Trinidad and Tobago VAT, GST, and Sales Tax Guide

Trinidad and Tobago

Port-of-Spain GMT -4

EY Street address: Mail address: 5-7 Sweet Briar Road P.O. Box 158 Port-of-Spain Port-of-Spain Trinidad Trinidad

Indirect tax contacts

Gregory Hannays +1 (868) 622-1364 gregory.hannays@tt.ey.com

Nassim Mohammed +1 (868) 822-5022 nassim.mohammed@tt.ey.com

Colin Ramsey +1 (868) 822-5016 colin.ramsey@tt.ey.com

A. At a glance

Name of the tax

Value-added tax (VAT)

Local name Value-added tax (VAT)

Date introduced 1 January 1990

Trading bloc membership Caribbean Community (CARICOM)

Administered by Board of Inland Revenue (BIR)

Value-Added Tax Administration Center (VAT Center) (www.ird.gov.tt)

VAT rates

Standard 12.5%

Other Zero-rated (0%) and exempt

VAT number format 999999 (6 digits)

VAT return periods

Thresholds

Registration

Bimonthly or otherwise determined

TTD500,000

Recovery of VAT by non-established businesses No

B. Scope of the tax

VAT is charged on the entry of goods imported into Trinidad and Tobago and on the commercial supply of goods or prescribed services by a registered person. In Trinidad and Tobago, taxable supplies are referred to as “commercial supplies.”

C. Who is liable

The Trinidad and Tobago VAT law imposes a registration requirement on any person that makes commercial supplies in Trinidad and Tobago in excess of TTD500,000 in a 12-month period.

A person that intends to make commercial supplies may apply for registration. However, the application must be supported by additional information indicating that the value of the person’s commercial supplies will exceed TTD500,000 in a 12-month period. Suitable evidence includes

incorporation documents, contracts showing evidence of commencement of business, bank state ments and invoices issued.

Exemption from registration. VAT is due on the importation of goods and the commercial supply of goods and prescribed services. Prescribed services are any services that are not exempt. Hence if a business is supplying exempt services, there is no requirement to register for VAT in Trinidad and Tobago. Also, if a business makes taxable supplies during a 12-month period and is not expected to exceed TTD500,000, then that business will not be required to register.

Voluntary registration. Voluntary registration is not allowed in Trinidad and Tobago.

Group registration. Group VAT registration is not allowed in Trinidad and Tobago.

Divisional registration is allowed in Trinidad and Tobago. All members of a divisional registration group in Trinidad and Tobago are jointly and severally liable for VAT debts and penalties.

However, on request, the Board of Inland Revenue (BIR) may approve the separate registration of the divisions of a company, and in such cases, supplies between divisions would be subject to tax.

Non-established businesses. A branch of a non-established business is registered in the same manner as a resident taxable person. A “non-established business” is a business that does not have a fixed establishment in Trinidad and Tobago. A non-established business that makes com mercial supplies in Trinidad and Tobago must register for VAT if it meets the registration require ments. However, to register for VAT, a non-established business must set up an external company or branch in Trinidad and Tobago. This is based on the current practice of the BIR.

A non-established business that must register for VAT may need to appoint an agent or manager who is resident to assume the responsibilities of principal relating to compliance under the VAT Act.

If a non-established business wishes to supply goods or services solely to a VAT-registered person in Trinidad and Tobago, for the purpose of the taxable person making commercial supplies in Trinidad and Tobago, the non-established business’ supply is regarded as not taking place in Trinidad and Tobago, unless, the supplier and recipient agree that the supply is to be regarded as taking place in Trinidad and Tobago. The non-established business is not required to register for VAT if the supply is treated as taking place outside of Trinidad and Tobago, provided the sup plier is not required to be registered as a result of making other supplies.

Tax representatives. A non-established business that registers for VAT in Trinidad and Tobago is not required to appoint a tax representative; however, the business can choose to appoint one. Any person who carries on a business, in Trinidad and Tobago on behalf of a principal may per form the functions under the VAT Act.

In the absence of the appointment of a tax representative, the BIR may deem a person who carries on business on behalf of a non-established business to be its agent for the purpose of compliance and accountability.

