With San Marino adopting tax transparency, the territory now faces significant challenges in stabilizing the country's banking system and implementing structural tax reforms to provide stable tax revenues, the International Monetary Fund (IMF) says.
However, normalizing relations with Italy could provide a boost to confidence, the IMF said. In particular, the ratification of the double taxation treaty with Italy, which is a precondition for the implementation of key economic and financial cooperation agreements between the two countries, could promote cross-border activity.
As part of fiscal consolidation plans, the latest budget extended the temporary surtax on net income tax paid in the previous year, introduced a special tax on property, and imposed a minimum corporate income tax, applied also to the self-employed.
The IMF recommended that further measures should aim to increase the effective tax rate on personal income, currently at a low of 6.5% (or about one third the European Union average), and also recommended the replacement of the import tax with a broader indirect tax, such as a value-added or consumption sales tax.
The government plans to introduce a broader tax reform in 2013, aimed at improving the equity and efficiency of the tax system, including by unifying tax rates and eliminating some exemptions and deductions.
Source: http://www.tax-news.com/