Read our commentary on the Trinidad and Tobago budgetary measures delivered by the Minister of Finance, the Honourable Mr. Colm Imbert, in Parliament on 30 September 2016, available online at www.ey.com/tt.
EY Focus on Trinidad & Tobago Budget 2017
The Trinidad & Tobago Budget 2017 is based on the Economic Policy Statement,
entitled Shaping a Better Future: A Blueprint for Transformation and Growth,
delivered by the Minister of Finance, the Honourable Mr. Colm Imbert, in Parliament
on 30 September 2016.
This review summary was prepared by Ernst & Young and is intended for the benefit
of our clients and associates as a general guide. Readers are encouraged to consult
with professional advisors for advice concerning specific legal, accounting or tax
matters before making any decision.
This publication is distributed with the understanding that Ernst & Young Services
Ltd. or any other member of the Global Ernst & Young organization is not
responsible for the result of any actions taken on the basis of this publication, nor
for any errors or omissions contained herein.
Ernst & Young Services Limited
5/7 Sweet Briar Road
St. Clair, Port of Spain
Tel.: (868) 628-1105
Fax: (868) 622-0918
30 September 2016
Trinidad & Tobago Budget 2017
EY Focus on Trinidad & Tobago Budget 2017 | 1
Table of contents
2017 fiscal measures.............................................................................5
Income tax computation comparative...................................................16
Energy sector review...........................................................................18
Analysis of tax revenues .....................................................................26
Analysis of recurrent government expenditure.....................................28
Status of fiscal measures 2016............................................................30
Guyana - New prospect........................................................................34
Despite the economic challenges faced by Trinidad & Tobago (T&T) and other oil and
energy producing nations, we are steadfastly optimistic and strongly believe that
this country can implement measures in the short to medium term that will lead to
sustainable economic growth in the future.
To achieve stability, the government’s policy framework should consider the
1. How to manage the country’s current spending levels over the medium term.
2. How to increase the country’s capacity to grow and broaden the country’s
tax revenue base.
3. How to prioritize capital outlays and develop an industrial policy with a focus
on private sector led investment and diversification efforts.
4. How to create stronger institutions and create a better enabling
The government is, however, faced with the immediate task of reducing expenditure
against a backdrop of declining energy revenues and a weakening fiscal position, as
well as significant pressure being exerted on the country’s foreign exchange reserve
position. In the long term, we look forward to the development of the Vision 2030
plan, which we assume will be focused on achieving economic diversification and
the development of new industries and sources of economic activity. To improve
our economic fortunes, tough decisions will have to be made in the short term and
we must all be prepared to bear our fair share of this adjustment. We are, however,
confident that with the right focus and execution, T&T will emerge stronger, with a
stable and diversified economy going forward.
We thank you all and we welcome your feedback.
Colin Soo Ping Chow
EY Caribbean Ltd.
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“It is in your moments of decision that your destiny is shaped.”
Taking Charge of Our Future
Although the economy is in the midst of an energy led recession, on the
anniversary of his first year in office, the Honourable Minister of Finance was able to
boast that the country’s economic vital statistics as measured by our import cover,
debt to GDP, and unemployment rates remain relatively resilient compared to our
developing country peers and other oil producing nations. Indeed, as evidence of
growing confidence in the prudent financial management of the government, the
Minister pointed to the significant oversubscription of the country’s largest foreign
currency debt offering of US$1b.
At the same time, the Minister was at pains to point out to the population that the
combined impact of the significant fall in oil prices, reduced oil and gas production
and the result of exploration related tax incentives, has led to an unprecedented
decline in energy revenues. To provide some colour, the Minister stipulated that the
fall off in current revenues, between 2014 and 2016, was in the order of TT$20b.
A gap of this size represents a tremendous shock to the system, which underscores
the vulnerability of our nation state to energy price fluctuation and our reliance on
energy revenues generally.
In the circumstances, it seems trite to recant our energy reliance and the need for
greater economic diversification. The question is what measures can be adopted to
redress our deteriorating economic fortunes.
On the revenue side, there are perhaps a handful of major decisions that remain
within our circle of influence. At the forefront is the need to continue work on
reversing the decline in our oil and gas production, as well as stemming the
curtailment of natural gas supplies to the down-stream and mid-stream sectors.
To achieve this, there is a need to encourage new and existing energy players
to choose T&T for investment over competing options. This, in turn, requires a
careful balance to be struck between investor considerations and the needs of the
government to procure fair and stable returns on behalf of its citizens.
On this score, the Minister indicated that a technical study on the reform of the
oil and gas regime was embarked upon by the International Monetary Fund (IMF)
and the results of the analysis are being actively considered by the government
and discussed with stakeholders. Also of relevance to the encouragement of new
investment would be the request by the energy companies for greater control
over the allocation of their production. The announcement of the implementation
of transfer pricing legislation will go a long way in ensuring that the correct arm’s
Executive Overview length profits of these multinationals are allocated, recognized and taxed in T&T,
thereby bolstering the revenues of the State.
Another critical success factor is the government’s efforts to obtain cooperation
from our South American neighbor, Venezuela, on accessing its natural gas fields.
Discussions have commenced on an initiative for Venezuela to supply natural gas
to the country via its Dragon Field, which reportedly has an estimated 2.6tcf of gas
and is wholly located within Venezuelan territorial waters. In addition, the Minister
alluded to ongoing plans around the formation of a consortium to monetize the
Loran-Manatee, a cross-border gas field, which has up to 10.25tcf in estimated gas
reserves. These arrangements are game changing in nature and can help secure
a long-term supply of natural gas with the potential to revitalize the energy down-
stream and mid-stream sectors of the country. Notwithstanding, these discussions
are wrought with risk, especially considering the low visibility around the viability of
the Maduro regime and the aggressive stance the Republic of Venezuela has taken in
its border dispute with our Caricom sister territory, Guyana.
