At the 2022 Budget Presentation, the Honourable Minister of Finance, Mr. Colm Imbert, reiterated the Government of Trinidad and Tobago’s intent to proceed with the collection of Property Tax in Trinidad and Tobago. At the presentation, Mr. Imbert advised that the revenue intended to be collected from Property Tax would provide a steady stream of income to help fund its development programme. With the continued progression of the Government’s plans, there may be some uncertainty regarding what Property Tax is, how Property Tax will operate, what are the obligations of owners and occupiers, and what are the potential liabilities for non-compliance. This Article will briefly touch on these aspects to assist with gaining a better understanding of the Property Tax regime.
The Property Tax Act, Chap. 76:04 (the ‘PTA’) creates a tax called Property Tax, which is levied on property that falls within the definition of “land” for the purposes of the legislation. The person who is determined to be the “owner” of the land, for the purposes of the PTA, is required to pay the tax to the Board of Inland Revenue. The tax is payable on what is defined as the “annual taxable value” (‘ATV’) of the land, at various rates of tax that is set out in Schedule 1 of the legislation as follows:
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- Residential land, which is taxed at 3% of the ATV;
- Commercial land, which is taxed at 5% of the ATV;
- Industrial land, which is divided into:
- Plant and machinery housed in a building, which is taxed at 6% of the ATV; and
- Plant and machinery not housed in a building, which is taxed at 3% of the ATV;
- Agricultural land, which is taxed at 1% of the ATV.
There are two (2) pieces of legislation that are inextricably linked and upon which the Property Tax regime rests:
(a) The PTA; and
(b) The Valuation of Land Act, Chap. 58:03 (the ‘VLA’).
As indicated above, the PTA creates the charge to tax on the value of land, such value being based on a valuation exercise which is conducted by the Commissioner of Valuations, in accordance with the VLA.
As Property Tax involves taxing an “owner” of “land” at a fixed rate of tax based on the “ATV” of the land, it is critical to know what these terms mean, particularly as they are specifically defined within the PTA.
The “owner” of land for the purposes of the PTA is relatively broad in scope and includes not only the legal or title owner and their receiver, attorney, agent, manager or guardian, but also any other person in charge or having the control or possession of land in his own right, or in the right of the owner.
“Land” as defined in the PTA is also quite encompassing and includes all types of land, corporeal and incorporeal, of every kind and description, or any estate or interest in an estate, together with all paths and passages, land that is covered by water, and all buildings, structures, plant and machinery, pipelines, cables and fixtures that are erected on or affixed to the land. Despite the encompassing scope of land for the purposes of the PTA, certain properties, such as land used for places of worship of any religious denomination, certain school buildings, office and playgrounds, land owned, occupied or used exclusively by a charitable institution, and land belonging to or in occupation by the State of Trinidad and Tobago, a statutory authority, or a state enterprise controlled by the State, is exempt from the payment of Property Tax.
The last term, “ATV”, is the figure on which the specific rate of tax will be applied on in order to compute what the likely Property Tax will be. This figure is arrived at after any applicable deductions and allowances (in respect of voids and loss of rent equivalent to 10%) are made to a figure referred to as the “annual rental value” (‘ARV’).
The ARV is arguably the most relevant term at this time since there is currently an obligation on all owners of residential, commercial and agricultural land to complete and submit a return pursuant to the VLA, to the Valuation Division or other specified offices on or before the 30th November, 2021. The Commissioner of Valuations will be required to value the property in accordance with the VLA (whose provisions are compatible with that of the PTA), to arrive at the ARV figure.
When the Commissioner of Valuations has valued land based on the return and in accordance with the factors that he is required to consider, a notice of valuation, which will contain the Commissioner’s valuation, will be issued to the owner of the land.
If an owner is dissatisfied with a valuation that is made by the Commissioner, he may object to the valuation, within thirty (30) days after service of receipt of a notice of valuation. The VLA outlines certain specifics grounds upon which an objection can be made, and which the objection should be based on. The Commissioner of Valuations is required to consider the objection and to either allow it wholly or in part or disallow it. If an owner remains dissatisfied with the Commissioners decision, he can appeal to a newly constituted body called the Valuation Tribunal.
When the collection of Property Tax formally resumes (which is likely to be preceded by legislative enactment specifically provision for the resumption), for each year in which the Property Tax will be collected, the BIR will be required to serve a Notice of Assessment on the owner of land personally, on the owner’s agent, or by post, before the 31st March of the relevant year. The owner will thereafter be required to pay the Property Tax on or before the 30th September of the relevant year.
If an owner is dissatisfied with the BIR’s assessment of the amount of Property Tax to be paid, which is contained in the Notice of Assessment, he can object to the assessment by notifying the BIR of the objection, in writing, within twenty one (21) days that the Property Tax will become due and payable. Similar to the objection process to the valuation exercise, there are certain specified grounds upon which an objection may be made, which are outlined in the PTA.
If the BIR is of the view that the Notice of Assessment was accurate and therefore disallows the objection, the owner may appeal the BIR’s decision to the Tax Appeal Board.
An owner liable to pay Property Tax can request a deferral of payment of the tax on the grounds that he is in an impoverished condition and is unable to improve his financial position significantly due to his age, impaired health, or some other special circumstance, and that undue hardship would ensure to him. An owner requesting such a deferral is required to provide written evidence in support in order for the BIR to consider the deferral.
While Property Tax is required to be paid by the 30th September of the relevant year, if any amount of the Property Tax is outstanding by the 15th March of the following year, a penalty at the rate of 10% of the outstanding tax will be added, in addition to interest calculated at the rate of 15% per annum. The BIR 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. The BIR has the power to waive any penalty and interest that may arise, if it is just and equitable to do so.
The powers of the BIR to exercise distrain or subsequently, forfeiture, will arise if the tax remains outstanding for a further extended period of time, and provided that further statutory notices are sent. The provisions of the PTA outline the requirements and safeguards that the BIR will be required to adhere to if it opts to exercise distraint or forfeiture, as well as the consequences of forfeiture.
While debates in certain quarters regarding the timing of the resumption of collection of Property Taxes continue to persist due to the prevailing economic downturn, it seems clear that the regime will proceed as planned within the near future. As such, it is in the interests of owners to understand how Property Tax operates, their obligations, and rights, in advance of the implementation of the regime.
Disclaimer: This Document Provides General Guidance Only And Nothing In This Document Constitutes Legal Advice. Should You Require Specific Assistance, Please Contact Your Attorney-At-Law.
This blog post was authored by Miguel Vasquez, associate in the Firm’s Taxation and Dispute and Risk Management groups. For more information, contact Miguel at MiguelV@trinidadlaw.com.
