Other Considerations

We commend the Government’s efforts to improve the efficiency of the Board of Inland Revenue (BIR) and Customs and Excise Division through the proposed establishment of the Trinidad and Tobago Revenue Authority (TTRA). Other countries in the Caribbean namely Jamaica, Barbados and Guyana have introduced Revenue Authorities and it is no surprise that T&T is pursuing the implementation of a TTRA.

Notwithstanding the foregoing, we wish to highlight the following areas where consideration can be given to the implementation of policy changes that may positively impact ease of doing business in T&T.

Value Added Tax (VAT) Registration Process

The BIR has stipulated a number of requirements for Non-Residents Companies (NRC) doing business in T&T which are required to be registered for VAT. These requirements include, inter alia, the following:

1. A local bank account to be opened in respect of the NRC;

2. A T&T resident individual to be appointed Power of Attorney for the NRC;

3. Evidence of commencement of trade in the form of a deposit or a contract entered into for rental of office space etc.; and

4. Signed application forms for non-resident directors which must be notarized or apostilled.

Whilst the VAT Act grants the BIR the authority to direct the manner and form in which a VAT application should be submitted, we wish to point out that these policies may act as a hindrance to the NRC achieving compliance. We wish to also make the point that whilst we understand that the BIR’s policies are based on best practices implemented pursuant to training received by the BIR, we would encourage the BIR to exercise more flexibility in its approach to dealing with these matters going forward. Where the VAT registration process for a NRC is simplified, this would augur well in improving the T&T’s ranking in the ease of doing business.

VAT Refund Offsets

Section 92 (2) of the ITA and section 35 (2) of the VAT Act of T&T both grant the BIR the authority to offset tax refunds owed to taxpayers against outstanding tax liabilities. Whilst the BIR has used such provisions to unilaterally apply refunds owed to taxpayers against outstanding tax liabilities, the practice of granting offsets when requested by taxpayers has not been done frequently based on our experience.

It should be noted that other regional territories such as St. Lucia and Guyana allow for automatic offsets of refunds against outstanding tax liabilities whilst other territories such as Barbados allow for such offsets once a written application is made to the Barbados Revenue Authority.

Such an approach of offsetting refunds owed against tax liabilities computed (provided that the liabilities in question are not under dispute) may assist in reducing the amount of VAT refunds owed by the Government of T&T to taxpayers and would ease the cash flow burden experienced by companies who are owed such refunds. This would encourage further business expansion and increased investment as cash flows directly invested in business generating activities vs. in VAT and TAX refunds.

Quarterly Reduction Requests

The ITA of T&T provides that where the chargeable income of a taxpayer for the current year of income is likely to be less than the previous year of income, an application may be made to the BIR to pay reduced quarterly installments based on the projected current year’s chargeable income.

Currently, we understand that taxpayers who have applied to the BIR for approval to pay reduced quarterly installments have not obtained written approval to proceed with same. In this regard, the BIR, as a statutory body exercising discretionary powers, ought to adjudicate on these matters making decisions based upon the merits of a taxpayer’s application. In the absence of such approval, taxpayers may overpay taxes thereby resulting in tax refunds due which could take a significant period to retrieve.

In our view, the approach of the BIR to requests for quarterly reductions should be reconsidered or alternatively some public guidance should be promulgated informing taxpayers that quarterly instalments can be based on a reasonable forecast of future income.