In the shorter term, it was encouraging to hear that the government is intent on
expeditiously executing its planned sale of its interest in First Citizens, Trinidad
& Tobago NGL Limited (TTNGL) and Trinidad Generation Unlimited (TGU). These
asset sales will not only serve the purpose of generating alternative sources of
much needed revenue, but should also reduce the role of the state in enterprises
that can, and arguably, should be in private ownership at this stage of our national
The tax measures announced by the Minister, such as the reintroduction of the
regime around Property Tax, the implementation of the tax on online purchases,
and so called “sin taxes” on tobacco and alcohol, will initially have modest revenue
generation impact. Nevertheless, these imposts will help to stem the level of fiscal
deficits, produce sustainable sources of tax collections and introduce greater
participation of the national community in contributing to the Treasury. Of
greater impact on the business community is the planned increase in individual
and corporation tax on chargeable income over $1m, which is estimated to raise
revenues in the region of $560m.
Revenues aside, it is also incumbent upon us as a country to recognize that major
curbs ought to be placed on our level of spending. In terms of significance, our most
material outlay falls under the broad category of “transfers and subsidies”, which has
ballooned to average around $31b over the past decade, thereby accounting for over
50% of government expenditure.
It was therefore unsurprising to hear the Minister announce a further reduction in
the diesel subsidy as a further step towards the potential eventual free floatation of
gasoline and diesel prices. It was also heartening to hear the Minister acknowledge
that the government must work to make state enterprises more financially
independent as the state can no longer afford to intervene and protect the entire
population from the true cost of public services.
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2017 fiscal measures
The Minister of Finance has proposed the introduction of a new tax bracket of 30%
on high income individuals whose chargeable income exceeds $1m per annum,
as well as a new tax bracket on companies with chargeable profits also in excess
of $1m per annum with effect from 1 January 2017. The measure is expected to
generate an additional $560m in tax revenue from high income individuals and
businesses. The impact of this measure is analyzed hereunder.
Impact to Individuals
As stated above, individuals whose chargeable income exceeds TT$1m will be
liable to tax on the incremental amount at the rate of 30%. As such, the first $1m
of chargeable income will be taxed at the rate of 25% and any amount in excess of
$1m will be taxed at the rate of 30%.
The following reflects the tax rates for T&T from income year 2000 to present:
• Income Years 2000 to 2002 – Chargeable Income up to TT$50K - 28%
– Chargeable Income over TT$50K - 35%
• Income Years 2003 to 2005 – Chargeable Income up to TT$50K - 25%
– Chargeable Income over TT$50K - 30%
• Income Years 2006 to 2016 – All Chargeable Income - 25%
• Income Year 2017 (Proposed) – Chargeable Income up to TT$1m - 25%
– Chargeable Income over TT$1m - 30%
Impact to Companies
The current Corporation Tax rates in T&T are as follows:
Basic Corporation Rate 25%
Approved Small Company 0%
(Exempt from tax for five years)
SME Listed Company 10%
(First five years from the listing on the TTSE)
Long-Term Life Insurance Companies
(Investment income derived from the Capital Fund) 15%
(Transfer to shareholder’s account) 25%
New Tax Brackets
Applies to companies involved in the liquefaction of natural gas, manufacture of petrochemicals, physical separation
of liquids from a natural gas stream, transmission and distribution of natural gas, wholesale marketing and distribution
of petroleum products (as defined) and any other activity so prescribed. It does not include companies operating a
liquid petroleum gas filling plant or conducting a refilling operation, involved in the sale and distribution of leaded and
unleaded gasoline, diesel and kerosene lubricants and other car care products or operating service stations.
An area that the Minister admitted was sacrificed over the last financial year was
capital expenditure on public sector work projects. This is not a desirable outcome as
it is counter-stimulative. More importantly improvements in roads, schools, hospitals
and other essential facilities are critical for the long term social and economic well-
being of our society. It was, therefore, refreshing to hear the Minister acknowledge
that such projects do not have to be exclusively undertaken by the State. They can
undoubtedly be better managed via Public Private Partnerships and it was gratifying
to understand that this will not only be the preferred modus operandi of the
government in the future, but also that the government is intent on rewarding such
partnerships with tax incentives.
T&T may be a fortunate beneficiary of OPEC’s recently announced resolve to work
towards cutting crude production by up to 700,000bopd. Indeed, Saudi Arabia’s
agreement to this shift in policy manifests the devastating impact the precipitous fall
in energy prices has had on its economy and that of other oil producing nations. As
a petroleum price-taker, we can do nothing to influence global prices. In this regard,
we all look forward to better understanding the government’s Vision 2030 plan and
collaborating with our country’s leaders in making the necessary fiscal adjustments
with a view to reshaping our collective future.
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Our readers may recall that during the presentation of the 2015/2016 National
Budget, the Minister of Finance signaled his intention not to extend the waiver
of Property Taxes beyond 31 December 2015 and to enforce collection from 1
January 2016 using the old levels and rates as a starting point.
In his 2017 National Budget presentation the Minister indicated that he was advised
that it would be unconstitutional to collect property taxes using the old rates, since
different rates applied in different areas of T&T.
