Trinidad and Tobago Tax Amnesty 2019

A welcome opportunity for taxpayers to wipe the slate clean before the implementation of the Trinidad and Tobago Revenue Authority (or is it just a tried and tested method for the T&T Government to generate Revenue before an election?)

The Miscellaneous Provisions (Tax Amnesty, Pensions, Freedom Of Information, National Insurance, Central Bank, Companies And Non-Profit Organisations) Bill, 2019 was assented to on 25th June 2019.

This Act includes a provision for another tax amnesty (the “Amnesty”) for the period 15 June to 15 September 2019, and waives the following:

(a) interest on any outstanding tax due and payable for the years up to and including the year ending 31^st December 2018, where the tax is paid prior to or during the prescribed period;

(b) outstanding interest charged on any outstanding tax due and payable for the years up to and including the year ending 31^st December 2018, where the tax is paid prior to or during the prescribed period;

(c) all other penalties due and payable on or in respect of any tax or outstanding tax or interest for the years up to and including the year ending 31st December 2018, where the tax is paid prior to or during the prescribed period;

(d) all penalties on any outstanding return for the years up to and including the year ending 31st December 2018, where the return is filed prior to or during the prescribed period; and

(e) all penalties with respect to any return for the years up to and including the year ending 31st December 2018 and filed prior to 15^th June 2019, where such penalties have not been paid.

The Amnesty applies to the following taxes: –

Corporation Tax;
Business Levy;
Green Fund Levy;
Income Tax;
Petroleum Tax;
Supplemental Petroleum Tax;
Unemployment Levy;
Financial Services Tax;
Hotel Accommodation Tax;
Insurance Premium Tax;
Health Surcharge;
Property Tax;
Stamp duty;
Online Purchase Tax; and
Value Added Tax.

The Honourable Minister of Finance (“MoF”) has stated that the purpose of the Amnesty is to enable the ‘soon to be established’ Trinidad and Tobago Revenue Authority (“TTRA”) to start with a clean slate.

The MoF urged taxpayers to take advantage of the Amnesty on the basis that that there would not be another Tax Amnesty after the TTRA comes on stream. The joint select committee report and amended legislation to bring the TTRA into force are expected to be laid before parliament soon.

The MoF has set a target to raise approximately TT$500M from this Amnesty, stating that the last tax amnesty generated TT$750M.

In the last ten years there has been four tax amnesties. The Amnesty provides another welcomed opportunity for taxpayers who have not yet paid all of the outstanding taxes up to and including the last tax year.

Jurisdiction and Judicial Review in Caribbean Tax Jurisprudence

A recent decision of the Trinidad and Tobago Tax Appeal Board reveals the limited scope of its jurisdiction to adjudicate on matters of interest to taxpayers, and raises legitimate questions whether Judicial Review to the High Court is an under-utilized remedy in Caribbean tax jurisprudence.

Background

In JAVC Limited v. the Board of Inland Revenue (“JAVC Limited”), the issue for the Tax Appeal Board (the “Board”) was whether it had jurisdiction to hear an appeal where the taxpayer implored it to find, inter alia, that it was improper for the Board of Inland Revenue (the “Revenue”) to commence enforcement proceedings against it founded upon a VAT assessment that had been superseded and / or discharged as evidenced by a subsequently dated VAT Clearance Certificate which stated:

“[The Appellant] has to date discharged all obligations and paid all taxes due under the provisions of the Value Added Tax Act, Chapter 75:06”

The triggering point for the Notice of Appeal was the taxpayer’s receipt of a letter from the Revenue indicating the commencement of collection proceedings in relation to the superseded and / or discharged assessment.

The Ruling

The Board is a Superior Court of Record established by the Tax Appeal Board Act, Chap. 4:50 (the “TAB Act”) to provide for appeals from assessments to income tax, corporation tax and other taxes.

Although in the Board’s reasons it acknowledged “the cardinal principle of natural justice which establishes the right of a taxpayer to challenge an assessment made upon it through the dispute resolution mechanism as specified with the tax legislative regime before the [Revenue] may undertake appropriate proceedings for the recovery of outstanding tax liabilities”, it nonetheless ultimately concluded that its jurisdiction was constrained by section 3(4) of the TAB Act as follows:

“38. In our examination of the question as to whether the instant appeals were filed in accordance with the provisions of section 3(4) of the Tax Appeal Board Act, Chap. 4:50, we begin by considering the scope of the particular section which provides: –

‘(4) The Appeal Board shall have jurisdiction to hear and determine –

(a) Appeals from the decision of the Board of Inland Revenue upon objections to assessment under the Income Tax Act;

(b) Appeals from such other decisions of the Board of Inland Revenue as may be prescribed by or under that Act;

(c) Such other matters as may be prescribed by or under this Act or any other written law.’

