IMF hired by TCI Gov’t; VAT seems to be a top choice for new tax

By Denadrea Hamilton

Editor

#TurksandCaicos, April 15, 2022 – Representatives of the International Monetary Fund, IMF are in country on an invitation by the Turks and Caicos Islands Government to conduct a study on the current tax regime, hired to determine, says the Minister of Finance, how TCI can improve its tax earnings.

E Jay Saunders, Minister of Finance, Investment and Trade and Deputy Premier informed our news organization this past Sunday, the goal is a tax regime which is “progressive, sustainable, predictable and simple to administer.”

While there is no highlighting of VAT by the Finance Minister in his comments to us, it has become a blazing headline as the notion, rejected by Turks and Caicos in the last PNP Administration, continues to be an option.

The Finance minister in response to our question on whether the government is again wooing the idea of Value Added Tax, explained:  “in terms of government revenue, we’re not looking at any specific area as yet.”

There have been a number of meetings with stakeholders and in this round of work, media is not included.

What will come of those session, is a report with recommendations, which could include that VAT.

Hon Saunders said since Government commissioned the study, it will be up to “us, if and how we want to move forward with the recommendations.  All we’ve done at this moment, he shared, is commissioned a study of our tax system.  Right now we’ve taken no position on taxes.”

In a statement from the Turks and Caicos Islands Chamber of Commerce on April 7, there was focus on the possibility of introducing a broad based tax, like VAT informed Daniel Le Vin, 1st Vice President of the Chamber.

The Chamber makes it clear that it does not support the introduction of VAT.  No broad based tax is supported by the Chamber of Commerce including income or corporation tax.  In fact, the Chamber explains VAT would be “bad” for the TCI because it would be so very costly and complex to administer; the Chamber feels it would be a negative blow to small business because of what it would take to administer a VAT tax.

The Chamber also expressed that not at all is a the TCI a low tax jurisdiction.  Stating this:  “the tax burden is relatively high within a regime which works reasonably well…”

The suggestion by the Chamber, improve on the efficiencies of the current systems.

Another suggestion, since almost everything is imported, continue the customs duty and raise taxes on other areas like accommodation tax and stamp duty.

Supplied to the IMF team by the Chamber of Commerce said LeVin that:  “The Chamber cautions against any significant changes which might increase the overall tax burden and cost of living or doing business in the TCI or create administrative difficulties.”