The Minister has announced that the existing Property Tax Act would be put into
full effect in fiscal year 2017 with the population of the valuations roll and minor
amendments to the Valuation of Land Act. In addition, he stated that under the
Valuation of Land Act every owner is required to submit a return, which will be used
by the Valuation Division of the Ministry of Finance (MoF) to calculate the annual
rental value of the property, failing which the Valuation Division would prepare its
The Valuation of Land Act as it stands required that owners submit a return in
the form prescribed by 1 April 2010. The penalty under the existing legislation is
TT$500 on summary conviction. This provision would have to be updated and it
may be one of the amendments to which the Minister alluded.
We have provided below a brief overview of the provisions contained in the
Property Tax Act.
Rate: 6% (Housed in a Building)/3% (Not Housed in a Building)
Basis: Annual Taxable Value (ATV)
ATV: 6% of installed cost of plant, machinery and associated buildings
With respect to industrial properties, the ATV is to be calculated based upon the
installed cost of machinery, plant and associated buildings minus a depreciation
factor calculated by the Valuation Division. The depreciation factor is expected to
take into consideration real declines in productivity and efficiency of the machinery
and plant and has no reference to the accounting depreciation.
All immovable plant and machinery would otherwise be assessed to tax whether or
not housed within a building.
Certain buildings that are not specialized (including warehouses or factory shells
not adapted for special use of a particular industry) to be taxed on ATV based upon
the annual rental value (see Commercial Property Tax).
It should be noted that companies in the Petroleum sector are subject to tax under
a separate tax regime.
Historically, the basic Corporation Tax rate in T&T was as follows:
Income Years Corporation Tax Rate
2000 to 2002 35%
2003 to 2005 30%
2006 to 2015 25%
In relation to other Caribbean territories, see the table below for details on the
current rates of Corporation Tax.
Country Corporation Tax Rate
Barbados 25%/15% (Note 1)
Jamaica 25%/30%/33.3% (Note 2)
Guyana 30%/40%/45% (Note 3)
St. Lucia 30%
St. Kitts 33%
Antigua & Barbuda 25%/22.5% (Note 4)
St. Vincent & the
1. Barbados - A 15% rate applies to manufacturing companies and to net income derived from the rental of
2. Jamaica - Unregulated companies are taxed at the rate of 25% and regulated companies (excluding life
insurance companies) are taxed at a rate of 33.3%. Building societies are taxed at a rate of 30%.
3. Guyana - Non-commercial companies are subject to tax at a rate of 30% whereas commercial
companies (as defined) are subject to tax at a rate of 40%. Companies engaged in the business of
telecommunications are subject to tax at the rate of 45%.
4. Antigua & Barbuda - Banks which offer mortgages at a rate of 7% or below are subject to tax at the rate
As illustrated above, the basic Corporation Tax rate in T&T has remained at 25%
from income year 2006 to present. From a Pan-Caribbean perspective, the new
tax bracket of 30% is still competitive relative to the tax rates in other Caribbean
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It is hoped that the introduction of transfer pricing rules would see the repeal of
the arbitrary 2% management charge restriction so that unreasonable charges
would now be more appropriately disallowed under accepted transfer pricing
methodology. Conversely, all reasonable charges based on arm’s length principles
would be fully deductible.
We note that transfer pricing legislation was promised as far back as the Budget
Statement of October 2011. To date, however, little progress appears to have been
made in implementing such legislation. In this regard, the OECD has estimated that
worldwide revenue losses from abusive pricing practices are between 4%-10% of
global corporate income tax revenues. Given our present economic circumstances,
we can ill afford to lose such revenues and it is hoped that the long promised
transfer pricing legislation will be finally enacted as a matter of priority.
The Minister proposed that foreign yacht repair services be exempt from VAT for
yacht owners with effect from the first quarter of 2017.
Prior to the 2016 amendments to Schedule 2 of the VAT Act, such repairs were
classified as zero rated supplies for VAT purposes. Effective 1 February 2016,
repair services became standard rated.
As a consequence of the proposed exemption on such services, VAT registered
suppliers would not be able to recover the input VAT incurred in the making of the
exempt yacht repair service.
In keeping with the government’s intention to move towards the elimination of the
burden of the fuel subsidy, the Minister proposes to increase the current market
price of diesel by 15%, from $1.98 per litre to $2.30 per litre. The change in price
will take effect immediately.
It should be noted that the price of diesel was previously increased in September
2015 and April 2016 from $1.50 to $1.72 and from $1.72 to $1.98 respectively,
an increase of 15% in both cases.
Given current oil prices, the impact of the fuel subsidy has been significantly
Notwithstanding the positive impact of this measure on the government’s budget,
the increase in the price of diesel may result in inflationary effects, primarily on
transportation costs to both individuals and businesses. Moreover, businesses may
seek to pass on their increased costs to consumers translating to higher prices for
goods and services.
Valued Added Tax
ATV: For commercial properties, the ATV is determined by reference to the
annual rent income expected to be earned from the property less 10% (for
the average time the property may not be rented).
Basis: 2% of capital value of lands and agricultural buildings
ATV: The capital value means the sum which the fee simple might be expected to
realize if offered for sale on such reasonable terms and conditions as a bona
fide seller would require
ATV: The ATV is determined by reference to the annual rental income expected
to be earned from the property less 10% (for the average time the property
may not be rented). Previous pronouncements by the MoF indicated that the
ATV is the expected annual rent to be obtained from T&T resident tenants
and, as such, rental rates expected to be obtained from expatriate tenants
would not form the basis for assessments.
The Minister only referred to residential properties and made no mention of the
property taxes that are currently included in the Property Tax Act that would apply
to industrial, commercial and agricultural properties.
The Minister indicated that the government had engaged the Inter-American Centre
of Tax Administrators to work on a policy and legislation to govern transfer pricing.