39. The section therefore establishes that the jurisdiction of the Tax Appeal Board relates to appeals from either the decision of the [Revenue] upon its determination of an objection or a decision of the [Revenue] in which the appeal process to the Tax Appeal Board is prescribed such as for example, where the [Revenue] has made a decision not to extend the time to a taxpayer for lodging an objection to an income tax assessment or to cancel the VAT registration of an aggrieved VAT registrant.” [Emphasis Added]

The decision further reveals that not only does the Board have limited jurisdiction to adjudicate in disputes between taxpayers and the Revenue, but it also takes a very restrictive view on what constitutes a “decision” for the purposes of section 3(4) of the TAB Act. Specifically, the Board also held

“44. C. The communication which the Appellant has relied on as the decision of the [Revenue] upon which its Notices of Appeal have been founded, being the letter of the [Revenue] dated 22^nd March 2017, is in our opinion not a letter in which the [Revenue] has made a decision but amounts to a notice in which the [Revenue] has communicated to the Appellant its intention to commence enforcement proceedings against it as it relates to its outstanding tax liability …”

The Board did not elucidate the legal distinction between a “decision” and a “notice of an intention to [take an action]” for the purposes of the TAB Act. In lieu of an explanation, we assume the Board is unlikely to view correspondence that is unilaterally issued by the Revenue to the taxpayer as a “decision” – even though such correspondence or notice may be indicative of the fact that a number of underlying decisions had been made prior to its issuance. Presumably, as a matter of form, the Revenue’s correspondence must be expressly referable to a specific request made by a taxpayer in order for the Board to consider it to be a “decision”.

Implications

This decision of the Board is a very useful precedent from the perspective of a tax practitioner. Specifically, the borders of the Board’s jurisdiction – unless and until subsequently redefined by statute or a higher court – are now clearly delineated. The Board deals, fundamentally, with (i) appeals following a decision by the Revenue in respect of an objection and (ii) other specific (and limited) areas listed in legislation that expressly confer a route of appeal to the Board. But where the taxpayer’s contention with the Revenue does not fit neatly into the “assessment-objection-appeal” conveyor belt, then the Board is not the appropriate arena for adjudication. So, for example, in circumstances that the taxpayer alleges that the Revenue’s conduct is in breach of certain principles of natural justice, or where the Revenue prohibits taxpayer from filing a Tax Return, or where the Revenue has not paid interest on an outstanding VAT refund in accordance with the VAT Act, or where the Revenue refuses to waive interest or penalties (to name just a few of the myriad of issues taxpayers in T&T routinely face), the appropriate judicial forum to obtain recourse may not be the Board.

Alternatively, section 5(1) of the Judicial Review Act, Chap 7:08 provides that an application for judicial review of a decision of an inferior Court, tribunal, public body, public authority or a person acting in the exercise of a public duty or function in accordance with any law, shall be made to the High Court in accordance with this Act and in such manner as may be prescribed by Rules of Court.

In Preston v Inland Revenue Commission, [1985] AC 835 (House of Lords) it was stated that:

“Judicial review is available where a decision-making authority exceeds its powers, commits an error of law, commits a breach of natural justice, reaches a decision which no reasonable tribunal could have reached, or abuses its powers. Judicial review should not be granted where an alternative remedy is available. In most cases in which the commissioners are said to have fallen into error, the remedy of the taxpayer lies in the appeal procedures provided by the tax statutes to the General Commissioners or Special Commissioners. This appeal structure provides an independent and informed tribunal which meets in private so that the taxpayer is not embarrassed in disclosing his affairs and the commissioners are not inhibited by their duty of confidentiality. The commissioners and the tribunals established to hear appeals from the commissioners have wide knowledge and experience of fiscal law and practice. Appeals from the General Commissioners or the Special Commissioners lie, but only on questions of law, to the High Court by means of a case stated and the High Court can then correct all kinds of errors of law including errors which might otherwise be the subject of judicial review proceedings.”

In Preston, the House of Lords stated that a taxpayer can apply for judicial review of a decision of the Revenue if it failed to discharge its statutory duty to taxpayers or abused its power. For the purposes of judicial review, abuse of power included the unfair exercise of a statutory power if the Revenue’s decision or action was equivalent to a breach of contract or breach of representation giving rise to estoppel.

Given, as stated in Preston, “judicial review should not be granted where an alternative remedy is available”, does the Board’s articulation of its own limited jurisdiction in JAVC Limited now fully support Judicial Review applications of Revenue decisions directly to the High Court in circumstances that Caribbean tax practitioners had previously, and exclusively, sought recourse from the Board? We suspect that until and unless overturned, the JAVC Limited decision will help to establish a paradigm shift in Caribbean tax jurisprudence in favour of the High Court. Very interesting times are ahead.

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The views expressed in this article are the views of the author(s) only and shared for discussion and information purposes only; they are not intended to constitute legal advice. Readers are encouraged to consult with their professional advisors for advice concerning specific matters.

