Trinidad and Tobago Individual Tax Guide

Trinidad and Tobago

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Port-of-Spain GMT -4

EY Street address:

Mail address: 5-7 Sweet Briar Road

P.O. Box 158 St. Clair, Port-of-Spain Port-of-Spain Trinidad Trinidad

Executive and immigration contacts

Wade George

Gregory Hannays

Alicia Pereira

A. Income tax

+1 (868) 628-5185

Fax: +1 (868) 622-0918 Email: wade.george@tt.ey.com

+1 (868) 622-1364

Fax: +1 (868) 622-0918 Email: gregory.hannays@tt.ey.com

+1 (868) 822-6163

Fax: +1 (868) 622-0918 Email: alicia.pereira@tt.ey.com

Who is liable. Individuals ordinarily resident in Trinidad and Tobago are subject to tax on their worldwide income. Individuals not ordinarily resident in Trinidad and Tobago are taxable on income accruing in or derived from Trinidad and Tobago and on foreign income remitted to or received in Trinidad and Tobago.

Individuals are considered resident in Trinidad and Tobago if they are physically present in Trinidad and Tobago for a period of more than six months in the income year. The concept of ordinary residence is expanded under common law jurisprudence and examines various factors that determine the individual’s habitual place of abode.

Income subject to tax. Taxable income is the aggregate of world wide income from all specified sources after allowing for appro priate deductions and exemptions.

Employment income. Taxable income includes the value of employerprovided benefits, including accommodation, transportation and tax equalization.

Self-employment and business income Taxable income consists of the aggregate amount of income from all sources, including self-employment and business income, after allowing the appro priate deductions.

Directors’ fees Directors’ fees and amounts paid by a company for expenses to any of its directors are subject to tax.

Married persons are taxed separately, not jointly, on all types of income. No community property or other similar marital property regime applies.

Investment income Dividends received from a resident company (other than preferred dividends) are exempt from tax. Interest received by resident individuals on bank deposits and certificates

of deposit held at financial institutions in Trinidad and Tobago and interest on bonds and similar instruments that are issued in Trinidad and Tobago are exempt from tax. Rental income and royalties are taxed as ordinary income.

For nonresidents, a final withholding tax is levied at source at a rate of 15% on interest, royalties and management fees. A final withholding tax is imposed at a rate of 5% on dividends paid to a parent company. For other dividends paid to nonresidents, the final withholding tax rate is 10%. These withholding tax rates may be modified or eliminated under the provisions of a tax treaty (see Section E).

Capital gains. Long-term capital gains are not subject to tax.

Any gain realized on the disposition of certain assets within 12 months after acquisition is taxable as ordinary income. Persons domiciled in Trinidad and Tobago are taxed on gains derived from sales of capital assets acquired and disposed of within a 12-month period.

The following assets are exempt from tax:

• Currency acquired for personal expenditure abroad by the tax payer or his or her family or dependents

• Sums obtained as compensation or damages for any wrong or injury suffered by an individual in his or her personal life or profession or vocation

The following gains are exempt from tax:

• Gains accruing on the disposal of any security in Trinidad and Tobago

• Gains accruing on the disposal of personal automobiles, household goods or owner-occupied houses if these assets are disposed of for TTD5,000 or less

• Gains that are specifically exempt from tax under the law

The following deductions are allowed:

• The cost (money or money’s worth) of an asset, together with other expenses incidental to acquisition

• Any expenditure incurred wholly and exclusively for enhancing the value of an asset (maintenance expenses are not allowable expenses)

• Costs incurred wholly and exclusively in disposing of an asset, including legal fees and agent’s fees

Taxation of employer-provided stock options and profit-sharing schemes. No specific provisions in Trinidad and Tobago regulate the taxation of employer-provided stock options. Therefore, the tax treatment is based on general principles and case law.

Ordinarily, an option is taxed on its market value at the time of grant if the option gives the employee an irrevocable right to acquire shares. An option is not taxed at the time it is exercised. In general, any gains derived from the subsequent sale of the shares acquired under the option are exempt from tax. If a vesting period must elapse before the employee obtains an irrevocable right to acquire shares, the taxing date is the date of vesting.

Specific provisions apply to profit-sharing schemes approved by the Board of Inland Revenue. An employer that establishes an employee share ownership plan (ESOP) must contribute at least

25% of the annual bonus distribution to the plan’s trustee for the purchase of company shares. When shares are granted to employees, the shares have already been purchased on behalf of the employees. Contributions by the employer to the plan are not considered income to the employee and are not taxable. Distributions received by an employee from the shares held in trust are not subject to tax. If the shares are transferred to an employee under either of two specified conditions, the market value of all the shares transferred is deemed to be income accruing to the beneficial owner of the shares on the date of transfer and is included in the income of the individual for that income year. The following are the specified conditions:

• The employee is still employed by the employer, and the shares are transferred after five years from the date of allocation of the shares.