Pending comprehensive legislation, he further indicated that the government had
engaged with a transfer pricing consultant to assist in formulating an arm’s length
pricing framework as part of its negotiations with Atlantic LNG.
Transfer pricing rules seek to prevent pricing manipulation between related parties
in order to achieve a tax advantage. These rules achieve their purpose by treating
related parties as if they were independent entities so as to ensure that the prices
charged between them accord with the arm’s length principle.
Transfer pricing in T&T must also be viewed in the context of the current tax
legislation framework. We note that the Income Tax Act arbitrarily restricts the
deduction of management charges paid to non-residents to 2% of all out goings and
expenses (exclusive of such management charges and capital allowances). In this
regard, the definition of “management charges” was expanded in 2006 to include
personal and technical services, as well as the allocation of head office costs. As
presently worded, the management charge restriction disallows legitimate charges
incurred for the purposes of the business.
Transfer Pricing Fuel Subsidy
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The Finance (No. 2) Act, 2016 enacted the multi-family dwelling tax incentive,
which provides that the gains or profits from the initial sale, or premiums and rents
derived from the letting of a newly constructed multi-family dwelling, construction
of which commenced on or after 1 July 2016, will be exempt from income tax until
the year ending 31 December 2025.
Notwithstanding the foregoing, no regulations were subsequently passed allowing
investors access to this incentive. The Finance (No.2) Act, 2016 did not provide
a definition of the term multi-family dwelling. In the presentation, the Minister
proposed to introduce regulation allowing access to the multi-family dwelling tax
The aforementioned tax incentives are aimed at promoting and encouraging
investment in the development of public infrastructure. In the absence of a
definition of “multi-family dwelling”, there appears to be no distinction from the
term ‘house’ embedded in the current housing tax incentives. We will await further
clarification on the process of claiming the multi-family dwelling tax incentive.
The Minister is proposing to stimulate the local agricultural sector by introducing
an incentive whereby all agro-processing operations will be tax free. The Ministry of
Agriculture, Land and Fisheries will be responsible for the certification process.
In order to qualify for the tax relief, the following criteria would have to be met:
• At least 75% of the processing of agricultural products must be done in
• 75% of the ingredients must be produced or harvested locally.
We await the passage of the legislation to provide further clarity on what
constitutes “agro-processing”. It is noteworthy that successive governments
have introduced tax incentives for various sectors of the economy that have been
ineffective due to the bureaucracy encountered by companies seeking to take
advantage of the tax incentives. It is therefore imperative that the certification
process is not rendered inaccessible due to unduly cumbersome procedures.
T&T’s food import bill has been the subject of much concern to the government.
With that being said, the implementation of direct tax incentives offered to the
Agricultural sector have been scarce over the last few years.
The 2017 Budget proposes to increase the excise duty on locally-manufactured
tobacco and tobacco imported from the Common Markets by 15% effective 20
Similarly, the excise duty on locally-manufactured alcohol and alcohol imported
from the Common Markets is proposed to increase by 20% effective 20 October
2016. The current excise rates vary for beers, wines and spirts.
For alcoholic beverages and tobacco products imported into T&T from extra-
regional sources, customs duty will be adjusted to receive equal treatment to that
of the Common Market.
The Minister has signaled the government’s intent to enact, in 2017, The Gambling
(Gaming and Betting) Control Bill, 2016, which was first introduced and read in the
House of Representatives on 1 July 2016.
The Gaming legislation is geared towards leveraging every potential source of
tax revenue and creating an environment conducive to the generation of quality,
The legislation is additionally intended to redress an industry which is currently
loosely regulated and the associated negative social effects. The 2016 Bill seeks to
establish a License Regime with a comprehensive, robust and stringent regulatory
framework, which will curtail fraudulent acts of money laundering and terrorism
financing, and meet globally recommended standards required by the Financial
Action Task Force and the Caribbean Financial Action Task Force.
In the 2017 Budget Speech, the Minister re-introduced the concept of the 7% levy
on goods purchased online from non-resident vendors. This levy as proposed will
only be applicable on the purchases that enter T&T via courier companies or air
The levy will be due and payable at the bonded warehouses before clearance of
goods or directly to customs, similar to the manner in which VAT and customs duty
are currently collected. The effective date for implementation of this levy is 20
Tax on Online Purchases
Alcohol and Tobacco
Agro-Processing Tax Relief
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The Minister is proposing to dispose of the following assets to generate
Asset Percentage of
to be sold
The National Gas Company’s
shareholding in Trinidad & Tobago
NGL Limited (TTNGL)
The Government of Trinidad &
Tobago’s shareholding in First Citizens
Industrial estates under the remit
of Evolving Technologies Enterprise
Development Company Limited
Trinidad Generation Unlimited (TGU)
to institutional investors, such as
National Insurance Board and Trinidad
& Tobago Unit Trust Corporation
Special arrangements will be put in place for the existing shareholders of TTNGL
and First Citizens Holdings Limited to access the IPOs.
The Minister also indicated that the government intends to pursue the partial
divestment of Lake Asphalt to an International Strategic Partner who can
successfully market the natural asphalt and diversify Lake Asphalt’s product
line. This is expected to increase production volumes, monetize the product and
increase employment, particularly in the La Brea area. This initiative is scheduled
The Minister proposed the introduction of an integrated Revenue Authority
(RA) as well as other measures, as needed, to improve tax administration. The
Minister expects to complete the legislative requirements in Parliament for the
establishment of the RA in the second quarter of the Fiscal Year 2017.
The Minister has proposed to assist the less fortunate by exempting persons whose
monthly electricity bill is $400 or less from the first $100 in electricity charges.