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T&T Budget 2019: “Turnaround”

On October 1, 2018, the Minister of Finance released his Budget Document entitled “Turnaround”.

On October 1, 2018, Trinidad and Tobago‘s Minister of Finance released his Budget Document entitled “Turnaround”.

The following is a summary of the key proposed fiscal measures:

Subject	Proposed Measure	Proposed Date of Implementation
Tax Administration	Trinidad and Tobago Revenue Authority	2019 (Full benefits of reform to manifest in 2020)
Property Tax	Board of Inland Revenue to issue notices to property owners for the payment of property tax.	2019 Note: Property Tax will only be implemented and collected in respect of calendar year 2019
Agriculture	Agriculture Financial Support Programme: The provision of one-off grants for successful and approved agricultural producers with investment opportunities in a range of activities, including modern farming technology, research and product development, brand building, food safety compliance requirements, value added initiatives and energy-saving and labour-saving technology.	October 3, 2018
Fuel Subsidy	Increase the cost of super gasoline from $3.97 per litre to $4.97 per litre.	Immediately
Public Service Pension	Minimum public service pension of $3,500 per month immediately upon retirement of the public servant.	January 1, 2019
Crime Stoppers	Crime Stoppers to increase the current maximum reward from $10,000 to $100,000 for information on the 25 most wanted criminals as identified by the Trinidad and Tobago Police Service which will lead to the successful conviction of those persons. An overall increase in the budgetary allocation for Crime Stoppers by $2.5 million.	January 1, 2019
Remote Health Centres	Three (3) health centres located in Grand Riviere, Blanchisseuse and Cedros would remain open on a 24 hour / 7 days basis.	January 1, 2019
Penalties Under Children’s Act	An increase by 100% of all fines levied in connection with the prevention of cruelty to children as detailed in the Children’s Act.	January 1, 2019
Stamp Duty	The Stamp Duty threshold for residential property to be increased from $850,000 to $1.5 million for first time home owners.	January 1, 2019
Penalties under the Litter Act	100% increase in all penalties under the Litter Act.	January 1, 2019
Penalties for Bush/Forest Fires	Increase the fine from $1,500 to $5,000 under the Agriculture and Fires Act for committing such an offence.	January 1, 2019
Compliance with the Board of Inland Revenue		January 1, 2019
TD1	Under section 98(2)(b) of the Income Tax Act – to increase penalty/fines from $3,000 to $10,000 for submission of incorrect information of TD1s regarding fraudulent documents to support claims.
Business Levy	Under section 5A (2)(c) Income Tax Act – the threshold for a self employed individual subject to Business Levy to be increased from $200,000 to $360,000.
Fraud	Under section 119 Income Tax Act – to increase the penalty for the offences in respect of Fraud from $50,000 to $250,000.
Registration of Clubs Act	Under the Registration of Clubs Act – the rate of interest for late payment of taxes is being increased from 15% to 20%.
Food Cards	Increase the value of the Food Card: • for households with 1-3 persons: from $410 per month to $510 per month; • for households with 4-5 person: from $550 per month to $650 per month; and • for households with 6 and more persons: from $700 per month to $800 per month.	January 1, 2019
Disability Grants	•Remove the age eligibility for the disability grant under the Public Assistance Act to allow disabled under the age of 18 to access the grant. •Increase the Disability Grant for recipients 18 years and older from $1,800 to $2,000.	January 1, 2019
Public Assistance Grant	Increase the Public Assistance Grant by $150 as follows: •for 1 person from $1,150 to $1,300; •for 2 persons from $1,400 to $1,550; •for 3 persons from $1,600 to $1,750;and •for 4 or more persons from $1,750 to $1,900.	January 1, 2019
Senior Citizens’ Pensions	The cap on the Senior Citizens’ Pensions will be increased to $6000.	January 1, 2019
Tax Allowance for Tertiary Education	The allowance for tertiary education expenses will increase from $60,000 to $72,000 per year.	January 1, 2019

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BUDGET-STATEMENT-2019

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Bauhuis Coating International Limited v The Board of Inland Revenue

An oldie, but a goodie: Value Added Tax Implications of Bauhuis Coating International Limited v The Board of Inland Revenue

Background

Construction projects can be very expensive. Moreover, they often involve a number of specialist technical service providers, some of whom may not be resident in Trinidad and Tobago (“T&T”), and will not be registered for Value Added Tax (“VAT”).

For unregistered recipients of vatable services, VAT represents a 12.5% uplift on the overall cost of the Project. But make no mistake: registered receipts of vatable services are also affected by upfront VAT costs. Specifically, not only must such costs be financed, which naturally affects cash flow over the course of the project, but the prudent finance manager is cognizant of the deleterious impact of the time value of money ¹ (i.e. that between the date the VAT expense is incurred, and the date a refund of overpaid VAT is received from the Board of Inland Revenue (the “Revenue”), the real value of the money to be refunded will have depreciated).

