PARAMARIBO, Suriname (CMC) — The International Monetary Fund (IMF) on Tuesday said authorities in the Dutch-speaking Caribbean Community (Caricom) country of Suriname were not “sufficiently prepared to effectively implement and administer” the value-added tax (VAT) in January last year.

The Washington-based financial institution said that at the request of the Directorate of Taxes and Customs in Suriname a technical assistance mission evaluated how the authorities launched the VAT, administered the tax in the first 12 months of operation, and provided advice on improving the efficiency of the administration of VAT.

It said that Suriname implemented a VAT on January 1, 2023, replacing the sales tax.

According to the IMF, VAT revenue collected for the first 12 months was approximately three per cent of gross domestic product (GDP) and was 95.4 per cent of the collection target.

“The weaker-than-expected VAT performance can be attributed to how the VAT implementation was managed. The authorities were not sufficiently prepared to effectively implement and administer the VAT.”

The IMF said that several risks have been identified and that if not urgently addressed, “there may be weaker VAT revenue collection, continued weak filing and payment compliance, which pose a challenge to the authorities’ fiscal programme”.

In September last year, Finance and Planning Minister Stanley Raghoebarsing defended the decision of the Chandrikapersad Santokhi Government to amend the VAT, admtting then that mistakes had been made in its implementation.

He told the national assembly that the tax base of the products should have been 60 per cent instead of the current 38 per cent, and that the Central Bank of Suriname had calculated that the introduction of 10 per cent VAT raises inflation by 1.1 per cent and that an inflation rate of 40 per cent had been expected for last year.

Trade unions and Opposition parties said that the amendment to the VAT is a condition outlined by the IMF for providing assistance to Suriname.