We note that the Minister has stated that the Government will bear the difference
in charges in an arrangement with T&TEC. This measure will take effect from 1
In an effort to stimulate creativity and innovation in business, an Entrepreneurial
Talent Grant has been proposed. The Minister has indicated that citizens will be
invited and encouraged to participate in a national competition by presenting
innovative business concepts, for evaluation by a panel of experienced businessmen
and entrepreneurs. Every year, the top five projects will receive a $1m grant to
facilitate the development and implementation of their business concepts.
With a view to mobilizing private sector funding within the public sector, the
Minister has proposed to institute during 2017 tax reliefs and fiscal incentives for
Public Private Partnerships (PPP).
A PPP is a contractual arrangement between a public agency and a private sector
entity. Through this agreement, the skills and assets of each sector (public and
private) are shared in delivering a service or facility for the use of the general
The government will provide 50% tax relief and other fiscal incentives to businesses
which can provide public infrastructure and/or public facilities, amenities and
services which are currently provided exclusively by the government. Additionally,
projects which increase productivity and create meaningful employment will also be
considered for inclusion.
The government will provide a Clearing House to evaluate proposals from the
Pursuant to this initiative, the Minister has indicated that the government would,
in particular, be inviting proposals from the private sector for the management,
operation and maintenance of the Couva Hospital and Training Facility.
Entrepreneurial Talent Grant
Public Private Partnership (PPP)
Business Tax Relief
Sale of Assets
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which exist in the current system. However, there are a number of problems that
can be resolved without the implementation of an RA.
The RA should be able to address:
• Human resource management problems:
• With semi-autonomous powers, the RA should have the ability to
implement a human resource management function, which (at least
in theory) should facilitate effective recruitment and selection of
appropriate personnel, career planning, promotion and advancement,
learning and growth and development.
• Effective performance management systems could be implemented,
which would reward/discipline staff based on performance.
• As employees of the RA would not fall under the Public Service
Commission, their remuneration would be determined by the RA. In
this regard, remuneration of tax administration employees can better
reflect market compensation.
• Less than exemplary customer service may be addressed by both
training and development and evaluation by way of a performance
• Accountability of Management
• The RA would allow for tax administration to be supervised by an
independent board, which should be responsible for introducing high
quality and accountable management.
Is it expected that the RA would come into existence?
• The Trinidad & Tobago Revenue Authority Bill 2010 was piloted through
Parliament by the former PNM administration. However, the Bill, which
required a three-fifths special majority to pass, was not supported by the
Opposition or Independents in the Upper House.
• We understand that the requirement for a three-fifths special majority
is mandatory as the formation of the RA affects the rights of the public
servant under Section 4 “Recognition and declaration of rights and
freedoms” and Section 5 “Protection of rights and freedoms” of the
Constitution of T&T.
• It is uncertain whether the government can achieve the required three-
fifths special majority that is required to pass the Bill.
The Minister also stated that the RA will allow for greater sharing of information
between the BIR and the Customs and Excise Division (C&E), which is needed
to reduce the incidents of tax evasion. The new institution will also allow for tax
administration to be supervised by an independent board, which will be responsible
for introducing high quality and accountable management.
What is an RA?
• An RA is simply a term used to describe a governance regime for an
organization engaged in revenue administration, where the regime
provides for more autonomy than that afforded a normal department in a
• The RA would result in the integration of C&E and the BIR into a semi-
autonomous body, which will be responsible for the administration and
enforcement of the revenue law in T&T, as well as the collection of taxes.
What are the problems with the existing systems?
• The BIR currently lacks robust human resources and management
systems, resulting in:
• An inability to retain competent staff within the tax system.
• A heavy reliance on external bodies to provide funding (MoF)
and perform the vital talent recruitment function (Public Service
• Inadequate management capability and training.
• Inadequate staff development and training.
• Inadequate supervision of staff.
• Lack of accountability of management of the tax administration to the
• Sub-optimal communication and data exchange among the existing
• Less than exemplary customer service.
• Low effectiveness of tax administration and reduced levels of compliance.
• A perception that the function and purpose of the C&E and the BIR differs
significantly and, in this regard, should not be integrated.
Would the implementation of an RA resolve the problems in
the existing system?
The implementation of an RA may resolve some of the above-mentioned problems,
16 | EY Focus on Trinidad & Tobago Budget 2017
Income Tax Computation Comparative
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No proposed change for individuals earning less than $1m.
Note 1 Personal Allowance for residents increased to TT$72,000. Effective 1 January 2016.
Note 2 Tax Allowance limited to $25,000 per household in the year of income for first time homeowners for five
years including those years utilized by existing beneficiaries. Effective 1 January 2015.
Note 3 Maximum allowance per household is $60,000 (i.e. spouses must share allowance).
Note 4 Maximum allowance granted for contribution to Approved Annuities/ Pension Plans and 70% of NIS
Payments is $50,000. Effective 1 January 2015.
Note 5 Tax Deduction equal to the amount of donation, up to a maximum of 15% of the individual’s total income
in an income year. The Income Tax Act (ITA) defines total income as the aggregate amount of income of a
person before making any deductions for expenses or allowances.
Note 6 Chargeable income up to $1m will be taxed at 25%. Effective 1 January 2017.
Note 7 Chargeable income in excess of $1m will be taxed at 30%. Effective 1 January 2017.