Tax Planning

Against the background that VAT is a real cost, multinationals seeking to do business in the region will be wise to consider whether opportunities exist to mitigate their exposure to VAT.

In T&T, the VAT Act is replete with opportunities for multi-nationals to limit exposure to VAT. One such provision is Section 12 of the 2^nd Schedule of the VAT Act, Chap. 75:06 (the “VAT Act”), which provides as follows:

“12. Any services which are supplied for a consideration that is payable in a currency other than that of Trinidad and Tobago, to a recipient who is not within Trinidad and Tobago at the time when the services are performed.” [Emphasis Added]

A supply of services falling within Item 12 is zero-rated, and is therefore not chargeable to VAT. The scope of this provision has been considered by the Court of Appeal in Bauhuis Coating International Limited v The Board of Inland Revenue, Civil Appeal No. 187 of 2011 (“Bauhuis”).

The material issue in Bauhuis was whether, in certain circumstances, commercial supplies made by a VAT registrant in T&T for the ultimate benefit of a person who is also within T&T, may nonetheless classify as a zero-rated transaction for the purposes of Item 12 of Schedule 2 of the VAT Act. The “certain circumstances” being the interposition of non-resident persons between the ultimate service provider and ultimate beneficiary in a supply chain of sub-contracted services.

The material facts of Bauhuis are as follows:

British Gas Trinidad and Tobago Limited (“BGTT”), a company resident in T&T, entered into a master contract with Allseas Marine Contractors S.A. Switzerland (“AS”), a company resident in Switzerland, for the procurement (“P”) and installation (“I”) of pipelines in T&T.

AS thereafter contracted with Bauhuis Coating Limited (“BCL”), a Cyprus resident company, to coat (“C”) the pipelines. BCL then subcontracted this responsibility to its wholly owned subsidiary, Bauhuis Coating International Limited (“BCIL”), which was resident in T&T. BCIL thereafter physically executed the pipe coating services within Trinidad in accordance with the contract (the said contract) with their parent Company BCL.

Chart of Service Supply Chain:

BCIL regarded all its commercial supplies performed under the said contract as zero-rated under Item 12 of Schedule 2 of the VAT Act because, pursuant to its contract, it provided services (i) to BCL who was not within T&T at the time of the supply; and (ii) for a consideration that was payable in United States dollars.

During an audit of the value added tax returns the Revenue discovered the numerous contractual linkages in the procurement and installation of pipelines service supply chain, and formed the view that the commercial supplies provided by BCIL were subject to VAT at the then rate of 15%. BCIL filed an appeal against the assessment. Specifically, the Revenue contended that BGTT was the recipient within the meaning of Item 12 and since that is a T&T company carrying on business in T&T, the supply by the Appellant did not qualify to be zero rated.

The Tax Appeal Board, in affirming the assessment of the Revenue, based its decision in its judgement on the ground that the recipient was BGTT for the purposes of Item 12.

Issue:

Ultimately, the decision of the Court of Appeal turned on the definition of “recipient” in the VAT Act.

The Decision

The term “recipient” under the Act does not envisage a third party – i.e. some remote person who between himself and the supplier has no liability for the consideration or the tax, but at some point down the chain of supply may derive a benefit from a supply made higher up the chain. Instead, the recipient is an immediate party and/or counterparty to the transaction in respect of the supply. The counterparty for such purposes can be identified as the person: –

(a) To whom the registered person is [contractually] obligated to provide the commercial supply;

(b) To whom the registered person is obligated [pursuant to the VAT Act] to provide the tax invoice; and

Crucially, the Court concluded that the Revenue was not permitted to ignore the intermediate contracts between BCL and AS as having no commercial or business purpose apart from the avoidance of a liability to tax and hold that there was once single composite transaction between BCIL and BGTT unless there are two findings of fact:

(i) There was a preordained series of transactions, i.e. the single composite transaction (e.g. pre-ordained that BCIL and BGTT will be the supplier and beneficiary); and

(ii) that transaction contained steps which were inserted without any commercial or business purpose apart from a tax advantage (AS and BCL add no value and were solely interposed in order to derive a tax benefit),

Bauhuis has been more recently applied in the Tax Appeal Board’s decision of T Limited v the Board of Inland Revenue, Tax Appeal Nos. v33 – 40 of 2009.

Implications

The decision affirms the sacrosanct rule of privity of contract² by declaring that the Revenue must consider the immediate commercial arrangements set up between two parties to a contract and the attendant obligation of each party, albeit there are a series of linkages along the supply chain by virtue of several subcontracts.

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Recent Tax Case: C. Limited (No. 2) v The Board of Inland Revenue

Is “insufficient documentation” sufficient grounds for the Board of Inland Revenue to raise an additional assessment upon a taxpayer?