Reverse charge. No reverse-charge mechanism applies in Trinidad and Tobago. In Trinidad and Tobago, the responsibility to account for VAT charged on goods and services is with the supplier of the goods or services and not the recipient. VAT incurred on services purchased from abroad is not required to be reported in Trinidad and Tobago and cannot be claimed by the Trinidad and Tobago recipient in its VAT return.

Domestic reverse charge. There are no domestic reverse charges in Trinidad and Tobago.

Digital economy. Nonresident providers of electronically supplied services for both business-tobusiness (B2B) and business-to-consumer (B2C) supplies are not required to register and account for VAT in Trinidad and Tobago. As such, no VAT is accounted for on the supplies. This is because the services provided are regarded as taking place outside of Trinidad and Tobago.

Please note that in a prior budget, the BIR outlined its intention to review the taxation of the digital economy in more detail. However, at the time of preparing this chapter no action has yet been taken.

There are no other specific e-commerce rules for imported goods in Trinidad and Tobago. Online marketplaces and platforms. No special rules exist for online marketplaces and platforms in Trinidad and Tobago.

Registration procedures. A written hard copy application for registration must be submitted on the prescribed form. The application must be supported by evidence to show that the value of the person’s commercial supplies will exceed TTD500,000 in a 12-month period. Such evidence may include incorporation documents, contracts entered into, bank statements and invoices issued. An applicant will be registered within one to two weeks after the receipt of the application provided that all the relevant documentation has been provided. Currently, VAT registration applications may also be submitted via the e-Tax platform, provided by the BIR.

In the case of a non-established business, the VAT registration application form must be signed by the directors, notarized and apostilled. Also copies of the passports of the company directors must be notarized and apostilled.

Deregistration. A taxable person who is not required and will not be required under the VAT Act to be registered may apply to the BIR to have their registration canceled. The BIR may refuse to cancel the registration on the grounds that the person has, within the last two years, made sup plies requiring them to be registered.

Changes to VAT registration details. As per section 28 (1) of the VAT law, a taxable person must, within 21 days, give the BIR notice in writing of any of the following changes:

• Any change affecting the accuracy of the particulars provided by their application to be registered for VAT

• The business for which the person is registered is closing down

• Any other matter of which they are required by the regulations to give the BIR notice

If a taxable person dies; becomes bankrupt, goes into liquidation or receivership or becomes a party to an amalgamation, the taxable person or the person responsible for the affairs of the taxable person must, within 21 days, give the BIR notice in writing thereof.

D. Rates

The term “commercial supplies” refers to supplies of goods and prescribed services that are made liable to a rate of VAT, including the zero-rate.

The VAT rates are:

• Standard rate: 12.5%

• Zero-rate: 0%

The standard rate of VAT applies to all supplies of goods or services, unless a specific measure provides for the zero rate or an exemption.

Examples of goods and services taxable at 0%

• Exported goods

• Medicines

• Water and sewerage services supplied by a public authority

The term “exempt supplies” refers to supplies of goods and services that are not liable to VAT and that do not qualify for input tax deduction.

Examples of exempt supplies of goods and services

• Financial services

• Medical services

• Residential property rentals

• Real estate brokerage

• Public postal services

• Prescribed bus and taxi services

• Betting and gaming

Option to tax for exempt supplies. The option to tax exempt supplies is not available in Trinidad and Tobago.

E. Time of supply

The time when VAT becomes due is called the “time of supply” or “tax point.” In general, the tax point for goods and services supplied by a taxable person is the earliest of the following events:

• The date of issuance of the invoice by the supplier

• The date of receipt of payment for the supply

• The date on which the goods are made available to the recipient or the services are performed

A taxable person must account for VAT in the VAT period in which the tax point occurs, regard less of whether payment is received. A taxable person may recover input tax indicated on the tax invoices received.

Deposits and prepayments. For deposits and prepayments, a supply of goods or services takes place when payment is made for the supply. The rule does not vary for refundable or nonrefund able amounts or if the supply does not take place.

Continuous supplies of services. Where a supply of services is continuous (e.g., electricity and telecommunications), the supply takes place when an invoice for the supply is issued by the sup plier, but only to the extent of the supply to which the invoice relates.

Where services are supplied under an agreement (e.g., property rental) that expressly provides for the consideration to be paid in periodic payments, whether or not the services are provided periodically, the services are regarded as being successively supplied at the times when the peri odic payments are made or become due, whichever is earlier, to the extent that an invoice for the services is not issued by the supplier.

