3. Executive Summary

We have summarized below, the key fiscal measures and the potential impact once implemented:

1 Construction

1. In relation to the reintroduction of Property Tax, consider removing Property Tax on all industrial plant and machinery.

2. Consider reducing the rates of Stamp Duty on the transfer/sale of residential and commercial properties. In the case of residential land, consider removing stamp duty altogether or alternatively, revisiting thresholds which are quite antiquated.

3. In relation to the tax exemption granted on low-cost housing, consider increasing the maximum cost of construction from $1.5m to TT$2.0m to be more in line with prevailing market prices. Likewise, the limit for obtaining loans from TTMF of TT$1m on the application website should be revisited.

4. Consider extending the construction sector tax incentives which are scheduled to expire 31 December 2025 to 31 December 2035.

5. In relation to the construction of multi-family dwellings, consider extending such incentives to expenditure incurred on repurposing of buildings.

6. Streamline the process for accessing the tax incentives and addressing delays associated with sequential approvals.

7. Consider re-zoning a small percentage of land for agricultural use to commercial use as was done in Aranguez South (note that a fee for so doing may be considered).

Businesses encouraged to retool with the aim of improving productivity and by extension, profitability.

With the reduction of such transaction costs, businesses and individuals would be incentivized to acquire properties thereby generating cash flow in the economy. Such savings on stamp duty could be used as collateral by persons to build homes.

This measure would encourage businesses to construct more affordable housing thereby benefiting the more vulnerable in our society.

The extension of such tax incentives should encourage businesses to undertake construction projects more frequently in the next decade.

Persons encouraged to repurpose existing buildings to be in line with more modern standards.

Improved efficiency in the process and potentially lower cost passed on to the final consumer.

IIncreased earnings (almost tenfold) from sale of lands and potential fees generated from re-zoning.

More efficiency in business operations which could lead to costs savings and reduce inflation rate and the reduce the costs to consumers.

No. Sectors/Focus Areas Proposed Fiscal Measures Impact

3 Manufacturing

1. Imminent implementation of Special Economic Zone (SEZ) Act.

Removal of T&T being blacklisted possibly leading to further investments in T&T and lower likelihood of further Double Taxation Treaties being repealed.

2. Consider implementing the VAT Exemption on materials and equipment used in manufacturing sector.

3. Improve efficiency in the process for importing materials etc.

4 Energy We support the recommendations made by the Petroleum Committee in the Energy Sector.

5 The Orange Economy/Cultural and Creative Industry

1. Promotion of the orange economy.

2. Rebates – consider increasing percentages for rebates granted to nationals and international producers on expenditure incurred while filming in T&T.

3. Other measures Proposed - refer to pages 13 to 15 of the document

Reduced VAT refunds owed to taxpayers and potentially lower cost to consumers.

More efficiency in business which could lead to costs savings and more competitive export pricing and reduced retail prices.

Further investments in oil and gas in T&T.

Job creation in sector with a focus on youth and women who make up the majority of the sector.

Greater inducement for entities to invest in local film productions.

6 Agriculture

1. Process for accessing tax exemptions to be clearly defined.

2. Address issue pertaining to Land Tenure.

3. Address issues pertaining to Praedial Larceny.

4. Extend employment tax incentives to hire youths to Agriculture sector

5. Other measures - refer to pages 16 and 17 of the document

These measures are all aimed at incentivizing the Cultural and Creative industry which we consider to be a driver for diversification of the economy.

Greater interest by private sector in accessing incentives.

This would lead to greater efficiency in the process.

Reduction in crime related activities pertaining to Agriculture.

Encourage businesses to hire youth in Agriculture thereby increasing employment and engagement in youths.

These measures are all aimed at promoting activity in the Agriculture sector with the objective of improving food security and reducing the overall food import bill.

7 Digitization and Technology

1. Increase threshold and extend deadline for accessing incentives.

2. Extend existing allowances to existing regular business companies.

3. Amend the Seventh Schedule of the ITA to include computer software.

Streamline listing requirements to access stock exchange with TTSE.

To allow companies the opportunity to invest in technology and access these incentives.

Same as above.

Greater incentives for companies to invest in software.

Encourage more companies to become listed on SME exchange.

No. Sectors/Focus Areas Proposed Fiscal Measures Impact

9 Go-Green

1. Expand existing incentives to cover investments by individuals and businesses in acquiring solar panels.

2. Introduce legislation to persons to encourage investments in charging ports for electric vehicles.

3. Update the laws that would allow the repurchase of power from providers that have developed green energy sources – eg. Solar panels, allowing the sale excess power back to the grid

Lower recurring cost for individuals and businesses where solar panels implemented.