High Income Earner
Income from Employment 1,500,000 1,500,000
Personal Allowance - (Note 1) (72,000) (72,000)
Deduction for First Time
Acquisition of House - (Note 2)
Tertiary Education (Extra-
Regional) - (Note 3)
Deduction for Approved Annuity/
Pension Plan and NIS - (Note 4)
Covenanted Donations - (Note 5) (5,000) (5,000)
Chargeable Income 1,288,000 1,288,000
Income Tax @ 25% - (Note 6) 250,000 322,000
Income Tax @ 30% - (Note 7) 86,400 -
Total Tax Liability 336,400 322,000
With regard to high income individuals, the following table highlights the impact
of the proposed increase in the tax rate:
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Evidentially, there are diametrically opposing views as to the role and extent that
tax incentives should play in enticing investments in this sector, particularly the
upstream sector, between this administration and the last.
The former administration amended the fiscal regime governing the upstream
petroleum sector with effect from the 1 January 2014 (and expiring on 31
December 2017) to allow for, inter alia:
• the immediate write off of 100% of the capital expenditure on exploration
• the accelerated claims of capital allowances in respect of tangible and
intangible drilling and development costs.
Such measures were deemed essential and the representatives of the energy
companies heralded praise and gave firm commitments to reinitiate investments in
their respective drilling programs. These pledges were upheld and the much needed
natural gas production resulting therefrom is expected to come onstream in the
third quarter of calendar year 2016 and the first quarter of calendar year 2017.
This incremental supply of natural gas is seen by industry experts, along with the
downstream operators, as vital in addressing, in part, the supply curtailment issue.
Recognizing the stark contrast in the hydrocarbon price environment prevailing at
the time the legislative amendments were enacted, the current administration has
second guessed the efficacy of these measures on the basis that the application of
same by the upstream producers has, in no small way, reduced the tax liabilities of
Striking the balance between providing incentives for investments in the energy
sector specific to exploration and development and preserving a respectable
revenue basis for the country is at the heart of this debate.
The Minister placed great emphasis on the current efforts of the Administration to
supplement natural gas supply through dialogue with our neighbor, Venezuela, for
cross-border supply from the Dragon Field and the unitization of the cross-border
In addition, the Minister revealed that he engaged the technical assistance of the
IMF and they have made the following recommendations:
• The fiscal regime must incorporate a balance among objectives, in
ensuring that it seeks to promote investment by reducing the fiscal burden
of projects of low profitability, while assuring the public that the extraction
of the country’s natural resources always results in some minimum
payment. Moreover, where a petroleum project generates a surplus over
the total cost of production, including profit necessary for initial and
continuing investment, the government should share substantially in that
• Government should also attach priority to a degree of stability in
petroleum revenue flows, just as petroleum companies attach a high value
to the stability and predictability of fiscal terms and conditions.
• Reform of the oil and gas fiscal regime should provide terms attractive
for investment, while securing a substantial share of rents for the
government. A shift of the tax base towards profits and cash flows rather
than gross production or revenue, thereby aligning mutual interests.
In summary, the IMF has recommended a moderate fixed rate royalty, to ensure
a minimum revenue stream, a cash flow tax that replaces the Supplemental
Petroleum Tax (SPT), together with a reduced Petroleum Profits Tax rate and a
streamlining of capital allowance rates.
While the IMF recommendations were not articulated with the requisite specificity
during his presentation for meaningful analysis, it is important that the interests
of the government and the energy companies be aligned (and not viewed as
competing) at this time.
This quagmire, together with the imminent re-negotiations of natural gas supply
contracts, can only be resolved through the implementation of a holistic natural gas
master plan, which is developed by all parties involved.
Given that the budgeted revenue for fiscal year 2017 is predicated on a crude oil
price of US$48 per barrel and a natural gas price of US$2.25 per mmbtu, we all
would agree that the Minister has no easy task overseeing the stewardship of the
country’s finances at this time. His efforts to achieve success, however, ought to be
balanced with the imperatives of the entire energy sector, upon which the economy
has historically disproportionately relied.
Energy sector review
20 | EY Focus on Trinidad & Tobago Budget 2017 EY Focus on Trinidad & Tobago Budget 2017 | 21
The Minister stated that the intention of the Insurance Bill, 2016 is to strengthen
the regulatory remit for insurance companies and pension funds. He emphasized
that, other than a date change to the Insurance Bill, 2016, the same Bill was sent
to a Joint Select Committee (who also had no changes) by the former government
and, as such, it is the Minister’s expectation that this long overdue legislation will
receive the support of the Opposition in 2017.
The current Insurance Act requires companies that carry on long-term life
insurance business (life insurance, pension, personal accidents, annuities and other
classes of life insurance business as defined under the Insurance Act) to maintain
assets in their Statutory Fund to cover liabilities and protect policyholders.
The long term life insurance business of an insurance company is currently taxed as
(i) Gains or profits derived from investments in the Statutory Fund – 15%
(ii) Profits of the Statutory Fund transferred to the shareholder’s
account – 25%
The enactment of the Insurance Bill, 2016 will replace the current concept of
the Statutory Fund with risk related capital adequacy requirements, which could
significantly increase the capital held by insurance companies in order to protect
the interests of policyholders. With the removal of the Statutory Fund, the
methodology for determining taxes due on the long term life insurance business will
need to be re-designed.
The Insurance Bill
The better the question.
The better the answer.
The better the world works.
22 | EY Focus on Trinidad & Tobago Budget 2017 EY Focus on Trinidad & Tobago Budget 2017 | 23
The Minister reported that the US Treasury informed the government of T&T
that because it: (i) signed the intergovernmental agreement; (ii) demonstrated
firm resolve to achieve compliance by seeking to enact the necessary governing
legislation; and (iii) submitted a detailed plan of action to achieve compliance with
FATCA, the country is considered to have an exchange of information agreement
“in effect” with the US and, as such, would not be subject to any immediate
sanctions for not meeting the FATCA reporting deadline of 30 September 2016.