It is the bane of every taxpayer, and every tax professional who represents taxpayers, to receive the following reason in an “Explanation of (Audit) Adjustments” from the Board of Inland Revenue (the “Revenue”) as the purported justification for why an additional assessment was raised upon the taxpayer:

• “The Company failed to provide adequate documentary evidence to substantiate the claim in respect of XXXXXX”; or

• “The documents presented were insufficient to substantiate this claim”.

By way of background, the Trinidad and Tobago (“T&T”) Income Tax Act, Chap. 75:01 (the “ITA”) provides that where it appears to the Revenue that a taxpayer has not been assessed, or has been assessed at less than that which ought to have been charged, the Revenue may, within the year of income or within six years after the expiration of the year of income or three years from the date the tax return is filed, whichever is later (the “Statutory Deadlines”), assess such person at such amount or additional amount as according to its judgment ought to have been charged.

Against the background of the Statutory Deadlines, it is very common in T&T for a taxpayer to (a) file a tax return in year 1; (b) hear nothing from the Revenue for the next 5 years; and (c) months (sometimes weeks) before the expiration of the Statutory Deadlines receive correspondence from the Revenue that it has been (i) shortlisted for an audit, (ii) must attend meetings and (iii) provide supporting documents within a very limited period of time. Thereafter, and no matter what is provided to the Revenue (at least from the perspective of the taxpayer) the Revenue will conclude that “insufficient documents” were provided to it in order to substantiate the expense claim(s), and an additional assessment will be raised on the taxpayer days before the expiration of the Statutory Deadlines.

This practice begs the following questions:

• Is “adequacy of documentary evidence” a subjective standard in the absolute discretion of the Revenue to determine?

• Does the fact that the general burden to prove the correctness of the tax filing is upon the taxpayer justify the Revenue’s performance of a perfunctory audit?

These issues were the subject of the Tax Appeal Board’s deliberations in the recent case of C Limited (No. 2) v The BIR.

C. Limited (No. 2) v The Board of Inland Revenue

(Decision delivered November 13, 2017)

Counsel: Barrie Attzs, for the Appellant; Kishore Maharaj, for the Revenue

Material Facts

The taxpayer submitted its Corporation tax return in respect of year of income 2000 in May 2001. The Revenue initially accepted the return. However, in 2005 the Revenue informed the taxpayer that it had been selected for an audit. Thereafter, the Revenue raised an “additional assessment” on the taxpayer on the basis, inter alia, that the taxpayer did not provide satisfactory documentary evidence to support certain expense claims.

At trial, the Revenue led no evidence in respect of:

(i) why after accepting the Return initially it subsequently selected the taxpayer for an audit in 2005; or

(ii) what information or material it acted on in arriving at its additional assessment.

Legal Issue

The primary issue for the Court’s consideration was whether, on an additional assessment:

• the burden is upon the taxpayer to prove that it has sufficient documentation to substantiate its claim(s); or

• there is an onus upon the Revenue to demonstrate a positive fact or error of law that justifies the raising of an additional assessment after it had initially accepted the taxpayer’s tax filings.

Held

Appeal allowed.

The Revenue has an onus to establish the facts which caused it to appear to it that the taxpayer was under-assessed and, as a consequence, that it rightfully raised an additional assessment. In short, the Revenue is not permitted to justify its additional assessment on a bare subjective opinion that insufficient evidence in support of the impugned claims was furnished by the taxpayer to it during the audit and objection stages despite numerous requests being made for same. On the contrary, there is an evidential burden placed upon the Revenue to demonstrate the discoveries it had made during its examination in relation to the adjustments that form the basis of its additional assessment.

Implications for Tax Practice

The ability of the Revenue to raise an additional assessment is a powerful statutory weapon within its legislative arsenal in the exercise of its monitoring of the compliance of taxpayers within the self-assessment system. However, this power is not absolute and is subject to evidential safeguards to ensure that the additional assessment is not founded on mere suspicion or on an arbitrary or purely subjective basis. Specifically, the Revenue must discover new information or material which warrants such additional assessment. This acts as a judicial mechanism to counteract any potential abuses by the State in the exercise of its statutory powers.

This case is therefore particularly significant because the vast majority of contested “assessments” in respect of corporate tax payers in T&T are “additional assessments” as opposed to “best of judgment assessments” (which arise when the taxpayer either makes a Return of Income which is not accepted by the Revenue or fails to make a Return of Income altogether).

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CAVEAT

The views expressed in this article are the views of the authors only and shared for discussion and information purposes only; they are not intended to constitute legal advice. Readers are encouraged to consult with their professional advisors for advice concerning specific matters.

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T&T Budget 2017: Changing the Paradigm

On October 2, 2017, the Minister of Finance released his Budget Document entitled “Changing the Paradigm”.

On October 2, 2017, Trinidad and Tobago‘s Minister of Finance released his Budget Document entitled “Changing the Paradigm”.