The increased infrastructure may act as an incentive for persons to move toward electric vehicle acquisitions.

Increase the investment in green sources of energy by Private Sector.

10 Hospitality Process for accessing incentives under TDA to be improved. Rationalization of application process.

11 Tobago

1. Move reporting lines for land holding licenses in Tobago to chair of THA;

2. The creation of an “in-transit” desk to Tobago mainly targeting international travelers.

3. Other measures - refer to page 20 of the document.

This should assist in improving efficiency in the process.

This should lead to an ease of access by foreign visitors to Tobago therefore enhancing tourist arrivals to both Trinidad and Tobago.

These measures are all aimed at promoting travel to Tobago in order to stimulate economic activity therein.

12 Crime

1. Individuals and Companies -Donations to the TTPS for operational and infrastructural support – A tax deduction of 100% for donations of up to TTD $1,000,000 for a defined period.

2. Individuals and Entities – Donations to Crime Stoppers – A tax deduction of 100% for up to TTD $1,000,000 for a defined period.

Providing an alternative source of funding to TTPS to aid in the fight against crime.

13 Children and Youth

1. Extend employment incentives to other industries such as agriculture.

2. Individuals and Entities – Donations to schools registered with the Ministry of Education for operational and infrastructural support – A tax deduction of 100% for donations of up to TTD$1,000,000 for a defined period.

3. Introduction of an Education Allowance that grants a tax deduction to individuals/corporations that contribute up to a maximum of $36,000 in a year of income towards a specific project for the school (the current system of deeds of covenants is too complex and is a dis-incentive to providing support).

Similar to the above, providing additional funding to crime stoppers to assist in the fight against crime.

Encourage entities to hire youth in agriculture.

Providing alternative funding to schools to undertake projects in improving existing facilities and to include other initiatives such as a science lab etc.

Encourage individuals and businesses to contribute to school projects thereby raising alternative sources of funds for schools.

14 Energy

15

We support the recommendations made by the Petroleum Committee in the Energy Sector.

1. Consider amending the legislation and VAT return forms to allow for automatic offset of VAT refunds against VAT payables from one VATperiod to the other.

2. Re-introduce approvals for quarterly reduction applications by the Board of Inland Revenue.

Further investments in oil and gas in T&T.

Lower VAT refunds owed to taxpayers and greater cash flow available to businesses and reduces the administrative complexity for BIR.

Taxpayers could avoid overpaying taxes and use cash flow to generate further business.

4. Commentary

We recognize that there currently exist a number of fiscal and tax measures which were previously enacted to address the various sectors above and for ease of reference, we have identified these measures under their respective categories. Please see our high-level comments below.

Construction Sector

The construction sector has traditionally been used as a catalyst to boost the economy and create employment etc. With the imminent reintroduction of Property Tax however, we consider it important to address concerns in relation to same as well as, identify considerations pertaining stamp duty on the conveyance or transfer or land and buildings for commercial and residential use.

Property Tax

The Government of Trinidad and Tobago (T&T) has been feverishly working on reintroducing Property Tax at the following rates:

Residential 3% ATV = 90% of the annual rental income expected to be earned from such property as determined by the Commissioner of Valuations under the provisions of the Valuation of Land Act.

Commercial 5% ATV = 90% of the annual rental income expected to be earned from such property.

6% 3% and machinery not housed in a building

ATV = calculated as the value of the plant and machinery that is housed in a building, less any applicable allowances and deductions.

ATV = 3.5% of the capital value of the property, less any applicable deductions and allowances.

ATV = 5% of the capital value of the property, less any applicable deductions and allowances.

ATV = 5% of the capital value of the property, less any applicable deductions and allowances.

ATV = calculated as the value of the plant and machinery that is not housed in a building, less any applicable allowances and deductions.

Agricultural 1% ATV=2%oftheopenmarketcapitalvalue of the land/property.

2% of the open market capital value of the land and any agricultural buildings thereon.

Whilst we are not against the resumption of Property Tax, we note that in the case of industrial property, the Property Tax is levied on both plant and machinery housed in a building as well as, plant and machinery not housed in a building. The imposition of Property Tax on plant and machinery may act as a disincentive to manufacturers to re-tool and consequently, we propose that consideration be given to remove the Property Tax on all plant machinery whether housed in a building or open air.

We would also note that there is great uncertainty on how the “value” is arrived at for the purpose of assessing Property Tax on industrial buildings. We would therefore suggest that the Property Tax Act be amended to clarify the meaning of “value” in the context of industrial buildings. Additionally, it is expected that revenue from the Property Tax will be allocated to the Regional Authority and not a central fund.

