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Income Tax - Corporations Printable Version

Corporations

These are artificial persons registered under the Companies Act or created by an Act of Parliament. They include Companies incorporated outside of Trinidad and Tobago which have registered under Part V Division 2 of the said Act.

Filing of Tax Returns

In respect of Corporation Tax/Petroleum Profits Tax returns, filing dates are 30th April in each year, and the returns must be filed with the Board of Inland Revenue at any of its offices.

The Taxes and payment

Corporation Tax, Business Levy, Petroleum Profits Tax, Unemployment Levy, Supplemental Petroleum Tax and Green Fund Levy.  Estimated taxes based on the previous year’s profits are payable by quarterly instalments on 31st March, 30th June, 30th September, 31st December and the remainder on or before 30th April the following year.  In other cases, taxes are payable 30 days after receipt of a notice of assessment.

Taxation of Non-Resident Companies

A non-resident company is liable to corporation tax on income arising or derived from any trade or business carried on by it in Trinidad and Tobago. Additionally withholding tax is levied on:

(a) remittances in respect of Trinidad source income of a non trading nature earned by non resident companies; and

(b) profits of branches of non resident companies (after making deductions for corporation tax) which are not re-invested (other than in replacement of fixed assets) to the satisfaction of the Revenue.  A corporation is considered to be resident where its "mind or management" is ordinarily situated.

Taxable Sources for Corporation Tax

The following revenues are included: Income from sources derived in or accruing in Trinidad & Tobago or elsewhere and whether received in Trinidad & Tobago or not in respect of gains and profits from farming, fishing, operation of mines or other natural resources, trade or business, professions, vocations or management charges, royalties, rents, interest, discounts, annual payments, fees, commissions, distributions, short term capital gains.

Business Levy and Green Fund Levy

The business levy is payable quarterly at the rate of .6% of the gross income of the company.  Payments of corporation tax are set off against the business levy liability of the corporation in the following year when returns are filed.  The individual taxpayer is entitled to a tax credit against his business levy liability for a year of income of any payment made in respect of his income tax liability for that year up to a maximum of his business levy liability.

No liability accrues in respect of gross sales giving rise to exempt income or gross sales not exceeding $200,000.00 per annum. Green Fund Levy applies even if the business is exempt from business levy, and is chargeable t the rate of .3% of the gross income of the company.

Supplemental Petroleum Tax

Supplemental Petroleum Tax is levied at scales based on the price of oil.

Expenses allowed as Deductions under the Corporation Tax Act

All expenses wholly and exclusively incurred in the production of the income of the trade or business are allowed except where specifically disallowed under the Act.  Major expenses not allowed are domestic and private expenses, capital expenses and certain payments to non-residents unless withholding taxes have been accounted for and paid over to the Board of Inland Revenue.

Significance of being resident

Residents are taxed on income derived from abroad whether remitted to Trinidad and Tobago or not.

Applicable Tax Rates

The tax rate for companies is generally 25% of the chargeable profits of the company.  The rate is 35% for companies engaged in liquefaction of natural gas, manufacture of petrochemicals and transmission and distribution of natural gas and wholesale marketing and distribution of petroleum products.  Petroleum profits tax is levied at 50%.

Territorial Rules

The Corporation is resident where its central management and control takes place.  Control is exercised where the Board of Directors meets and makes decisions, unless the Board is itself controlled by a third party. The worldwide income of resident companies or entities is taxed.

Branch income is taxed as if the branch is a separate entity.  All branch profits, unless re-invested in specific activities, are deemed to be remitted and subjected to withholding taxes.

Withholding Tax Rates

Dividends to individuals 10%

Dividends to companies 10% but 5% to a parent company

Royalties to individuals and to companies: 15%

Interest to individuals, companies and banks: 15%

Some of the existing double taxation treaties provide rates of up to 30%.  The lower statutory rates of 10% or 15% will be applied in such instances.

Withholding tax on branch profits realised by a foreign corporation so far as not reinvested  in Trinidad and Tobago (branch tax) 10%.

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