The following is a summary of the key proposed fiscal measures:

Subject	Proposed Measure	Proposed Date of Implementation
Corporation Tax for Commercial Banks	Commercial banks will be subject to a flat 35% rate of tax.	January 1st 2018
Corporation Tax (Generally)	Companies will be subject to a new flat 30% rate of tax.	January 1st 2018
Export Allowance for the Manufacturing Sector	To re-establish export allowances to manufacturers; to establish a framework that would allow a reduction on tax for revenues generated from incremental exports to existing markets.	January 1st 2018
Energy Sector	12.5% royalty rate would be applicable on the extraction of all gas, condensate and oil. The fair market values of oil and gas will be fixed by the Petroleum Pricing Committee.	December 1st 2017
	• Making the Supplemental Petroleum Tax responsive not to price but to underlying profitability.	TBA
	• Extending the Supplemental Petroleum Tax to gas.	“”
	• Reconciling and simplifying of the fiscal regimes applicable to the exploration and production and production sharing systems.	“”
Gambling Industry	The existing rate of duty on all mechanical games of chance for gambling of 20% be increased to 40%.	October 20th 2017
	The introduction of a 10% tax on all cash winnings by the National Lotteries Control Board.	December 1st 2017
	Electronic roulette devices operating in bars throughout the country, under the Liquor Licence Act, Chap 84:10 will now attract a flat device tax of $120,000 annually.	January 1st 2018
	• The gaming tax which shall be payable annually under the Liquor Licence Act, Chap 84:10 will be increased from $3,000 to $6,000 in respect of each amusement game.	“”
	• Various taxes on gaming tables and other devices by private members’ clubs would be increased.	“”
Property Tax	The payment of Property Tax under the Property Tax Act had been waived for the period January 1st 2010 to January 1st 2016. This is to be put into effect.	2018
Tax Administration	Introduction of the Trinidad and Tobago Revenue Agency (“TTRA”). The TTRA will manage both the Customs and Tax Divisions, and will also manage its own Human Resources. Legislation to establish TTRA to be tabled before Parliament in December 2017.	2018
Vehicles using Clean or Alternative Fuels	25% increase on the motor vehicle tax and customs duty on private passenger vehicles with engine sizes exceeding 1599cc and not exceeding 1999cc. Moratorium up to December 31st 2017 for private passenger vehicles already in transit or already in Trinidad and Tobago.	October 20th 2017
	Removal of all taxes and duties on CNG vehicles with engine sizes under 1599cc.	“”
Import Duty on Tyres	Used tyres will attract the same 30% customs duty as new tyres. However, the customs duty on the importation of new tyres utilized on buses and lorries will remain at 15%.	October 20th 2017
	Environmental tax of $20.00 per tyre on all tyres imported into Trinidad and Tobago.	December 1st 2017
Fuel Subsidy	An adjustment to the subsidy plus the increase in Gross Margins will increase the price of Super Gasoline from $3.58 per litre to $3.97 per litre and the price of Diesel from $2.30 per litre to $3.41 per litre.	Immediately

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BUDGET STATEMENT 2018 BOOKLET

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Barbados’ Budget 2017 – More Taxes…

Barbados’ Minister of Finance, the Rt. Hon. Christopher Sinckler, presented the 2017 Budgetary proposals on Tuesday 30 May 2017. The proposals were centered around objectives of: Reducing the fiscal deficit; and Protecting and increasing the country’s foreign exchange reserve levels. Among many other things, the Minister considered recommendations made by private sector entities in Barbados. … Continue reading “Barbados’ Budget 2017 – More Taxes…”

Barbados’ Minister of Finance, the Rt. Hon. Christopher Sinckler, presented the 2017 Budgetary proposals on Tuesday 30 May 2017. The proposals were centered around objectives of:

Reducing the fiscal deficit; and
Protecting and increasing the country’s foreign exchange reserve levels.

Among many other things, the Minister considered recommendations made by private sector entities in Barbados. The recommendations were inter alia aimed at reducing the Government’s level of expenses and increasing the country’s commitment to business facilitation in order to increase investor confidence. However, Minister Sinckler emphasized that some of those recommendations could cause an impact on the country that it could not now bear.

The main immediate proposals highlighted by the Minister in order to achieve the Government’s objectives were:

The National Social Responsibility Levy.

This levy was introduced in the 2016 Budgetary proposals and has been in effect from September 2016 at a rate of 2%. it is applicable to all goods imported into Barbados as well as all domestically manufactured goods.

Pursuant to the 2017 Budgetary proposals, the rate is to be increased from 2% to 10%. This increased rate is due to take effect from 1 July 2017.

Foreign Exchange Commission

Effective 1 July 2017, a 2% commission is to be imposed on all sales of foreign exchange by authorized dealers (commercial banks and other approved financial institutions). It will apply to transactions such as wire transfers, credit card transactions, and over the counter sales, among other things.

