An Approved Property Development company is entitled to a deduction of fifteen percent (15%) of the capital cost of any building constructed by it and proved to the satisfaction of the Board of Inland Revenue to have commenced:
(i) before 31/12/2005 and completed on or before 31/12/2007; or
(ii) on or after 01/01/2008 and is completed on or before 31/12/2014.
that is to be used for commercial or industrial purposes by it, a purchaser or a lessee.
Where the period of construction extends over more than one (1) year of income, the deduction shall be allowed in the year of income in which the building is completed. Where part only of the building is to be used for commercial or industrial purposes the deduction may, according to the extent of its non-commercial or industrial use, be pro-rated.
Incentives to Hotel and Tourism
With a view to encouraging the development of the hotel industry in Trinidad and Tobago and to stimulate tourism development generally, the Tourism Development Act provides incentives to both Hotel Owners and Hotel Operators.
A summary of the major incentives are:
· Tax exemption for a period not exceeding seven (7) years in respect of profits from an approved tourism project;
· A tax exemption on profits derived from the initial sale of a villa or condominium, or the site of a villa or condominium that forms part of an Integrated Resort Development which is an approved tourism project;
· An accelerated depreciation of depreciable equipment owned by the owner or operator and used in an approved tourism project;
· A capital allowance in respect of approved capital expenditure incurred by the owner or operator in the creation of a new tourism project or in the expansion of an existing tourism project;
· Carry-over of losses arising out of the operation or renting of an approved tourism project during the tax exemption period. Such losses may be set off against future profits of the operator or owner;
· A tax exemption on dividends paid out of gains or profits where the recipient is a non-resident shareholder who is a national or a non-resident shareholder who is not a national and who is not liable to tax in respect of that dividend in the country in which he is resident;
· A licence to an importer to import vehicles exempt from motor vehicle tax, for use in an approved tourism project,
· Customs duty at the rate of ten percent (10%) where a license is obtained for importation of vehicles under the Act;
· Customs and Excise Duty Exemption on building materials not otherwise exempt, and articles of hotel equipment to be used exclusively in connection with construction and equipping of a hotel project.
The details of the incentives must be gleaned from a study of the legislation. It should be noted that there are specific investment criteria to qualify for incentives under the legislation. Some areas of tourism are specifically reserved for nationals. Some of the areas of investment are:
|Type of Tourism Project
||Minimum Capital Expenditure|
|Convention Centres, Shopping Facilities
|Historical Landmarks, Heritage Sites
|Theme Parks/Cultural Centres
An application to be licensed as an approved tourism project must be made to the Corporation (the State Authority to which the responsibility for tourism in Trinidad and Tobago is assigned) and if in Tobago, the Corporation shall submit the application to the Tobago House of Assembly for recommendation, together with a proposal for the tourism project containing information as prescribed by the Act. Note that in order to obtain benefits as an approved tourism project, the project shall:
· in relation to international investors, have a minimum capital expenditure as outlined in the Act;
· be constructed or undertaken primarily for use in the tourism industry; and
· be available on a continuing basis for use in the promotion of Trinidad and Tobago as a tourist destination.
Under the Petroleum Taxes Act governing Petroleum Profits Tax, several incentives are available, including:
· Initial allowance on tangible expenditure of 20%;
· First year allowance on tangible expenditure of 20%;
· Annual allowance on tangible expenditure of 20%;
· Expenditure on the development of a dry hole shall, with the Minister’s approval, be written off in the financial year in which the dry hole is plugged and abandoned;
· Work-over, maintenance and repair works (on completed wells and qualified side tracks) allowances covering all costs other than tangible cost incurred;
· Heavy oil allowance - sixty percent (60%) for the financial year in which the expenditure is occurred; and eighteen percent (18%) of such expenditure for each of the next five (5) years;
· Capital allowances of up to one hundred and forty percent (140%) of expenditure (in calculating taxable profits) incurred between January 1st 2013 to December 31st 2014 in respect of the drilling of exploration wells in deep horizon on land (exceeding a true vertical depth of 8,000 feet) or in shallow marine areas (exceeding a true vertical depth of 12,000 feet) where such exploration has been certified by the Minister in writing, but not including expenditure incurred in respect of an exploration dry hole, finance, administrative and other indirect costs.