Stamp

Imposed by an antiquated piece of legislation, Stamp Duty is levied on, inter alia, the conveyance or transfer on sale of property as well as, deeds of lease. In the case of the sale of a residential property with a dwelling house, Stamp Duty is applicable at the following scaled rates:

In the case of commercial and industrial properties, the rate of stamp duty is circa 7%.

Whilst we commend the steps taken by the Government of T&T to increase the thresholds on which Stamp Duty would be applicable to first-time homeowners, it is felt that in the case of businesses, the Property Tax could create a clear disincentive to enhancing buildings, as well as, modernizing plant and machinery. These arguments are not without merit and for these reasons, we have seen other jurisdictions impose Property Tax only on the unimproved value of the underlying real estate. Furthermore, we would note that such value does not encompass anything affixed to the said property. We propose that Stamp Duty is eradicated entirely on residential land and buildings.

We would also emphasize that in other Caribbean territories, Stamp Duty/Transfer Tax is levied at the following rates in relation to the conveyance or transfer of land and buildings:

 Barbados – 2.5 Property Transfer Tax (PTT) and 1% Stamp Duty;

 Jamaica – 2% Transfer Tax and fixed rate nominal Stamp Duty; and

 Guyana – 2% Stamp Duty.

Given the significant disparity in the aforementioned rates to the existing Stamp Duty rates, now may be an opportune time to revisit the existing Stamp Duty rates particularly considering the imminent reintroduction of property tax as stated above. Alternatively, revisiting the bands on which stamp duty is applicable should be considered as the current ranges

(e.g. the current ranges for commercial property of 0 - $300,000 and $300,000 to $400,000) are not in line with today’s market values for commercial properties.

Apart from the above, there is currently a suite of tax incentives under the principal domestic tax legislation for the construction sector as summarized below:

1. Gains or profits from the initial sale of newly constructed houses where the cost of construction exclusive of the cost or value of the land does not exceed TT$1.5M and by any person registered as a trader in houses shall be exempted from Income Tax;

2. Gains or profits from the initial sale of a residential house site, being part of a land development project will be exempt from income tax until 31 December 2025;

3. Gains and/or profits from the initial sale or premiums and/or rents derived from the letting of newly constructed commercial buildings or multi-story car parks will be exempt from Income Tax until 31 December 2025;

4. Gains or profits from the initial sale or premiums and rents derived from the letting of a newly constructed multi-family dwelling will be exempt from Income Tax until 31 December 2025; andstatedabove. Alternatively,revisitingthebandsonwhichstampdutyisapplicableshouldbeconsideredasthecurrent ranges (e.g. thecurrent ranges for commercial property of 0 -$300,000 and $300,000 to $400,000) arenot in linewith today’s market values for commercial properties.

5. A deduction of 20% percent of capital expenditure incurred in the construction of commercial or industrial buildings when ascertaining chargeable profits1 (hereinafter referred to as Approved Property Development Company (APDC) Allowance).

In an effort to continue promoting activity in the construction sector, we recommend the following:

• For item 1, increasing the cap from TT$1.5M to TT$2.0M in line with current prices for properties. In so doing, the maximum qualifying limit on loans from TTMF for low-cost housing of TT$1m should be revisited.

• Extending the expiry date for the incentives listed at numbers 2, 3 and 4 above to 31 December 2035.

• In relation to item 4, we suggest amending this measure to include re-purposed commercial properties to multifamily dwellings or mix-use ( residential and Commercial) buildings.

• In relation to the APDC allowance outlined in item 5 above, an extension beyond 31 December 2024 may be considered.

It is noteworthy that Section 45E of the Income Tax Act (ITA) of Trinidad and Tobago (T&T), which is incorporated in the Corporation Tax Act (CTA) of T&T via section 19 thereof, provides for the tax exemption in item 4 above.

In order to benefit from such a tax exemption however, a person must apply to the Ministry of Housing for a certificate granting the exemption. We further understand that the Ministry of Housing is not currently granting approvals for such tax exemptions since such an agency has not established a definition of “multi-family dwelling” in its regulations.

In this regard, we request that the application process to access the tax incentives outlined under the ITA and CTA be streamlined to allow for taxpayers to access these incentives in a more user-friendly, seamless and timely manner. For example, consideration may be given to amending the ITA to include a definition for “multi-family dwelling” so as to bring much needed clarity.