Excise Tax

Also effective from 1 July 2017, the excise tax on fuels is proposed to be increased as follows:

Gasoline – from BBD$0.74 to BBD$0.99 per litre (an increase of BBD$0.25 per litre)
Diesel – from BBD$0.20 to BBD$0.44 per litre (an increase of BBD$0.24 per litre)

Tax Amnesty

A tax amnesty will begin on 1 June 2017 and will end on 30 November 2017. Under this amnesty, all penalties and interest in respect of outstanding Value Added Tax and Land Tax will be waived.

The Minister indicated that the revenue generated from these and a few other measures would serve to mitigate the projected 2017/2018 fiscal deficit and provide a surplus of approximately BBD$29 million.

Recent Tax Case: C.G. v. The Board of Inland Revenue

The Appellant raised a previously untested point before the Appeal Board: whether a taxpayer can obtain an order for summary judgement and bring the appeal proceedings to an end prematurely without having to incur the costs and time associated with the trial process.

Obtaining an Order for Summary Judgement in Tax Appeal Cases

Background

A summary judgement is a judgement entered by a court for one party and against another party summarily, i.e., without a full trial. In the absence of an award of summary judgement (or some type of pretrial settlement), a lawsuit ordinarily proceeds to trial. This process can be costly and lengthy. A party applying for summary judgement is attempting to avoid the time and expense of a trial when, essentially, the outcome is obvious.

In Trinidad and Tobago summary judgement in the Supreme Court is governed by Rule 15 of the Civil Procedure Rules (formerly Order 14 of the Supreme Court Rules). The Tax Appeal Board (“Appeal Board”), which is a Superior Court of Record, is subject to its own rules: The Tax Appeal Board Rules, Chap. 4:50 (the “Tax Rules”). The Tax Rules do not expressly make provision for summary judgment applications; however Rule 21 of the Tax Rules provides that:

“Except as otherwise provided in the Act or in these Rules or in any written law, the Rules of the Supreme Court relating to applications to a Judge in Chambers and as to taxation of costs shall, with the necessary modifications, if any, apply to appeals and applications to the Court”.

Moreover, section 6(7) Tax Appeal Board Act, Chap. 4:50 provides that:

“The Board, as respects the… enforcement of its orders… and other matters necessary or proper for the due exercise of its jurisdiction, has all such powers, rights and privileges as are vested in the High Court of Justice…”.

The wording of this section is sufficiently wide to give the Appeal Board the power to award summary judgements.

C.G. v The Board of Inland Revenue

(Decision delivered December 1, 2016)

Material Facts

In C.G. v The Board of Inland Revenue, the taxpayer filed an application before the Appeal Board to allow his appeal, and to vacate the Board of Inland Revenue’s Assessment against him – without the delay and expense inherent in a full blown trial – on the basis, inter alia, that: the Statement of Case filed by the Board of Inland Revenue revealed, on its face, that it stood no reasonable chance of success on the Appeal.

Legal Issue

The Appellant raised a previously untested point before the Appeal Board, i.e. whether an Appellant can obtain an order for summary judgement and bring the appeal proceedings to an end prematurely without having to incur the costs and time associated with the trial process.

Held

In C.G. v. The Board of Inland Revenue, the Appeal Board confirmed that the remedy of summary judgement can be utilized at the Appeal Board and, in general terms, may be made [with necessary modifications] in the following circumstances:

“Where in an action to which this rule applies a statement of claim [Notice of Appeal] has been served on a defendant [Respondent] and that defendant [Respondent] has entered an appearance [Statement of Case] in the action [Appeal], the plaintiff [Appellant] may, on the ground that the defendant [Respondent] has no defence to a claim included in the writ [Notice of Appeal], or to a particular par of such a claim, or has no defence to such a claim or part except as to the amount of damages claimed, apply to the Court for judgement against that defendant [Respondent].”

Where questions of law are raised summary judgement is appropriate where:

1. if the defendant’s [Respondent’s] only suggested defence is a point of law and the court can see at once that the point is misconceived, the plaintiff [Appellant] is entitled to judgement;

2. if at first sight the point appears to be arguable, but with a relatively short argument can be shown to be plainly unsustainable.

Implications for tax law practice

By confirming its jurisdiction to grant summary judgements, this enables the Appeal Board to deal with its cases expeditiously and cost effectively.

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DISCUSSION FORUM

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Avoiding interest on quarterly taxes in Trinidad and Tobago

In Trinidad and Tobago, interest may be avoided by a company on the payment of quarterly taxes should the required amounts be paid to the Board of Inland Revenue on or before the due dates. The due dates for the payments of quarterly taxes are 31^st March, 30^th June, 30^th September and 31^st December. The 4^th quarter for 2016 ends on 31^st December and it is important that the quarterly taxes due are correctly determined and paid on time. Should a downward adjustment be required to be made for the payment, an application should be made and approved by the Board of Inland Revenue. Interest of 20% per annum is imposed on the late payment of quarterly taxes.