Where goods are supplied progressively or periodically under an agreement that provides for the consideration for the supply to be paid from time to time upon the supplier issuing invoices, the goods are regarded as being supplied at the time when:

• An invoice for the supply of the goods is issued by the supplier

• Payment for the supply of the goods is made Or

• Payment for the supply of the goods becomes due

Goods sent on approval for sale or return. Where goods are supplied to a person under an agree ment whereby the recipient has an option to return the goods to the supplier, the supply takes place when the goods are made available to the recipient.

Reverse-charge services. In Trinidad and Tobago, the reverse charge for services does not apply. As such, there are no special time of supply rules.

Leased assets. Where goods are supplied under an agreement for hire purchase or lease with an option to purchase, the supply takes place when the goods are made available to the recipient.

Imported goods. VAT on the entry of imported goods becomes due and payable at the time when the goods have entered. The importer is liable to account for the tax and must pay it.

F. Recovery of VAT by taxable persons

The VAT paid on goods and services that are acquired for the purpose of making taxable supplies is deductible as input tax. Input tax is offset against output tax, which is the tax charged on the making of commercial supplies. Input tax is deductible when the goods and services are acquired.

Goods or services are deemed to be for the purpose of making commercial supplies if the sup plier acquired, imported or produced the goods or services for any of the following purposes:

• Their supply or resupply as a taxable supply

• Their consumption or use (whether directly or indirectly or wholly or partly) in producing goods or services for supply as a taxable supply

• Their consumption or use (whether directly or indirectly or wholly or partly) with respect to a commercial enterprise

The time limit for a taxable person to reclaim input tax in Trinidad and Tobago is six years. Once the taxable person can prove that the claim was not made in a prior period, the claim is gener ally allowed by the BIR. However, the period of six years from the end of the tax period should not elapse before such a claim is made and even in this circumstance the BIR may deny the claim.

Nondeductible input tax. Input tax may not be recovered on purchases of goods and services that are not used for business or where the person only makes exempt supplies.

Examples of items for which input tax is nondeductible

• Input tax is not deductible where invoices do not meet VAT invoicing requirements as set out in the law

Examples of items for which input tax is deductible (if related to a taxable business use)

• Rental of premises used in the business

• Inventory used to make finished goods

• Vehicles and equipment used in the business

• Professional and other services provided to the business

Partial exemption. The Trinidad and Tobago VAT law provides that if all the supplies made by a taxable person during a tax period are commercial supplies (i.e., standard-rated and zero-rated supplies), the input tax incurred in the period is deductible in full. However, if some, but not all, of the supplies made by the person during the tax period are commercial supplies, a partial recovery calculation is required. The following are the rules for the calculation of allowable input tax:

• All the input tax for the period that is directly related to the making of commercial supplies (regardless of whether the supplies are made during that tax period) is recoverable

• None of the input tax for the period that is directly related to supplies that are not commercial supplies (regardless of whether the supplies are made during that tax period) is recoverable

• A proportion of the input tax for the period that relates both to commercial and noncommercial supplies is recoverable. The recoverable portion is calculated based on the value of commercial supplies made during the period compared with the value of total supplies made during the period

If a taxable person makes no commercial supplies during the tax period, the recoverable input tax is the portion, if any, of the input tax for the period that the tax authorities consider to be “fair and reasonable.”

Approval from the tax authorities is not required to use the partial exemption standard method in Trinidad and Tobago. Special methods are not allowed in Trinidad and Tobago.

Capital goods. There are no specific rules for capital goods and there is no definition in the VAT law for capital goods. The same general rules for input tax recovery apply to capital goods.

Refunds. If the amount of input tax recoverable in a VAT period exceeds the amount of output tax payable for that VAT period, the excess may be refunded. VAT returns must be submitted within 25 days after the end of the VAT period. If this deadline is met and if the refund is unpaid after six months, the legislation provides for the tax authorities to pay interest on the outstanding bal ance, at the rate of 1% per month or part of a month, chargeable from the day after the expiration of the period until the date on which the outstanding amount is satisfied.

VAT bonds. The Ministry of Finance announced that taxable persons with outstanding refunds can now apply for VAT bonds in settlement of such refunds. Application forms can be accessed through the BIR’s website. The forms must be completed online and then downloaded to be signed and then scanned and emailed to VATBonds@ird.gov.tt.