For the benefit of our readers we address some frequently asked questions
concerning FATCA below:
What is FATCA?
FATCA is a US law aimed at foreign (non-US) financial institutions (FFIs) and other
financial intermediaries to prevent tax evasion by US citizens and residents through
the use of offshore accounts.
What is an intergovernmental agreement (IGA) and why did
T&T sign it?
An IGA is an agreement between the US and another country, where the other
country agrees to implement legal changes and logistical support to allow FATCA to
work in that country to enforce its compliance. In exchange, the US will:
• Provide reciprocal tax information about the country’s tax payers to its
• Exempt the country’s financial institutions from withholding1
• Exempt the country’s financial institutions from having to withhold on
other financial institutions or their customers.
T&T signed a FATCA IGA with the US government on 20 August 2016 to gain or
maintain the benefits listed above.
What is the reason for the Tax Information Exchange
Agreement Bill being debated in Parliament?
The Bill allows T&T to implement its commitments in the IGA, including:
• Allowing the Minister of Finance to establish a ‘Competent Authority’,
which acts as the local FATCA regulator and point of submission for
Foreign Account Tax
Compliance Act (FATCA)
• Modifying local law to allow the reporting of account holders’ personal
information by financial institutions and the government of T&T.
What type of taxpayer information is to be automatically
exchanged under FATCA?
• Name, address and US TIN of each specified US person that is a holder of
a reportable account.
• In the case where a non-US entity is identified as having one or more
Controlling Persons, the name, address, and US TIN (if any) of each
specified US Person.
• Account number.
• Name and identifying number of the reporting T&T financial institution.
• Account balance.
• For a Custodial Account, the total gross amount of interest, dividends and
total amount of other income generated.
• For a Depository Account, the total amount of interest paid or credited.
• For an account other than a Custodial Account or a Depository Account,
the total gross amount paid or credited to the account holder.
How is FATCA different from the older Tax Exchange of
Information Agreements between the US and T&T?
FATCA provides for the automatic exchange of information between financial
institutions, the local competent authority and the US Treasury.
What was the significance of 30 September 2016?
The IGA committed T&T to report information about US tax payers by 30
The Bill will make it legal for the Competent Authority and local financial institutions
to report this information.
According to the Minister, what will happen if the T&T
government does not make good on its commitment to the
Having missed the reporting deadline, and not taking all the necessary steps to
obtain full compliance with FATCA, including the enactment of the Tax Exchange of
Information Bill, the US Treasury may suspend T&T’s benefits under the IGA.
Withholding is a 30% tax on specific payments.
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What does all this mean for individuals and businesses?
Generally, as a customer of a financial institution, you will need to provide more
information about yourself or your business, and certify whether you are a US tax
payer or not.
If the US takes action against T&T for not meeting its commitments in the IGA,
local financial institutions could be deemed non-compliant with FATCA, potentially
• Your financial institutions’ US investment income or certain payments2
due to you, may now be subject to withholding.
• Financial institutions outside of T&T may suspend dealings with your
local financial institution, with a detrimental impact on a wide variety of
transactions that require a correspondent relationship.
A payment includes any payment of interest (including any original issue discount), dividends, rents, salaries, wages,
premiums, annuities, compensations, remunerations, emoluments and other fixed or determinable annual or periodical
gains, profits, and income, if such payment is from a source within the US
26 | EY Focus on Trinidad & Tobago Budget 2017 EY Focus on Trinidad & Tobago Budget 2017 | 27
FISCAL YEAR 2017
Analysis of tax revenues
Taxes on Income and Profits of Oil Companies $472m
Taxes on Income and Profits of Other Companies $6,808m
Taxes on Income and Profits of Individuals $7,034m
Value Added Tax $7,825m
Other Tax Revenues $7,794m
28 | EY Focus on Trinidad & Tobago Budget 2017 EY Focus on Trinidad & Tobago Budget 2017 | 29
Analysis of recurrent government expenditure
FISCAL YEAR 2017
Charges on Account of Public Debt $4,191m
Ministry of Finance $5,769m
National Security and Police Service $6,977m
Energy and Energy Industries $918m
Utilities, Infrastructure, Development $8,632m
Pensions and Social Services $7,535m
30 | EY Focus on Trinidad & Tobago Budget 2017 EY Focus on Trinidad & Tobago Budget 2017 | 31
Status of fiscal measures 2016
Proposed Measures Implications Status
VAT Reform Increase in VAT registration
threshold from $360,000 to
Decrease in rate of VAT on
standard rated supplies from
15% to 12.5%.
Revision of zero rated goods
Enacted in the
Enacted in the
Enacted in Legal
Notice No. 17 of
Business Levy Increase in the rate of
Business Levy from 0.2% to
Enacted in the
Green Fund Levy Increase in the rate of Green
Fund Levy from 0.1% to 0.3%.
Enacted in the
Personal Allowance Increase in the Personal
Allowance to resident
individuals from $60,000 to
Enacted in the
Revision of existing technical
specifications for zero rated
CCTV and alarm systems.
NIS Increase in earnings class
limits and contribution rates.
Enacted in the
Finance (No. 2)
Old Age Pensions The cap on joint incomes
received by retirees in respect
of National Insurance and Old
Age Pensions to be increased
to $5,000 or an additional
$500 per month.
Enacted in Legal
Notice No. 209
Proposed Measures Implications Status
Retirees’ Benefits No fees to be charged for
drivers’ permits and passports
for citizens who are 60 years
of age or over.
