rules related to doubtful debts and management charges, and further the objective of halting tax evasion by conglomerates.
By Courtesy of Lowtax.net