We wish to emphasize that submission for approvals to developtt.org is sequential and at times cumbersome. Additionally, the major cost of pre-completion/bridging finance is passed onto the buyer. There should be acceptance of a practical completion by a certified third party, non-governmental engineer. To this end, the issue of interim approval for construction projects ought to be also considered in order to mitigate the delays experienced and by extension, lower the cost. Finally, the rezoning of lands for agricultural use to commercial use as was done in Aranguez South may be considered. In so doing, this could increase the return to the Government of T&T (as much as tenfold) from the sale of such lands. A fee for the rezoning of such lands could also be considered.

Retail and Distribution Sectors

The retail and distribution sectors are major contributors to our economy. There are currently tax incentives available to these sectors as outlined below:

1. Tax Allowance of 150% of the expense incurred to promote the expansion of existing markets and creation of new markets – this also includes first time exports to the CARICOM market.

2. A tax credit of $50,000 for expenditure incurred in the year of income 2023 only by E-Money Issuers (EMIs) and Electronic Payment Service Providers (PSPs) in the respect of inter alia, the acquisition of equipment etc.

3. Commencing 1 January 2022, an allowance equal to 40% of the actual expenditure incurred capped at $3m for companies engaging in research and development.

4. Incentives under the Fiscal Incentives Act (FIA) primarily relating to VAT and duty exemptions as well as, relief from income tax on dividends or other distributions out of profits or gains derived from the manufacture of an approved product during the tax holiday period (maximum of 10 years).

We wish to emphasize that in relation to imports for retail and distribution entities, the process should be revisited to Improve efficiency. To this end, consideration may be given to the establishment of a fast-tracking approval unit to expedite approval for bigger shipments.

Lastly, whilst not separately identified as one of the sectors covered in this document, we have attached feedback from the health and pharmaceutical sectors for your consideration (refer to Appendix 2).

Manufacturing Sector

The manufacturing sector contributes significantly to our economy both in terms of employing persons and earning much needed foreign exchange. Examples of existing tax incentives/allowances applicable to these sectors are as follows:

1. Exemptions from customs duties on raw materials, machinery and equipment and certain packaging material.

2. Accelerated capital allowances of 90% of capital expenditure incurred for machinery or plant in the year incurred.

3. A one-time tax credit of $50,000 where an approved manufacturing company, as certified by the Ministry of Trade and Industry incurs expenditure in the year 2023 in acquiring new machinery, new production lines and new equipment.

4. Zero rating of Value Added Tax (VAT) on new equipment for a manufacturing company which utilizes alternate energy technologies and renewable energy options.

5. For income years 2022 and 2023, companies engaged in the business of manufacturing (with the exception of petrochemical companies) shall be subject to corporation tax at the rate of 25% on the first $100,000 expended on projects related to information technology, digitization or technology development to advance growth in the manufacturing industry.

6. Incentives to be introduced under the Special Economic Zones Act which would replace the existing Trinidad and Tobago Free Zones Act (TTFZA).

With respect to item 6 above, we commend the efforts of the Government of T&T in implementing the SEZ Act to replace the existing TTFZA as it is expected that the SEZ regime would include an incentive framework that will be in compliance with international standards as set out by the OECD’s Base Erosion and Profit Shifting (BEPS) Inclusive Framework and the European Union’s (EU) Code of Conduct Group. This new legislation has the potential to diversify the number and type of industries and more importantly, locate these zones strategically in specific areas across the country.

We wish to note however, that Governments of European countries have begun to terminate Double Taxation Treaties with T&T (firstly Denmark/T&T Treaty and now the Norway/T&T Treaty is scheduled to be terminated 1 January 2024). We would therefore encourage the Government to expedite the process of implementing the SEZ legislation post haste to avoid further Double Taxation Treaties with European countries being terminated.

We would note however, that the issue of VAT refunds continues to impact taxpayers greatly and whilst the Government has taken steps to address this in the form of VAT bonds being issued etc., a more permanent solution is required. In this regard, the following measures are being proposed: a. The implementation of a VAT exemption on raw material inputs and capital equipment for manufacturers; or b. The implementation of a VAT exemption on raw material inputs and capital equipment for manufacturers who attain a stipulated threshold of exports (to be defined).

We wish to emphasize that in relation to imports for manufacturers that there is already a process in place with Customs and Excise whereby raw materials are imported under a manufacturer’s license. Therefore, such a process may be utilized where a decision is taken to remove VAT on the qualifying imports and capital equipment as outlined above.

We would also note that the issues impacting the ease of importing items into the country as outlined under the Retail and Distribution sectors equally apply here and we would encourage the Government of T&T to take steps to improve same. The same applies to accessing incentives under the TDA i.e. there is a need for process improvement in order to access the incentives.