These allowances are claimed on the entity's tax returns.
There is a production expenditure rebate program providing cash rebates for expenditure accrued while filming in Trinidad and Tobago. The program is administered by the Trinidad and Tobago Film Company, a state agency under the Ministry of Trade and Industry.
Deductions for Expenditure on Approved Activities
Companies are allowed deductions in determining chargeable income for expenditure in relation to the following activities:
· Training and retraining of employees - up to one hundred and fifty percent (150%) of the reasonably incurred expenses;
· Artistic works including performance arts - actual expenditure subject to a maximum of $3M;
· Granting of scholarships to nationals unaffiliated to a company for accredited and approved tertiary education - the actual expenses incurred;
· Promotion or sponsorship of sporting activities or events or sportsmen - actual expenditure subject to a maximum of $3M;
· Sponsorship by a company of audiovisual or video productions for radio or television for local education or entertainment purposes or reflecting local culture or the incurring of such expenditure by a production company in relation to its own works of such nature - up to one hundred and fifty percent (150%) of the actual expenditure subject to a maximum of $3M; and
· Promoting the fashion industry - up to one hundred and fifty percent (150%) of the actual expenditure subject to a maximum of $3M.
Concessions under the Income Tax (In Aid of Industry) Act
Under the Income Tax (In Aid of Industry Act), the annual allowance of twenty percent (20%) is to be calculated on a straight line basis on the residue of expenditure after deduction of the initial allowance. Under this Act, the following concessions are available to all manufacturing trades:
· Initial allowances of ten percent (10%) of the expenditure on erection of buildings and structures for industrial purposes;
· Initial allowances of seventy-five percent (75%) on purchase of plant and machinery reduced in certain industries to twenty percent (20%);
· Annual allowances equal to twenty percent (20%) of the expenditure on building structures or five percent (5%) of the expenditure where a person carries on petroleum operations under license issued after 1st January, 1970;
· Annual allowances of a reasonable amount for wear and tear on plant and machinery;
· Oil refineries - annual allowances calculated by the manufacturer on one hundred and twenty percent (120%) of the expenditure;
· Investment allowance for capital expenditure in respect of production business on land equal to one hundred and fifty percent (150%) of the expenditure, that is, forty percent (40%) in year 1 and twenty percent (20%) in the following five (5) years.
These allowances are claimed on the entity’s tax returns.
Import Duty Concessions
Full exemption from Customs Duties is available to an applicant who holds a license from the Minister for imports of Machinery and Raw Materials in the following sectors:
· Approved Industry;
· Approved Agriculture, Livestock, Forestry and Fisheries;
· Approved Hotels;
· Approved Mining Purposes;
· Other approved purposes, e.g., sports and recreational activities for the tourism sector.
Cabinet approval is required for a full exemption and applications are made to the Permanent Secretary, Ministry of Finance.
In the Manufacturing/Assembly sectors, partial exemption from Customs Duties is available for imports as follows:
· Machinery and Equipment - Free or twenty-five percent (25%);
· Processing Raw Material inputs - zero percent (0%);
· Parts for assembly - five percent (5%).
Exemption from import surcharges is available on raw materials, intermediate goods, packaging materials and other inputs which are not locally manufactured. These are granted by Customs at the port of entry on production of adequate documentation. Stamp Duty on imports has been eliminated.
Exporters targeting countries other than CARICOM countries can benefit from the following incentives:
· Non-taxable Market Development grant up to the equivalent of fifty percent (50%) of new market development cost (not applicable to market development in foreign investor’s country of domicile). Recipients of this grant must meet the criteria set out by the Export Development Corporation which awards the grants;
· Tax deductions of up to one hundred and fifty percent (150%) of actual promotional expenses in foreign markets (applicable only to companies incorporated and resident in Trinidad and Tobago). The allowance is limited to the creation or expansion of a foreign market.