The VAT bonds refund applies to VAT periods prior to 1 January 2020. A bond is transferable to any financial institution, The Unit Trust Corporation, The National Insurance Board, any insur ance company, any entity dealing in mutual funds, any Credit Union registered under the Co-Operative Societies Act. Bonds shall mature three years from the date of issue.

Bonds cannot be cashed before the date of maturity and payment on matured bonds shall be in the currency of TTD. Bonds shall bear interest at the rate of 3.3% per annum from the date of issue of the bond until the date of maturity. Interest accrued on the bonds shall be paid every six months from the date of issue and continuing to the date of maturity.

Pre-registration costs. Input tax incurred on pre-registration costs in Trinidad and Tobago is not deductible. However, input tax may be claimed in respect of any stock in trade that is on hand at the time of registration. Evidence showing that the inventory on hand was audited by a chartered accountant must be produced at the time of registration.

Bad debts. Customers can claim relief for VAT paid on goods/services provided, which were not settled by the customers. The claim for VAT on bad debts is made by deducting the VAT on bad debts from the total output tax due for the period. However, for the claim to be made, the debt must be outstanding for at least 12 months, reasonable efforts should have been made to collect the debt and the amount outstanding has been written off as a bad debt.

Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Trinidad and Tobago.

G. Recovery of VAT by non-established businesses

Input tax incurred by non-established businesses in Trinidad and Tobago is not recoverable.

H. Invoicing

VAT invoices. A taxable person must generally provide a VAT invoice for all taxable supplies made, including exports. A VAT invoice is necessary to support a claim for input tax deduction.

Credit notes. A credit note may be used to reduce the VAT charged and reclaimed on a supply of goods and services. A credit note generally mentions the same information as a VAT invoice.

Electronic invoicing. Electronic invoicing is allowed in Trinidad and Tobago, but not mandatory. There is no provision in the law on electronic invoicing, but in practice, taxable persons can issue invoices electronically.

Simplified VAT invoices. A taxable person making a commercial supply exceeding the sum of TTD20 is required to provide the recipient a simplified invoice containing the name, address and registration number of the supplier, the date of the invoice and the consideration inclusive of VAT.

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The supplier is, however, required to issue a full tax invoice if it is requested to do so by the recipient. A simplified tax invoice cannot be used in support of a claim for input tax. Fast-food outlets, gas stations and cinemas are exempted from the requirement to issue a tax invoice, unless one is requested by the recipient of the supply.

Self-billing. Self-billing is not allowed in Trinidad and Tobago.

Proof of exports. VAT is not chargeable on supplies of exported goods. However, to qualify as VATfree, exports must be supported by evidence that the goods have left Trinidad and Tobago. Such evidence includes:

• The commercial invoice, which includes a description of the goods exported, quantum and price

• A CARICOM invoice

• Seaway bill/airway bill as applicable

• Completed Customs Declaration Form (C82 Form), signed and stamped by Customs and Excise

Foreign currency invoices. If a supply is made to a person outside of Trinidad and Tobago, the invoice may be issued in a foreign currency. However, in accounting for the tax payable, the tax able person must account for the tax in the domestic currency, which is the Trinidad and Tobago dollar (TTD). In converting the invoice, the exchange rate used must be the rate at which the Central Bank of Trinidad and Tobago would have purchased that currency in the form of notes at the time of the supply.

Supplies to nontaxable persons. Fast-food outlets, gas stations and cinemas are exempted from the requirement to issue a tax invoice, unless one is requested by the recipient of the supply.

Records. Every taxable person must keep at its principal place of business in Trinidad and Tobago or such other place as the board may approve such books and records, expressed in the English language and the currency of Trinidad and Tobago, as are appropriate to enable the board to ascertain the liability of that taxable person to tax.

Records may be held outside of Trinidad and Tobago, as long as such records can be provided in a timely manner to the BIR upon request and the records of approval are granted by the BIR.

The records required to be kept are, but not limited to, tax invoices, proforma invoices and certificates of waiver given to them and copies of tax invoices and proforma invoices given by them.

Record retention period. Books and records are to be kept for six years from the end of the VAT period, except where the person ceases to exist, and the affairs of the person have been wound up.

