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:
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.
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.
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%.
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.
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%.