Over the past few years, the Government of Trinidad and Tobago has introduced a number of tax incentives and measures which were aimed at stimulating growth and encouraging development in certain sectors and industries in the country.
- 2024 Introduced Tax Incentives:
For fiscal year 2024, consistent with what was proposed during the 2023/2024 National Budget Statement, the Government has introduced further incentives through the Finance Act, 2023. These incentives include the following:
- An exemption from Business Levy for manufacturing companies that are subject to the ordinary Corporation Tax rate of 30%, in respect of gross sales or receipts generated from export sales.
It is expected that this measure will further incentivise the export of goods from Trinidad and Tobago, as the country aims to double certain manufacturing exports by 2025. The incentive will be in addition to the one-time credit (up to a maximum credit of $50,000) that approved manufacturing companies which invest in new machinery, production lines or new equipment, are entitled to. Manufacturing companies also have a reduction in Corporation Tax, namely to 25%, on the first $100,000 that is expended on investments in projects relating to information technology, digitization, and technology development.
- An allowance equal to 150% of the expenditure incurred, up to $500,000, for the enhancement and promotion of education through corporate sponsorship of public or private schools registered with the Ministry of Education. The expenditure must be certified by the principal or the most senior administrator of the school.
While this allowance is likely to incentivise investment and a focus on youth from the perspective of aiding in addressing social issues like inequality and workforce development, it will assist in enhancing a donor company’s ESG profile. Such an investment can improve community relationships and demonstrate a commitment to social responsibility, which is increasingly important to investors, customers, and employees who place emphasis on societal well-being and development. The Government’s intended focus on the development of youth is evident, as this allowance will be in addition to the previously introduced apprenticeship allowance in which companies and businesses that hire young persons (i.e., persons between the ages of 16 and 25) who completed secondary school education, are entitled to claim an allowance equal to 150% of the expenditure incurred in hiring the young person, up to a maximum of 20% of the total wages and salaries bill of the company for the year was also introduced. The structure of the hire is required to be in the form of an apprenticeship training programme that is registered with the National Training Agency.
- An allowance of up to $500,000 on expenditure incurred from investments made in cybersecurity software and network security monitoring equipment. This allowance is intended to be available only for income year 2024 and 2025, while the cybersecurity software and network security monitoring equipment must be certified by iGovTT.
Investing in cybersecurity software is increasingly critical for companies in Trinidad and Tobago due to a notable rise in cyberattacks. These incidents have revealed vulnerabilities in critical infrastructure and highlight the potential for significant disruption and harm to both the public and private sectors, through the compromise of data integrity, customer information, and overall operational stability.
- Property Tax:
It is no secret that the Government intends to commence the collection of Property Tax in 2024. The Finance Act 2023 implements the mechanics for collection (and use) of the tax, which will be payable to Municipal Corporations. In the event of non-payment, the Municipal Corporation has the power to refer instances of non-payment, to the Board of Inland Revenue for assessment and recovery.
To date, most residential owners on the Valuation Roll should have received a Notice of Valuation from the Commissioner of Valuation. It is critical to note that what is contained in the Notice of Valuation is not the amount of Property Tax that is required to be paid; rather, the amount of tax payable will be contained on a further notice called a Notice of Assessment of Tax Liability. This Notice of Assessment of Tax Liability is expected to be issued and received by residential owners by the end of March, 2024. When received, the Property Tax stated on the notice will be due and payable on the 30th September.
Any amount of Property Tax that is outstanding by 30th September will be subject to a penalty at the rate of 10% of the outstanding tax, in addition to interest calculated at the rate of 15% per annum. The Board of Inland Revenue will be required to issue a notice to the owner notifying him of these liabilities, and the risk that the land will be subject to distrain or forfeiture.
An owner who is dissatisfied with either the valuation on the Notice of Valuation or the amount of Property Tax on the Notice of Assessment of Tax Liability, has legal avenues for disputing each. More specifically:
- Disputing a Notice of Valuation:
If an owner disagrees with the valuation contained in the Notice of Valuation, he/she may object to the valuation within thirty (30) days after service or receipt of a notice of valuation, and to provide the grounds upon which the objection is being made. The Commissioner of Valuations is required to consider the objection and then to either allow it, wholly or in part, or to disallow it. This means that the Commissioner will either agree with the owner’s position and reassess the value of the land, or, disagree with the owner’s position and keep the initially assessed value of the land. If an owner is dissatisfied with the Commissioners decision, he/she can appeal to a newly constituted body called the Valuation Tribunal.
- Disputing a Notice of Assessment of Tax Liability:
If an owner disagrees with the amount of Property Tax to be paid (i.e., the amount that is contained on the Notice of Assessment of Tax Liability), he/she can object to the assessment by notifying the Board of Inland Revenue, in writing, of the objection, within twenty one (21) days that the Property Tax will become due and payable. Similar to the objection process for the valuation exercise, the owner will be required to outline the grounds for objecting to the amount of Property Tax that has been as payable.
If the Board of Inland Revenue is of the view that the Notice of Assessment was accurate and it disallows the objection, the owner may appeal the decision, to the Tax Appeal Board.
- Amnesty for Outstanding NIS Contribution:
An amnesty with respect to National Insurance contributions that are outstanding from an employer, and that are due and owing before the 20th December, 2023, has also been introduced and is in effect until the 31st January, 2024.
In particular, any penalties and interest that have accrued on outstanding contributions that are paid to the National Insurance Board during the period of the 20th December 2023 to the 31st January, 2024, will be waived. Note that this amnesty does not extend to any National Insurance contributions that become due and payable after the 20th December, 2023.
- International Tax Compliance:
A further potentially significant development is in relation to bill that has recently been laid in Parliament, called the Base Erosion and Profit-Shifting Inclusive Framework (Country by Country) Reporting Bill.
Trinidad and Tobago has been listed by the European Union as a non-cooperative jurisdiction for tax purposes for a number of years. Such a listing has been as a result of a number of reasons which include its compliance rating for the exchange of information including transparency and governance, its international reporting standards, its non-signing and ratification of the OECD’s Multilateral Convention on Mutual Administrative Assistance, and the existence of a harmful preferential tax regime, namely the Free Zones regime.
In this regard, the Government has taken steps towards Trinidad and Tobago’s removal from the non-cooperative jurisdiction list through the repeal of the Free Zones regime which will be replaced by an internationally recognised Special Economic Zones regime, and amendments to a host of relevant legislation. In addition, the Base Erosion and Profit-Shifting Inclusive Framework (Country by Country) Reporting Bill, seeks to provide country-by-country reporting legislation to meet obligations to the Base Erosion and Profit Shifting (BEPS) Inclusive Framework. By adhering to BEPS standards, which promote transparency and fair tax practices, Trinidad and Tobago would be in a position to demonstrate its commitment to global tax cooperation and governance, which would align with the criteria used by the EU to assess non-cooperative jurisdictions. It is hopeful that this would also encourage more foreign investment and development projects in Trinidad and Tobago.
Miguel Vasquez is a Partner at M. Hamel-Smith & Co. He can be reached at mhs@trinidadlaw.com. Disclaimer: This Column contains general information on legal topics and does not constitute legal advice.
