No Escaping Death or Taxes – Tell the Grim Reaper “Not Anymore!”

By M. Glenn Hamel-Smith

The well-known adage says that there is no escaping death and taxes.  If you are an individual, spoiler alert, I am afraid that the saying still applies to you for the moment – sorry!  Perhaps with further developments in artificial intelligence and new technologies, we may at some point be able to prolong the arrival of death until it seems that we are comparatively immortal, at least compared to the old idiom of three score and ten, which many so persons are living beyond today.

But the good news is that if you are a small or medium sized company, or if you own such a company, both death and corporate taxes (for the company, not you the individual owner) can be avoided, at least for a while anyway.

Companies, as perpetual creatures of statute (they are entities created by legislation instead of procreation) can avoid “death” if they are successful in avoiding insolvency, being amalgamated (when two or more companies merge into one company), or acquired by another company.  That said, one might equate amalgamation to reincarnation in some cases as the amalgamated company continues to live on in the new surviving amalgamated company in a sense (in this jurisdiction anyway – in other jurisdictions, they cease to exist).  But when death comes, whether for a person or a company, it is pretty much finite.  It happens, it’s all over, there is no more.  So, one can argue that, of the two nuisances of death and taxes, the more annoying is taxes, because unlike death, they never seem to end.

But, no more!  There is a way for some companies to legitimately escape paying corporate taxes, for a few years at least.  And as corporate taxes are an expense that companies have to pay, escaping taxes could help a young growing company avoid insolvency and possible death.  You should note that our relatively recently proclaimed Bankruptcy and Insolvency legislation is actually designed to help companies avoid the death of insolvency (if possible) by staving off creditors for a while so that they can have time to renegotiate their debts.  So how can a small or medium sized company avoid paying corporate tax?  Such companies can do so by getting listed on the SME (small and medium enterprises) Exchange (also called the Junior Stock Exchange) of the Trinidad & Tobago Stock Exchange (TTSE).

Companies that can qualify and list on the SME Exchange pay zero percent corporate tax (not even Green Fund or Business Levy) for the first five years from being listed.  Okay, so maybe you can’t escape corporate taxes forever, but not having to pay for five years is really not bad at all.  After those five years, your listed SME company pays corporate taxes at half the current rate (fifteen percent) for the next five years.   All these measures were introduced in the Finance Act, 2020 to encourage companies to list to develop our capital markets.   Of course, after ten years from listing, your SME company pays corporate taxes just like every other company (and will graduate to the senior stock exchange – unless it seeks to delist).  Hopefully by that time, after carrying out a successful public offering of shares (an IPO) and possibly additional public offerings (APOs), it will be a large and successful company that is well capable of paying full corporate taxes and contributing to a successful economy.

The good news is that accessing that corporate tax-free status (at least for a few years) may become more accessible to SME companies.   It will be more accessible if the TTSE is successful in amending one of its qualifying rules for companies that wish to list on the SME Exchange – it is seeking to do so at the moment.  Rule 400(2) of the TTSE Rule Book outlines the Special Market Listing Requirements relative to the SME Market – that is, what things your company needs to do, or requirements it must meet, in order be able to list on the SME Exchange.

Currently, according to Rule 400(2), companies seeking to list on the SME Exchange, must, among other things, have at least twenty-five unconnected shareholders owning at least thirty percent (30%) of the total issued share capital (the issued shares of the company). While there is no definition of “unconnected shareholder” in the TTSE Rules, extrapolating from the definition of “connected persons” under the TTSE Rules,  it is assumed that a “connected shareholder” is a shareholder who is a: director or senior officer/manager of the listed company, or the spouse, minor child or dependent (or a spouse of a dependent), or partner of such a person, or a corporate entity controlled by any such person.  If that is so, an unconnected shareholder should be anyone who is not a connected shareholder.

At present, to qualify to list on the SME Exchange, a company must have an IPO of its shares following which at least twenty-five unconnected shareholders acquire and hold at least 30% of the issued share capital (in addition to the shares held by the connected shareholders).  In the hope of attracting many companies to list on the SME Exchange, the TTSE is seeking to amend the above provision of Rule 400(2) to reduce the 30% threshold to 20% with the proviso that the TTSE can determine that even lower thresholds can be applied with the approval of the Trinidad and Tobago Securities and Exchange Commission (the Commission).

If the amendment is passed with the proviso, a company’s shares could still potentially be listed on the SME Exchange (to qualify for the tax holiday) if there are even less than 25 unconnected shareholders who hold less than 20% of the share capital following its IPO, provided that the Commission approves.   More on the proposed amendment can be found here:  with written comments being requested by July 9, 2023, although it would be unusual if later submissions were to be refused.

There is, of course, no free lunch, to paraphrase another maxim.  So while a company that successfully lists on the SME Exchange will not have to pay corporate taxes for 5 years (and will pay reduced taxes for another five after that), there are costs associated with carrying out a successful IPO and getting listed on the SME Exchange, including fees payable to both the TTSE and the Commission, not to mention broker and legal fees.  And there are also on-going reporting and filing requirements for listed companies which add to the cost of doing business.

Companies will need to weigh those listing and reporting costs against the potential savings from the tax holiday to determine if it will be worthwhile to list.  Perhaps the TTSE and the Commission should look into publishing what the average costs might be (even if a range) for companies of varying sizes to list on the SME Exchange.  It might also be helpful (and make it more attractive to list), if the TTSE and the Commission provided a waiver or discount on the first-year fees for companies that choose to list on the SME Exchange.  Whatever the outcome, just remember you heard it here first – you can escape death and taxes, but only for a while, and only if you are an SME company.

Glenn Hamel-Smith is a Partner and the Head of Banking & Finance at M. Hamel-Smith & Co. He can be reached at

 Disclaimer:  This column contains general information on legal topics and does not constitute legal advice.  


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