The Government for National Unity and Transformation (GNUT), led by Prime Minister Jeremiah Manele, is actively progressing with a series of comprehensive tax reforms.
This was confirmed by the Minister for Finance and Treasury, Hon. Harry Kuma (MP), during his speech last week in Parliament as part of the motion to thank the Governor General for his speech from the throne.
“The Ministry of Finance and Treasury is currently working on tax reforms and legislative reviews aimed at improving the business environment by modernizing the country’s tax system and, at the same time, fostering economic growth,” said Minister Kuma.
He emphasized that the tax reform agenda is resource-intensive, which is why the government has decided to implement the changes in phases.
Phase One: Tax Administration Act and VAT Introduction
The first phase includes the Tax Administration Act and the introduction of a Value Added Tax (VAT) system.
The Tax Administration Act was passed by Parliament in 2022 and came into force on January 1, 2023. It serves as the legislative foundation for administering the Solomon Islands’ tax laws.
“The Act aims to modernize tax administration and ensure consistency across all taxes managed by the Commissioner of Inland Revenue,” Kuma explained.
The Act also amends the Goods Tax Act (Cap 122), Income Tax Act (Cap 123), Sales Tax Act (Cap 125), and Stamp Duties Act (Cap 126) to eliminate outdated administrative rules and bring them under the new centralized framework.
A VAT Bill is expected to be tabled in Parliament in 2025. The bill proposes a consumption tax levied on most goods and services, where businesses can deduct input VAT paid on purchases from VAT collected on sales — effectively making it a tax on final household consumption.
“The VAT Bill has completed final vetting by the Attorney General’s Chambers and a Cabinet paper has been prepared for its approval. I urge all Members of Parliament to support this bill, as it will transform our tax system, promote business growth, and protect government revenue,” said Kuma.
Phase Two: Income Tax Act Rewrite
Minister Kuma said work has already commenced on Phase Two, which involves a comprehensive rewrite of the Income Tax Act. Cabinet has approved the key policy directions for this rewrite earlier this year.
“The Economic Reform Unit, in collaboration with Asian Development Bank (ADB) advisers, is currently preparing a detailed policy paper to guide this next stage of reform.
“The government has committed to seeing these reforms through, aiming to create a more transparent, efficient, and growth-oriented tax system for Solomon Islands,” he said.
