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Trinidad and Tobago

Overview of the Tax Regime in Trinidad and Tobago

Trinidad and Tobago

ECONOMIC OVERVIEW


The Republic of Trinidad and Tobago is a twin island country situated off the northern edge of South America mainland, lying 11 kilometres (6.8 miles) just off the coast of northeastern Venezuela and 130 kilometres (81 miles) south of Grenada. Bordering the Caribbean to the north, it shares maritime boundaries with other nations including Barbados to the northeast, Grenada to the northwest, Guyana to the southeast, and Venezuela to the south and west.

Trinidad and Tobago is the third richest country by GDP (PPP) per capita in the Americas after the United States and Canada. Furthermore, it is recognised as a high income economy by the World Bank. Unlike most of the English-speaking Caribbean, the country’s economy is primarily industrial, with an emphasis on petroleum and petrochemicals. The country’s wealth attributes to its large reserves and exploitation of oil and natural gas. Trinidad and Tobago is the leading Caribbean producer of oil and gas.

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TAX LAWS IN TRINIDAD AND TOBAGO


INCOME TAX


• This is a tax levied on individuals accruing chargeable income in Trinidad and Tobago at a rate of 25% on the first $1M and 30% on any excess over $1M.

• There is deduction of a personal allowance claim of TT$72,000 and certain other deductions if the individual is a resident of Trinidad and Tobago.


Pay As You Earn (PAYE)


Employers are required to deduct and remit the taxes (PAYE) to the Board of Inland Revenue by the 15th day following the month in which deductions made.


National Insurance


An employer is required to:

• Register with the National Insurance Board (“NIB”);

• Ensure it registers all employees with the NIB; and

• Make deductions from employees based on NIB rate sheets.


Health Surcharge


An employer is required to deduct and remit health surcharge to the Board of Inland Revenue:

• The current rate is $8.25 per week where the employee earns more than $469.99 monthly or $109 weekly.

• If the employee earns less than $469.99 monthly, then the rate of Health Surcharge is $4.8o per week.


CORPORATION TAX


Resident companies are subject to tax on profits directly accruing in or derived from sources within Trinidad and Tobago. Non resident companies carrying on business in Trinidad and Tobago is subject to corporation tax on gains and profits arising from the trade or business in Trinidad and Tobago.

Generally, companies engaged in business activities in Trinidad and Tobago are subject to corporation tax at a rate  of  25% on the first $1M and 30% on any excess over $1M on profits earned for income year 2017 after deducting expenses wholly and exclusively incurred in the production of the income and specific allowances/deductions which the legislation allow.

Effective 1 January 2018 the rate of tax will be 30% for all companies with the exception of commercial banks which will be subject to tax at the rate of 35%.

Quarterly instalments of taxes are due and payable to the Board of Inland Revenue on 31 March, 30 June, 30 September and 31 December. Any balance outstanding is due by 30 April after the end of the financial year.

A company is also subject to Business Levy and Green Fund Levy at the rate of 0.6% and 0.3% respectively based on its gross receipts.

Companies are required to file a corporation tax return on or before 30 April of the year after the end of the financial year. Where the company fail to file the tax return six months after the due date, there is a penalty of $1,000 imposed where the return remains outstanding for every six months or part thereof.


Companies in the Trinidad and Tobago Energy Sector


Companies engaged in the business of:

  • manufacture of petrochemical;
  • liquefaction of natural gas; and
  • the transmission of natural gas

are subject to corporation tax at the rate of 35%.


PETROLEUM PROFITS TAX


Petroleum Profits Tax (“PPT”) is applied on profits from production or refining activities earned by Petroleum companies  are  subject to a special fiscal regime, principally governed by the Petroleum Taxes Act.

Rate of PPT:

  • Petroleum Operations – 50%
  • Petroleum operations in “deep water” – 35%

SUPPLEMENTAL PETROLEUM TAX


Supplemental Petroleum Tax (“SPT”) is a tax charged on gross income derived from disposals of crude oil.

SPT paid is allowed as a deduction in arriving at profits subject to PPT.

