Tax Quarry

Trinidad and Tobago is well known for its yearly carnival and its beautiful landscape and soothing climate.  But in the corporate world, it is also known as a place where the government recognizes the need to provide incentives to encourage investment within its borders.  Trinidad and Tobago currently applies a basic 30% corporate tax rate, unless otherwise provided under the governing legislation.  In addition, the Government offers numerous tax incentives that are available for companies interested in expanding to the island of Soca Music.  The key incentives as outlined by PricewaterhouseCoopers Peter Inglefield in “Corporate Taxes 2004-2005:  Worldwide Summaries” are as follows:

(i)                 Fiscal Incentives Act, 1979:  A locally incorporated resident corporation, may be granted an exemption from corporation tax for a period of up to ten years, depending on the category under which it is approved.  The company can receive a total or partial exemption.  Where a company has been approved for exemption from corporate tax, it can distribute profits to resident shareholders tax-free.  Certain non-resident shareholders may also be eligible to receive profit distributions tax-free as well.  Special loss carry forward rules will apply for the period in which the exemption applied.

(ii)                Approved Tourism Projects:  Approved tourism development projects may also be eligible for an exemption from corporate tax for up to seven years.  Projects that would normally be eligible for this benefit would include hotels.  Special loss carry forward rules will apply during the period in which the exemption applied.

(iii)              Approved Mortgage and Other Companies:  Where a company has been approved for exemption from corporate tax under this provision, profits earned during the tax holiday period will be exempt from corporation tax and income tax when distributed to shareholders.

(iv)              Business Expansion Scheme:  This incentive provides a fifteen percent tax credit for small companies carrying on a business in regional development area and companies carrying out certain approved activities.  The incentive is based on their chargeable profit. 

(v)               Construction Companies:  Companies claim 10% wear-and-tear allowance on new construction projects commencing after the 1994 fiscal year.  No special exemptions from corporate or income tax apply in this situation.

Ensure that you contact local tax professionals before commencing any activity in Trinidad and Tobago if you are considering expanding your current enterprise or starting any of the above businesses.  This will help to ensure that if you meet the qualifications for these incentives you will be in a position to take full advantage of them.

If you require additional information, the US Embassy publishes a guide called, "Doing Business In Trinidad and Tobago" that is useful in determining the risks and rewards and benefits and disadvantages of conducting business in Trinidad and Tobago.  The guide also provides references to local professionals like lawyers, accountants and market researchers that can provide assistance with establishing your business there. The Investment Division of the Tourism and Industrial Development Company of Trinidad and Tobago Ltd. also provides useful information about tax incentives for local businesses.

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