Income Tax in Trinidad and Tobago
Personal Income Tax
Persons who are
resident, ordinarily resident, or domiciled in Trinidad and Tobago are taxed on
their worldwide income, whether or not such earnings are remitted to Trinidad
and Tobago. A non-resident individual is taxed on income arising in Trinidad
and Tobago, subject, where applicable, to the provisions of double taxation
treaties (DTTs).
Personal
income tax rates
The income tax rate for
individuals with chargeable income less than TTD 1 million is 25%. For
chargeable income in excess of TTD 1 million, the rate of tax applicable is
30%.
Business
levy
Business levy of 0.6%
is applicable to sole traders and self-employed individuals having gross income
or receipts in excess of TTD 360,000 per annum. It is payable if and to the
extent that the business levy liability exceeds the individual’s income tax
liability. It does not apply to income that is exempt from income tax and is
not payable in the first three years following commencement of the business activity.
Residency Rule
Individuals are
considered temporarily resident for tax purposes if they are present in
Trinidad and Tobago for more than 183 days in any calendar year.
Taxable Income
Employment
income
A resident individual
engaged in employment is assessable to tax on one's worldwide income. A
non-resident individual engaged in employment in Trinidad and Tobago is taxed
on income received for services performed in Trinidad and Tobago whether or not
such income is received in Trinidad and Tobago. For tax purposes, the term
'income' includes all cash and non-cash benefits and allowances derived from
employment, including the value of board and lodging provided by the employer.
Capital
gains
Only gains on the
disposal of a chargeable asset within 12 months of its acquisition are taxable.
Excluded are gains on the disposal of any security in Trinidad and Tobago and
gains on motor cars and household goods disposed of for TTD 5,000 or under.
Taxable gains are included with other income and are taxed in the normal
manner. Capital gains realised outside Trinidad and Tobago by resident aliens
are not taxable.
Income arising outside
Trinidad and Tobago and received by an individual who is resident but not
domiciled in Trinidad and Tobago is taxable in Trinidad and Tobago only to the
extent that such income is received in Trinidad and Tobago.
Dividend
income
Dividends, excluding
preference dividends, received from investments in resident companies are
exempt from tax in the hands of resident individuals. Distributions received
from a mutual fund established by a locally licensed trust are also exempt from
tax in the hands of a resident individual.
Interest
income
Interest received by a
resident individual on all classes of savings or other accounts with banks,
financial institutions, or other forms of deposit-taking institutions is exempt
from tax.
Deductions from Income
Employment
expenses
An employed individual
is not entitled to any blanket or standard deductions in computing taxable
income. Such an individual may claim a deduction only for unreimbursed travel
expenses incurred wholly, exclusively, and necessarily in the course of
employment.
Personal
deductions
A resident individual
is entitled to a deduction in respect of the following:
· Tertiary education expenses, up to a
maximum of TTD 60,000.
· Contributions to approved pension funds
or annuity plans, up to a maximum sum of TTD 50,000.
· Capital expenditure on conversion of a
house to an approved guest house.
· 100% covenanted donations to charitable
organisations and sporting bodies, up to 15% of total taxable income.
Personal
allowances
A personal allowance of
TTD 72,000 per taxpayer is granted.
Business
deductions
A self-employed
individual carrying on a trade, business, profession, or vocation may deduct those
expenses incurred wholly and exclusively in the production of such income.
Promotional expenses
incurred by professionals in the construction sector or persons employed in
agriculture in the expansion of existing markets or the creation of new markets
for the export of services or locally produced goods are deductible as an
expense at 150% of the actual outlay.
Tax Return and Compliance
Taxable
period
The tax year
corresponds to the calendar year in Trinidad and Tobago.
Tax
returns
Tax returns must be filed
by 30 April of the year following the calendar or accounting year-end. An
automatic six-month grace period is allowed, following which a penalty of TTD
100 accrues for every six months or part thereof that the return remains
unfiled. Tax returns are filed for income earned in a calendar year (which
coincides with the tax year) except in the case of a sole trader or
partnership, where filing is done according to the accounting terminal date.
Resident individuals
earning only employment income are not required to file a tax return.
Each individual must
file a separate tax return. There is no provision for joint filing by husband
and wife.
Payment
of tax
Income tax is deducted
at source on all employment income under the pay-as-you-earn (PAYE) system. Any
shortfall of taxes deducted at source should be settled by the due date (i.e.
30 April following the year of income).
Corporate Income Tax
Corporation
tax.
Companies resident in Trinidad and Tobago are subject to tax on their worldwide
income from all sources. Relief with respect to taxation suffered on
foreign-source income in an overseas jurisdiction may be available under a
double tax treaty. Nonresident companies engaged in business in Trinidad and
Tobago are subject to tax on income directly or indirectly accruing in or
derived from Trinidad and Tobago.
Rates
of tax. For the 2017 year of income, corporation tax is
chargeable at a rate of 25% on the first TTD1 million of taxable profits, while
taxable profits in excess of TTD1 million are subject to corporation tax at a
rate of 30%.
