Saint Kitts and Nevis has received praise from the International Monetary Fund for improving tax revenue collections and posting a large fiscal surplus in 2014.
However, the IMF also cautioned authorities that recently introduced value-added tax (VAT) and customs duty exemptions could erode past gains unless the Government considers measures to offset the revenue impact of these tax breaks.
From April 7, 2015, the Government exempted food, medicine, and funeral expenses from VAT. Exemptions had already been in place for bread, flour, fuel, infant formula, disposable diapers, milk, oats, rice, and sugar, among other items.
The IMF recommended that the federation continue efforts to reform tax administration, review public spending, seek to limit tax incentives, and improve monitoring of public enterprises.