IMF Recommends VAT Reform in Cape Verde to Boost Investment and Cut Poverty by 2026

• The IMF recommends simplifying or eliminating VAT exemptions in Cape Verde to generate fiscal space of about 1.2% of GDP without raising VAT rates.
• The additional revenue could fund increased public investment in infrastructure and education, boost production potential, and support formal job creation.
• Short-term consumption impacts from removing exemptions could be offset by targeted cash transfers, reducing poverty and inequality significantly.
• The IMF projects the poverty rate could fall below 2% and the Gini coefficient to 0.378 with these reforms.
• The long-term benefits of broadening the tax base outweigh short
• and medium-term concerns, supporting Cape Verde’s goal to eradicate extreme poverty by 2026.

Source: plataformamedia.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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