The Free Zones Act 1988 (as amended in 1995) established the Trinidad and Tobago Free Zones Company to promote export development and foreign investment projects in a bureaucracy-free, duty-free and tax-free environment for prescribed activities. Free zone enterprises may be established in any part of the country. They are one hundred percent (100%) exempt from:
· Customs duties on capital goods, spare parts for machinery and raw materials for use in the construction and equipping of premises and in connection with the approved activity;
· Import and Export duties, taxes or licensing requirements;
· Land and Building Taxes;
· Fees for Work Permits;
· Foreign currency or property ownership restrictions;
· Corporate, capital gains, withholding and value added taxes;
· Duties on vehicles for use only within the Free Zone.
Other benefits include:
· Exemption from import licensing, or where goods are being shipped other than to Trinidad and Tobago, an exemption from export licensing;
· Exemption from income tax, corporation tax, business levy where:
§ the approved enterprise is engaged in the construction, sale, lease, rental and management of a Free Zone as an approved activity;
§ the approved enterprise is engaged in manufacturing in a Free Zone, or engaged in activities involving international trading in products, including products originating in countries which are members of the Caribbean Common Market;
§ the approved enterprise is engaged in exporting services from Free Zone to a territory other than Trinidad and Tobago;
· Exemption from withholding tax on profits of a branch, dividends and other distributions arising from activities in the Free Zone, remitted or deemed to be remitted by an approved enterprise to a non-resident;
· Exemption from the requirements of the Foreign Investment Act where (i) a person is seeking to register a company to be established in a Free Zone as an approved enterprise or (ii) a person invests in an approved enterprise established in a Free Zone or holds interest in land in a Free Zone.
Investment opportunities include:
• Development and operation of Free Zones;
• Manufacturing (including downstream petrochemicals) for export;
• International Trading in Products;
• Provision of Services for export (for example, Information Processing and Financial services).
Applications to operate in a Free Zone are made by way of specified forms submitted to the Trinidad and Tobago Free Zone Company. After receiving a recommendation by such entity, the Minister may by Order designate an area a Free Zone, the limits of which are defined in the Order.
Under the Fiscal Incentives Act benefits are granted to large scale manufacturers falling within one (1) of five (5) classifications under the Act.
To qualify the company must meet the following criteria:
• The company must be resident in Trinidad and Tobago, with the central management and control of its affairs situated in Trinidad and Tobago;
• The company must be a manufacturing enterprise, producing approved products as indicated by not being on the list of products on the First Schedule of the Fiscal Incentives Act, Chapter 85:01 (as amended);
• The company must be declared an approved enterprise under Sections 2 and 12 of the Fiscal Incentives Act, Chapter 85:01 (as amended);
• The company must make a contribution towards the Trinidad and Tobago economy in terms of employment, linkages, and investment.
• Exemption from customs duties on the construction of an approved project;
• Exemption from Value Added Tax (VAT); and
• Exemption from Income Tax on dividends or other distribution, other than interest, out of profits or gains derived from the manufacture of the approved product during the tax holiday period.
Pursuant to the Income Tax Act, income arising in Trinidad and Tobago is subject to withholding tax in Trinidad and Tobago at the rate of fifteen percent (15%). Trinidad and Tobago has entered into several Double Taxation Treaties with several jurisdictions. In some instances these treaties decrease the withholding tax rate.
Of several proposals made in the 2015 Budget, among others, the following were implemented:
· Tax credit of 25% in respect of persons who purchase bonds issued under the National Tax Free Savings Bonds Regulations, 1977. The credit is limited to 25% of the face value of the bonds where the maturity period is five, seven or ten years. The credit may also be carried forward.
· No Motor Vehicle Tax applies to new or used Electric Cars with an engine not exceeding 179 kilowatts imported into Trinidad between 1st January, 2015 and 1st January, 2020. However, used cars cannot be older than four years at the time of importation.
· No Motor Vehicle Tax applies to new or used Hybrid Cars with an engine not exceeding 1799cc imported into Trinidad between 1st January, 2015 and 1st January, 2020. However, used cars cannot be older than four years at the time of importation.