Over the past decade, governments in the Caribbean region have introduced the value-added tax (VAT) to modernize their tax system, rapidly mobilize revenue and reduce budget deficits. This paper reviews the tax administration reforms that have been undertaken by 20 Caribbean countries with the support of the Fiscal Affairs Department of the IMF and the Caribbean Regional Technical Assistance Center (CARTAC).
The purpose of this study is to describe the main drivers and characteristics of the reforms of the tax systems and their administration(s) in the Caribbean countries, and to determine whether these reforms have achieved their intended outcomes, particularly in regard to revenue mobilization. It will also assess the impact of these reforms in light of nonrevenue performance indicators, such as the expansion of the tax base, simplification of the tax system, increase in compliance levels, and improvement of tax administration effectiveness and efficiency.
The paper concludes that while it has increased revenues, the VAT has yet to reach its full potential. Zero-rating of domestic supplies, generous exemptions, lower rating of tourism activities, and low registration thresholds have affected its performance negatively and compromised administrative efforts.
The paper also finds that although tax administration reforms can boost revenues, countries have just started to address organizational inefficiencies, data integrity issues, and operational ineffectiveness. These reforms need to intensify in order to have a more significant impact on compliance and revenue.
Number of pages 46 • Language English • Countries: Anguilla, Antigua and Barbuda, the Bahamas, Barbados, Belize, Bermuda, the British Virgin Islands (BVI), Cayman Islands, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago, and Turks and Caicos.