• The employee ceases to be employed by the employer for a reason other than retirement or death, and the shares are transferred after the employment ends.

Deductions

Allowances and deductible expenses. The following table lists allowances and deductible expenses.

Allowances and deductible expenses Amount

Personal allowance

Contribution to approved pension or retirement fund deferred annuity and 70% of contribution to the National Insurance Scheme (NIS)

Tertiary education expenses

First-time homeowner allowance

Maintenance or alimony (under court order)

TTD84,000

TTD50,000

TTD72,000

TTD25,000

Amount paid (unlimited)

Up to 15% of total income Purchase and installation of CNG kit

Donations under deed of covenant

Tax credit of 25% of cost (up to TTD10,000)

Purchase of solar water heating equipment

Purchase of National Tax Free Savings Bonds not exceeding TTD5,000 in value

Tax credit of 100% of cost (up to TTD10,000)

Tax credit of 25% of the face value of the bonds

Traveling expenses wholly, exclusively and necessarily incurred by an employee in the performance of his or her duties with respect to his or her employment is deductible for tax purposes to the extent that the expenses have not been reimbursed by the employer.

Business deductions. The following expenses incurred wholly and exclusively in the production of income are deductible:

• Wear-and-tear allowance: A tax depreciation allowance is avail able for assets used in a business. The rates range from 10% to 40%, depending on the class of the asset.

• Bad debts: Bad debts incurred that are proved to the satisfaction of the Board of Inland Revenue to have become unrecoverable during the income year are deductible.

• Interest paid: Interest paid on loans or overdrafts is an allowable expense.

• Balancing charge and allowance: Effective from 1 January 2006, all assets are included in the various classes contained in the Seventh Schedule of the Income Tax Act. A balancing charge arises only if the disposal results in a credit balance on the entire pool of assets.

• Rental payments: Rental expenses are deductible in arriving at taxable income. This expense consists of the following elements: — Rental of equipment, plant and machinery. — Rental of buildings (must substantiate certain details). — Rental of motor vehicles.

• Business entertainment: Only 75% of business meals and enter tainment expenses may be deducted.

• Promotional expense allowance: This allowance provides for a deduction equal to 150% of the expenditure incurred with respect to the creation or expansion of foreign markets except those markets within the Caribbean Community and Common Market (CARICOM). Effective from 1 January 2020, first-time exports by companies to the CARICOM region are entitled to the pro motional allowance. However, this amendment does not apply to exports by individuals.

• Childcare or homework facility: The actual expenditure incurred in setting up a childcare or homework facility for dependents of employees is deductible up to a maximum of TTD500,000 per facility but not exceeding in aggregate TTD3 million.

Rates. For 2021, income tax is imposed at the following rates. Chargeable income Exceeding Not exceeding Tax rate TTD TTD TTD 0 1,000,000 25 1,000,000 30

Credits. Most tax credits have been replaced by the deductible personal allowance of TTD84,000 (see Allowances and deduct ible expenses).

Relief for losses. Business losses carried forward may be written off to the full extent of taxable business profits in the same tax year. The unrelieved balance may be carried forward indefinitely. No loss carrybacks are allowed.

B. Other taxes

Estate and gift taxes. No inheritance or estate tax is levied on a deceased person’s estate, and no tax is levied on gifts.

Lottery winnings tax. A lottery winnings tax is imposed at a rate of 10% on all prize money exceeding TTD1,000 from lotteries organized by the National Lotteries Control Board.

Business levy. Sole traders and self-employed persons engaged in a trade or business are subject to a business levy on gross sales or receipts (other than emolument income) at a rate of 0.6%. This levy applies only if gross sales or receipts exceed TTD360,000 for the income year. Any income tax paid may be credited against the individual’s business levy liability if the

business levy liability is higher. An exemption applies for the first three years of the business.

C. Social security

Trinidad and Tobago has no social security program. A national insurance program provides pension, sickness and maternity benefits. The employers’ weekly required contributions for 2021 range from TTD23.80 for employees earning less than TTD1,472.99 per month to TTD276.20 for employees earning TTD13,600 or more per month. The employees’ weekly required contributions range from TTD11.90 to TTD138.10.

Employees under 16 years of age, unpaid apprentices and per sons 60 years of age and older, as well as these individuals’ employers, are exempt from the national insurance contribution requirement.

The following health surcharge tax is levied on every employed person who makes, or is required to make, contributions under the National Insurance Act and on individuals, other than employed persons, who are required to file income tax returns.