Corporation tax is charged for the calendar year in which the accounting period ends, on taxable profits earned during the accounting period. Taxable profits is determined after deduction of capital allowances and the revenue expenses wholly and exclusively incurred in producing income. Corporation tax is based on 25% of taxable profits of a company.

In an income year quarterly corporation tax is based on the taxable profits of the previous year. The corporation tax payable for each quarter in 2016 is based on taxable profits for the income year 2015. The corporation tax installment payable for each quarter in 2016 is determined based on the following formula.

Taxable profits for 2015 X 25%

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Should the taxable profits for 2016 be expected to exceed the taxable profits for 2015, by 31^st December the company is required to pay to the Board of Inland Revenue, quarterly taxes equal to the liability for income year 2015 in addition to 80% of the increase for 2016 over 2015.

Should the taxable profits for 2016 be expected to be less than the taxable profits for 2015, an application should be made to the Board to Inland Revenue for approval to reduce the quarterly tax installment. A company is required to pay the higher of corporation tax or business levy.

Business levy is charged at the rate of 0.6% of gross sales or receipts of a company. A credit is given against business levy liability for any corporation tax paid for the income year, the result being that only the higher of the corporation tax or the business levy liability is payable.

Green fund levy is charged at the rate of 0.3% of gross sales or receipts of a company. Green fund levy must be paid in addition to corporation tax or business levy.

DISCUSSION FORUM

If you have any questions or comments about quarterly tax computation, please ask or comment below.

T&T’s 2016 Budget – A Blueprint for Transformation and Growth?

In Greek mythology, a phoenix is a long-lived bird that is cyclically regenerated or reborn. As the mythical phoenix periodically rises from the ashes, so does Trinidad and Tobago’s traditionally energy sector dependent economy cyclically rise from seasons of economic despair. However, in this current season of low oil prices, high unemployment, and against the background of a devaluing currency, has the Minister of Finance in his 30th September 2016 Budget document unveiled an alternate source of fuel that can propel the T&T Phoenix upward?

On September 30, 2016, the Minister of Finance released his Budget Document optimistically entitled “Shaping a Brighter Future – A Blueprint for Transformation and Growth“.

The following is a summary of the proposed fiscal measures:

Subject	Proposed Measure	Proposed Date of Implementation
Value Added Taxes	Foreign yacht repair services will be a VAT Exempt service for yacht owners.	First Quarter of 2017
Revenue Authority	Establish an independent body referred to as the Revenue Authority that will administer both taxation and customs. The new institution will be supervised by an independent board.	Fiscal Year 2017
Transfer Pricing	To develop policy and legislation to govern transfer pricing in T&T.	None
Property Tax	To be implemented based on the Property Tax Act 2009, with minor amendments to the Valuation of Land Act.	Fiscal Year 2017
Gaming	Re-Introduce the Gambling (Gaming and Betting) Control Bill. All forms of betting and gaming activities placed under a comprehensive regulatory framework.	None
Fuel Subsidy	To continue the incremental removal of the fuel subsidy and to increase the price of diesel by 15%. New price of diesel fuel will be $2.30 per litre, up from $1.98 per litre	Immediately
Alcohol and Tobacco	• increase the excise duty on locally-manufactured tobacco products by 15 percent as well as on alcoholic products by 20 percent; and • increase the customs duty on imported tobacco and alcoholic products from the Common Market Origin will be increased by 15 percent and 20 percent respectively; • increase the customs duty payable on alcoholic beverages and tobacco products imported into Trinidad and Tobago from extra-regional sources.	October 20, 2016
New Tax Bracket for High Income Individuals and Companies	Introduction of a new tax bracket of 30% on high income individuals whose chargeable income exceeds $1 million per annum and on companies with chargeable profits also in excess of $1 million per annum.	January 1, 2017
Tax on On-line Purchases	7% charge on purchases that arrive in T&T through courier companies or are brought in directly by individuals via air freight. The tax will be due and payable at the bonded warehouses before clearance of goods or directly to customs in the same way that VAT and customs duty are currently collected.	October 20, 2016
Agro-Processing Tax Relief	All approved agro-processing operations will be tax free. In order to be “approved” the qualifying criteria is that at least 75% of the processing of agricultural products must be done in T&T and 75% of the ingredients must be produced or harvested locally.	Second Quarter of Fiscal Year 2017
Public Private Partnership (PPP) Business Tax relief	a 50% tax relief and other fiscal incentives to businesses which can mobilize private sector funding to provide public infrastructure and/or public facilities, amenities and services. Projects that increase productivity and create meaningful employment will also be considered for inclusion.	First half of Fiscal Year 2017

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Read Full Budget Document here:

budget-statement-2017-for-web

DISCUSSION FORUM

Does the Budget prescribe the panacea that will alleviate the problems and elevate the T&T economy to renewed heights? Please leave your comments in the box below.

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