Implementation of a system of
discounts on public utility bills
Fuel Subsidy Increase in the retail price of
Diesel from $1.50 to $1.72
per litre and Super Gasoline
from $2.70 to $3.11 per litre.
Enacted in Legal
Notice No. 191
Gaming Industry Expedite passage of the
Gambling (Gaming and
Betting) Control Bill.
Agriculture Exemption from all duties
and taxes of all inputs in the
Property Tax Enforce collection of Property
Tax from 1 January 2016
using old rates and levels as a
Revenue Authority Establishment of the Trinidad
& Tobago Revenue Authority
by the end of the 2016 fiscal
Transfer Pricing Introduction of Transfer
Budget Statement 2016
32 | EY Focus on Trinidad & Tobago Budget 2017 EY Focus on Trinidad & Tobago Budget 2017 | 33
Status of fiscal measures 2016
Proposed Measures Implications Status
Online Shopping Imposition of a 7% levy on
online purchases of goods and
services from non-resident
Motor Vehicles 50% increase in Customs Duty
and Motor Vehicles Tax for
private vehicles with
an engine size exceeding
Enacted in Legal
Notices Nos. 47
and 48 of 2016
Fuel Subsidy Increase in the retail price of
Diesel to $1.98 per litre
and Super Gasoline to
$3.58 per litre.
Enacted in Legal
Notice No. 46 of
Maxi Taxis and Taxis Reduction in taxes on maxi
taxis and taxis
CNG, Hybrid and
Removal of all taxes on engine
sizes not exceeding 1999 cc.
Enacted in the
Finance (No. 2)
Alcohol Proposed unspecified
increase in taxes and levies.
Tobacco Proposed unspecified
increase in taxes and levies.
Oil and Gas Tax Regime Proposed review of the
regime to encourage
production in marginal
fields and areas of so-called
“stranded gas” to encourage
drilling and increased
production of oil and gas.
Proposed Measures Implications Status
Oil and Gas Tax Regime Review of the Supplemental
Petroleum Tax (SPT) on crude
oil prices moderately higher
than US$50 per barrel.
Agreement to be reached with
upstream companies on new
natural gas supply contracts.
Gaming Industry Enhanced collection of taxes
due from gaming and gambling
Bill, 2016 was
July 2016 but
not yet enacted
VAT Proposal to “seriously consider”
reducing the statutory period
for an acceptable delay in VAT
refunds to three months.
Property Tax Enforce collection of Property
Tax using old rates and levels as
a starting point.
Extension of the time period for
the expiry of the tax incentives
with respect to Commercial
Buildings and Multi-Story Car
Tax incentives for the
construction of Multi-Family
Enacted in the
Finance (No. 2)
Tax Holiday and other
incentives for Agricultural
Mid-Year Review 2016
34 | EY Focus on Trinidad & Tobago Budget 2017 EY Focus on Trinidad & Tobago Budget 2017 | 35
Corporate tax rate
Telephone company 45%
Non-commercial company 30%
Investment company Exempt
Capital gains tax rate 20%3
Payments to non-residents
Management charges or charges for personal services
and technical managerial skills 20%
Premiums, commissions, fee or licences 20%
Discounts, annuities or other annual or periodic payments 20%
Dividends and distributions 20%
Branch profits remittance 20%
Net operating losses (years)
Carry back Not Applicable
Carry forward (corporation tax) Unlimited4
Carry forward (capital gains tax) 24 years
1 A commercial company is a company where at least 75% of its gross income is from trading in
goods not manufactured and is defined to include banks and insurance companies other than
long term insurance business.
2 The rate of corporate tax for a commercial company is the higher of 40% of chargeable income
or 2% of turnover, whichever is higher.
3 In the case of capital gains arising within a period of 12 months, such chargeable gains shall
form part of chargeable income subject to tax.
4 The loss to be set off in future years may not exceed 50% of the amount of tax payable had the
set off not occurred. This limitation does not apply to petroleum operations.
Tax Rates 2016
36 | EY Focus on Trinidad & Tobago Budget 2017 EY Focus on Trinidad & Tobago Budget 2017 | 37
Petroleum capital expenditure 20% per annum
Diamond and gold mining sector
Exploration and development expenditure 20% per annum
Other sectors Rate1
Buildings (housing machinery) 5% on cost
Furniture and fittings 10%
Motor vehicles 20%
Electronic office equipment 50%
Other office equipment 15%
Plant and machinery 20%
Value Added Tax
Supply and import of most goods and services 16%
Supply of financial services Exempt
Rental of residential property Exempt
Basic food items 0%
Exports of goods 0%
Certain supplies of services to non-residents 0%
Taxable supplies of $10,000,000 per annum
Property Tax Rates
Value of net property for companies (GUY$)
Up to 10,000,000 Nil
10,000,001 - 15,000,000 0.5%
15,000,001 and over 0.75%
1 Allowances may be claimed on a reducing balance basis or straight line basis. Where the latter
basis is applied, allowances are limited to 90% of the cost of the asset.
Tax Rates 2016
Income Tax Rates - Individuals
Band of taxable income (GUY$) Rate of Tax
Up to 660,000 0%
660,001 and over 30%
Basic deduction $660,000
Mortgage interest 30% of interest paid
Employee national insurance contributions 100%
National insurance contributions
(% of maximum insurable earnings of GUY$200,000 per month)
National Insurance Employee Employer Total
Employed persons 5.6% 8.4% 14%
Self-employed persons — — 12.5%
For more information on Guyana Tax Services, contact:
Gail Marks, Senior Manager
+011 592 601 7071 | firstname.lastname@example.org
Colin Ramsey, Senior Manager
+1 868 822 5016 | email@example.com
Tax Rates 2016