The Corporation Tax Act
provides for a business levy to be imposed on the annual gross sales and
receipts of companies, including branches of nonresident companies operating in
Trinidad and Tobago. The rate of the business levy is 0.6%. The business levy
is credited against the corporation tax liability. It is the final liability if
the corporation tax liability is less than the business levy. Certain companies
are exempt from the levy, including the following:
· Companies or statutory corporations
exempt from corporation tax under any act
· Certain government corporations under
the jurisdiction of the Public Utilities Commission or exempted by order of the
President
· Companies subject to tax under the
Petroleum Taxes Act
A company is not
subject to the business levy for the first 36 months following the date of
registration of its business or if its gross sales or receipts do not exceed
TTD360,000 in the year of income.
The Miscellaneous Taxes
Act provides for a green fund levy to be imposed on the gross sales and
receipts of companies engaged in business in Trinidad and Tobago. The rate of
the green fund levy is 0.3%. The green fund levy may not be credited against
the corporation tax liability or claimed as a tax deduction in determining the
company’s taxable income.
The corporation tax
rate for companies engaged in the downstream petrochemical sector and related
sectors is 35%. Companies engaged in upstream petroleum operations are subject
to various taxes and imposts, of which the most significant are petroleum
profits tax of 50%, unemployment levy of 5% and supplemental petroleum tax at
rates based on the weighted average crude oil price. Upstream petroleum
companies are also subject to a different system of tax administration.
Generally, the profits
from a long-term insurance business of an assurance company that is subject to
tax are the profits derived from the investment of its Statutory Fund.
The rate of corporation
tax on the profits from a long-term insurance business for the 2017 year of
income is 15%. However, if such profits are transferred to the shareholders’
account, such transferred amounts are subject to tax at a rate of 25%.
Capital
gains. Capital gains are generally not subject to tax.
Depending on the class of asset and the nature of the company’s business
activities, however, the profit or loss on depreciable assets disposed of after
being held for more than 12 months may require a balancing adjustment (see
Section C).
Short-term capital
gains are profits on the disposal of assets within 12 months of their
acquisition. Although these gains are of a capital nature, they are generally
subject to tax. Profits derived from the partial disposal of an asset within 12
months of acquisition are also subject to tax. For the 2017 year of income, the
applicable rates are 25% on the first TTD1 million and 30% on the amount in
excess of TTD1 million.
Administration.
The tax year is the calendar year. Tax is calculated on the profits for the
accounting period that ends during the tax year. For each quarter, a company is
required to pay a green fund levy installment, as well as either a corporation
tax or business levy installment, whichever is greater. The quarterly payments
must be made by 31 March, 30 June, 30 September and 31 December in each tax
year. Quarterly payments of corporation tax are determined based on the taxable
income for the preceding accounting period. Business levy and green fund levy
installments are based on the actual gross sales or receipts of the company for
the relevant quarter. The business levy calculation excludes income that is
exempt for corporation tax purposes such as dividends received from Trinidad
and Tobago resident companies, but the green fund levy calculation takes into
account such income.
If the current year’s
profits exceed the preceding year’s profits, a company must pay by 31 December
the sum of the tax liability on the preceding year’s taxable profits plus 80%
of the increase in tax liability over the preceding year. Annual tax returns
must be filed by 30 April in the year following the tax year, and any balance
of tax due is payable at that time.
If the balance of tax
due is not paid by the 30 April deadline, interest accrues at a rate of 20% on
the outstanding amount beginning on 1 May. A grace period to 31 October is
granted for the filing of the tax return. If the return is not filed by 31
October, a penalty of TTD1,000 accrues beginning 1 November for each six-month
period or part of such period that the return remains outstanding.
Dividends.
Dividends received from nonresident companies out of profits not derived from
or accruing in Trinidad and Tobago are subject to tax. Dividends received by
resident companies from other resident companies are tax-exempt.
Dividends paid to
nonresident companies and individuals are generally subject to a withholding
tax of 10%. The rate is reduced to 5% if the recipient is a corporation owning
50% or more of the voting power of the distributing company.
Double
tax relief. Bilateral agreements have been entered
into between the government of Trinidad and Tobago and the governments of
certain other countries to provide relief from double taxation. These
agreements assure taxpayers that their trade or investment in the other
countries is free from the deterrent of double taxation. Relief from double
taxation is achieved by one of the following two methods:
· Exemption or a reduced rate on certain
classes of income in one of the two countries concerned.
· Credit if the income is fully or
partially taxed in the two countries. The tax in the country where the income
arises is allowed as a credit against the tax on the same income in the country
where the recipient is resident. The credit is the lower of the Trinidad and
Tobago tax or the foreign tax on the same income.
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Note:
Information
placed here in above is only for general perception. This may not reflect the
latest status on law and may have changed in recent time. Please seek our
professional opinion before applying the provision. Thanks.
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