SPT is computed and assessed on a quarterly basis (31st March; 30th June; 30th September; and 31st December). The rate of SPT is calculated as follows:

Price per Barrel in $ US Rate % Marine Rate % “New Field Development Marine” Rate % Land & Deep Water Block
US$ “A” “B” “C”
50.00 and less 0 0 0
50.01 – 90.00 33 25 18
90.01 – 200.00 SPT Rate = Base SPT* + 0.2% (P-US$90.00)
200.01 and over 55 47 40

Scale of SPT rates:

Where Base SPT* rate for:

  • Marine “A” is 33%
  • Land and Deep Water “C” is 18%
  • P = Weighted Average Crude Oil Price in USD

VALUE ADDED TAX


VAT is charged on the entry of goods imported into Trinidad and Tobago, and on the commercial supply within Trinidad and Tobago of goods and prescribed services by a registered person.

Key points to note:

  • Registration Threshold is TT$360,000 pre 1 Feb 2016 and TT$500,000 with effect from 1 February 2016.
  • Rate 12.5%
  • Zero rated items as listed in Schedule 2 of the VAT Act.
  • Exempt services included in Schedule 1 of the VAT Act.
  • VAT returns should be filed with the Board of Inland Revenue 25 days after the end of the tax period to which it relates.
  • In practice where the filing or payment deadline falls on a weekend the deadline is extended to the next business day.

PROPERTY TAXES


The Government of Trinidad and Tobago passed the Act in 2010, but initially placed a freeze on the taxes up to 2015. As such the taxes is intended to be implemented in 2016.

The tax will be payable on the Annual Taxable Value of the property which will be assessed by the government after which the owner of the property will have a deadline of September 15 2016 to make the tax payment.


DOUBLE TAXATION TREATIES


Trinidad and Tobago has entered into the following double taxation treaties (download here):

1. Brazil 8. India 15. United Kingdom
2. Canada 9. Italy 16. United States of America
3. Caricom 10. Luxembourg 17. Venezuela
4. China 11. Norway
5. Denmark 12. Spain
6. France 13. Sweden
7. Germany 14. Switzerland

WITHHOLDING TAX RATES


Table 1

Brazil Canada Caricom China Denmark France Germany India Italy
Dividends 5% and 10% 5% and 10% 0% 5% and 10% 5% and 10% 5% and 10% 5% and 10% 5% and 10% 5% and 10%
Interest 15% 10% 15% 10% 15% 10% 0% and 15% 10% 10%
Royalties 15% 10% 15% 10% 15% 10% 10% 10% 5%
Management Fees No Clause 10% 15% No Clause 5% 10% No Clause 10% 5%
Pensions and Annuities 0% and 15%
Other income/payments No Clause 15% No Clause No Clause No Clause No Clause No Clause

Table 2

Luxembourg Norway Spain Sweden Switzerland United Kingdom United States of America Venezuela Rest of the World
Dividends 5% and 10% 5% and 10% 0%, 5% and 10% 5% and 10% 5% and 10% 5% and 10% 5% and 10% 5% and 10% 5% and 10%
Interest 7.5% and 10% 15% 8% 0% and 15% 10% 10% 15% 15% 15%
Royalties 10% 15% 5% 15% 5% 10% 15% 10% 15%
Management Fees 5% 5% 5% 12.5% 5% 10% No Clause 10% 15%
Pensions and Annuities 15%
Other income/payments No Clause No Clause No Clause No Clause 15%

CAVEAT


The information on this page is provided by the Trinidad and Tobago based law firm of J.D. Sellier + Co as at May 27, 2016, and is provided for information purposes only. It is not intended to be relied upon for specific tax and/or business advice and as such, readers are encouraged to consult with professional advisors on specific matters prior to making any decision.

Neither J.D. Sellier + Co. nor www.caribbean-tax.com is responsible for the result of any actions taken on the basis of this information, nor for any omissions or errors contained herein.

Should you require legal advice, please contact us and we shall be happy to make a referral to a local tax practitioner.