Income Weekly Weekly Monthly contribution TTD TTD TTD

0 to 109 0 to 469.99 4.80 Over 109 Over 469.99 8.25

D. Tax filing and payment procedures

The tax year in Trinidad and Tobago is the calendar year. Married persons are taxed separately, not jointly, on all types of income. In general, every person in receipt of income must file an income tax return by 30 April of the year following the tax year. However, taxpayers whose sole income is from employment are not required to file tax returns, unless specifically requested by the Board of Inland Revenue. Every person receiving income from any trade, business, profession or vocation must file an income tax return for the year of income, even if the business operated at a loss. Penalties of TTD100 are imposed on late returns for every six months or part thereof past the due date.

Employers must deduct tax from employees under the Pay-AsYou-Earn (PAYE) system.

Every person in receipt of income other than employment income must pay tax in four equal installments on or before 31 March, 30 June, 30 September and 31 December in each income year. Each installment should equal one-quarter of the tax on charge able income for the preceding year. The balance of tax due, if any, must be paid no later than 30 April of the following year. Late payment of a quarterly installment results in an interest charge at a rate of 20% a year.

If the current year’s tax liability exceeds the previous year’s tax liability, total quarterly payments for the current year must equal at least the previous year’s liability plus 80% of the current year’s tax increase. If this requirement is not met, interest is charged at a rate of 20% a year on the underpayment.

Nonresidents must file tax returns for any year in which they derive income from Trinidad and Tobago sources. To file returns, nonresidents follow the administrative rules that apply to residents.

E. Double tax relief and tax treaties

Unilateral relief. A credit is available to residents for foreign taxes paid on foreign-source income. The credit may not exceed Trinidad and Tobago tax payable on the underlying foreignsource income.

A nonresident who proves to the satisfaction of the Board of Inland Revenue that he or she has paid, or is liable for, Caribbean Commonwealth income tax (see below) on Trinidad and Tobago income is entitled to double tax relief on foreign-source income at a rate determined under the following rules:

• If the appropriate Caribbean Commonwealth tax rate does not exceed the tax rate in Trinidad and Tobago, relief is given at one-half of the Caribbean Commonwealth rate of tax.

• If the appropriate Caribbean Commonwealth tax rate exceeds the Trinidad and Tobago rate, relief is given in the amount by which the Trinidad and Tobago rate exceeds one-half of the Caribbean Commonwealth tax rate.

Relief under double tax treaties. Trinidad and Tobago has entered into double tax treaties with the following jurisdictions.

Brazil India Sweden Canada Italy Switzerland China Mainland Luxembourg United Kingdom Denmark Norway United States France Spain Venezuela Germany

In addition, the treaty with the CARICOM states (Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Kitts and Nevis, St. Lucia and St. Vincent) provides reduced rates of withholding tax.

F. Entry visas

Only Trinidad and Tobago nationals and residents have the right to enter the country freely. Nonresidents are subject to varying entry requirements, depending on whether a temporary visa or resident status is required. General entry visas are not required for nationals of countries that are members of the following:

• CARICOM

• European Union (EU)

• British Commonwealth

Certain exceptions apply to the European Union and the British Commonwealth.

Obtaining a visa for entry into Trinidad and Tobago does not ensure that entry will be permitted. The immigration officer makes the final decision on whether to allow entry. Under the Immigration Act of 1969, an officer may allow entry to the following classes of persons:

• Diplomatic or consular officers of any country, representatives of the United Nations or any of its agencies, and officials from international organizations in which Trinidad and Tobago

participates, who are entering the country to carry out official duties or to pass through in transit

• Tourists and visitors

• Persons passing through the country to another country

• Clergy, priests or members of religious orders entering to carry out religious duties

• Students entering to attend a university or college authorized by statute to confer degrees, or an educational or training estab lishment recognized by either the Permanent Secretary of the Ministry of National Security or the Chief Immigration Officer

• Members of crews entering Trinidad and Tobago for shore leave or some other legitimate and temporary purpose

• Persons entering to engage in a legitimate profession, trade or occupation

At the point of entry, the immigration officer issues a landing certificate, which states the terms and the permitted period of stay. The officer may require the person entering to furnish secu rity in the form of a deposit or a bond to cover the cost of repa triation and other incidental expenses.

G. Work permits and self-employment

Trinidad and Tobago has a well-educated labor force with an adequate supply of skilled workers. Therefore, the government requires offering employment opportunities first to Trinidad and Tobago nationals and residents before nonresidents. The Ministry of National Security requires specific and detailed information before granting foreign nationals work permits. In practice, how ever, in highly technological industries, most foreign investors prefer to rely on expatriate personnel at the senior management level.

Traveling salespeople must obtain valid work permits and Traveling Salesman Licenses to enter Trinidad and Tobago. The licenses allow salespeople to engage in sales and set the conditions for their stays.

Broadly, individuals offered business offices or employment in Trinidad and Tobago who are not residents of countries that belong to the CARICOM, EU or the British Commonwealth must obtain both entry visas and work permits.