Electronic archiving. Electronic archiving is not allowed in Trinidad and Tobago.

I. Returns and payment

Periodic returns. The tax year is divided for taxable suppliers into two-month tax periods, and suppliers are required to submit a VAT return covering all taxable transactions up to and includ ing the last day of each tax period. For administrative convenience, the total number of registrants is divided into two basic categories and an ad hoc category, whose tax periods are as follows:

• Category A: two-month periods ending with the last day of January, March, May, July, September and November

• Category B: two-month periods ending with the last day of February, April, June, August, October and December

• Category C: tax periods as determined by the Board of Inland Revenue

Every registrant is required to submit a VAT return on the prescribed form to the Board of Inland Revenue by the 25th day of the month following each tax period.

Periodic payments. Every taxable person is required to pay the amount of VAT due to the Board of Inland Revenue by the 25th day of the month following each tax period. Payment of VAT must

be done by bank transfer or check. In 2021, electronic payment was introduced. The BIR now accepts payment of taxes via “TransACH” for transactions between TTD100,000 and TTD499,999 and “safe-tt” for transactions TTD500,000 and over through the Central Bank of Trinidad and Tobago.

Electronic filing. Electronic filing is mandatory in Trinidad and Tobago for all taxable persons. This change took place with effect from February 2020. Such filing should be done through the e-Tax system. The website address to access the e-Tax system is etax.ird.gov.tt. Taxable persons can file VAT returns online using the logged-in services or non-logged-in service. However, to access logged-in services (which offer more services) the taxable person must register to obtain a TTConnect ID. To obtain a TTConnect ID, the taxable person must have two forms of Trinidad and Tobago national identification.

Payments on account. Payments on account are not required in Trinidad and Tobago.

Special schemes. No special schemes are available in Trinidad and Tobago.

Annual returns. Annual returns are not required in Trinidad and Tobago.

Supplementary filings. No supplementary filings are required in Trinidad and Tobago.

Correcting errors in previous returns. Where a taxable person has filed a VAT return and wishes to make amendments to the return, the taxable person is required to write to the BIR requesting the amendments to the return.

Digital tax administration. There are no transactional reporting requirements in Trinidad and Tobago.

J. Penalties

Penalties for late registration. A penalty of TTD6,000 is imposed for a failure to notify the tax authorities of changes relating to the registration.

Penalties for late payment and filings. Penalties are assessed for errors and omissions with respect to VAT accounting. A fine of TTD1,000 is imposed for the late submission of a VAT return on summary conviction. In addition, a penalty of 8% and interest at the rate of 2% per month or part of a month is charged on late payments of VAT.

Penalties for errors. There are no specific penalties for errors. The penalties for late payment and filings above apply.

Failure to notify or late notification of such changes to the BIR may bring a penalty of TTD6,000. For further details, see the subsection above Changes to VAT registration details

Penalties for fraud. Where a person who makes a supply and:

• Falsely represents that tax is charged on that supply

• Falsely represents the amount of tax charged on that supply Or

• Recovers or seeks to recover an amount represented to be in respect of tax, the board may assess that person as being liable to pay an amount of tax on the basis of so much of the amount that it appears to the board was represented to be charged as tax, or was recovered or sought to be recovered in respect of tax, as exceeds the amount, if any, that he is authorized by the VAT law, to recover in respect of the supply and, where the person is not registered, the assessment shall be made as if that person were registered and its tax period had been such period as the board may determine

Where an assessment of the tax payable by a person is made or amended under this section wholly or in part as a result of any act or omission of that person that constitutes an offense against the VAT Act, the assessment may include such additional amount by way of penal tax as

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the board sees fit, but so that the additional amount does not exceed three times the amount of tax (other than penal tax) that is included in the assessment or amendment as a result of the act or omission that constitutes the offense.

Personal liability for company officers. The VAT law provides that where a company commits an offense, every director or other officer concerned in the management of the company is guilty of the offense unless they prove that the offense was committed without their consent or connivance and that they exercised all such diligence to prevent the commission of the offense.

Statute of limitations. The statute of limitations in Trinidad and Tobago is three to six years. An assessment by the BIR cannot be made, amended or vacated after six years from the end of the tax period to which the assessment relates or three years from the date of filing of the return to which the assessment relates, whichever is later.