A foreign national interested in establishing a business in Trinidad and Tobago must apply for a work permit. Foreign subsidiaries and branches may be headed by foreign nationals.

Foreign nationals intending to work in Trinidad and Tobago for less than 30 days do not require work permits. This is a one-off exemption granted on the first entry. The one-off exemption is not intended for individuals who intend to exercise employment in Trinidad and Tobago for greater than 30 days within a 12-month period. If persons are required to work for a period exceeding 30 days, the employers of such persons must apply to the Permanent Secretary at the Ministry of National Security for work permits. The employer must include a statement indicating the steps taken to recruit a citizen or resident of Trinidad and Tobago for the position in question.

The Ministry of National Security usually requires employers to advertise locally to secure the services of a Trinidad and Tobago

national. The employer must document the results by presenting the advertisements and responses to the Ministry of National Security together with the foreign national’s work permit applica tion.

The Trinidad and Tobago work permit process has now moved to a paperless system. All applications are submitted to the Ministry of National Security via a new online system through “TTBiZLink.” Access to the site is permitted only after a ttconnect ID is obtained. All required documents, including the completed application form, must be uploaded into the system. Other required documents include a digital passport photo (with required specifications), curriculum vitae and proof of qualifications, the biography page of the current passport, a police certificate covering the preceding five years and two written character references (one must be from the last employer). Copies of the documents may be provided but the originals of the police certificate and certified translations must be retained. The application must be submitted with a nonrefundable application fee of TTD600.

The Work Permit Advisory Committee reviews applications through the new online system and may seek advice from com petent sources in Trinidad and Tobago about the requirements for the position and whether a qualified national is available to fill the position. If the committee is satisfied that all the requirements are met, approval is granted subject to the payment of TTD450 for each month the work permit is issued. The committee meets every two weeks to review applications; in most circumstances, approval is granted within 8 to 10 weeks from the date of sub mission of the application. Copies of work permits issued are forwarded to the International Tax Unit of the Board of Inland Revenue.

The approval form and the work permit state the name of the nonresident employee and the position for which he or she is employed, and specify certain conditions. In many cases, the conditions relate to the repatriation of the nonresident employee at the end of the approved period and to training a national employee as an understudy.

By order, the Minister of National Security may exempt nonresi dents from the requirement to have a visa and work permit. In addition, the following facilitation policies apply:

• Reciprocal agreement: Under the Visa Abolition Agreement, nationals of Brazil, Canada, Denmark, Finland, Germany, Ireland, Italy, Norway, Singapore, Sweden, Switzerland, the United Kingdom and the United States are not required to obtain visas to enter Trinidad and Tobago. Entry visas are required for persons in possession of valid work permits.

• Short-term work visits: Persons intending to work in Trinidad and Tobago for less than 30 days do not need work permits.

• Free Zone operations: Under the Free Zones Act, workers em ployed by approved enterprises engaged in free zone operations are exempt from the payment of fees with respect to the grant of the work permit.

• CARICOM nationals: CARICOM nationals seeking to exercise rights conferred by the Immigration (Caribbean Community Skills Nationals) Act or the Caribbean Community (Movement of Factors) Act are exempt from the requirement to obtain a work permit.

H. Residence permits

The Ministry of National Security may grant permanent resident status to any of the following persons:

• A person who has ceased to be a citizen of Trinidad and Tobago

• A spouse, parent or grandparent of either a citizen or a resident

• A person who, by reason of education, employment, training, skills or other qualifications, has established, or is likely to establish, a successful profession, trade, self-operating business or agricultural enterprise in Trinidad and Tobago and who has sufficient means of support while in the country

A person who has been a continuous resident of Trinidad and Tobago must apply for resident status to the Permanent Secretary of the Ministry of National Security and must present the circum stances of his or her particular case. In determining the suitabil ity of an applicant, the Ministry of National Security must receive proof that the applicant entered the country legally, be satisfied that the person is not categorized within a prohibited class, and receive a good character certificate for the applicant from the police in Trinidad and Tobago. If an application for resident status is refused, the applicant may reapply one year after the date of receipt of the refusal.

I. Family and personal considerations

Family members. Any family member of a working expatriate wishing to work in Trinidad and Tobago must obtain his or her own work permit. The children of a working expatriate need student visas to attend schools in Trinidad and Tobago.

Marital property regime. No community property or other similar marital property regime applies in Trinidad and Tobago.

Driver’s permits. Foreign nationals may drive legally in Trinidad and Tobago with their home country driver’s licenses for 90 days after their date of arrival. A driver must keep a valid passport and license in his or her possession at all times. If the foreign national’s period of stay is more than 90 days, he or she is required to apply for a Trinidad and Tobago driver’s license.

To obtain a local Trinidad and Tobago driver’s license, a foreign national must take an eye test, a written examination and a practical driving examination.