Over the past year, the fis­cal poli­cies that were im­ple­ment­ed in T&T and that are cur­rent­ly un­der con­sid­er­a­tion with a view to im­ple­men­ta­tion, have had one ma­jor theme: com­pli­ance with in­ter­na­tion­al stan­dards.

When Min­is­ter of Fi­nance, Colm Im­bert, an­nounced the 2024 bud­get state­ment over a year ago, it was ob­served that the fis­cal in­cen­tives from a tax per­spec­tive that were pro­posed to be (and that in­deed were) in­tro­duced in 2024, were no­tice­ably scarce.

This ob­ser­va­tion con­tin­ued to pre­vail with the 2025 bud­get state­ment. This does not mean that the tax sphere has been ne­glect­ed by the Gov­ern­ment, how­ev­er. Rather, there has been a con­cert­ed ef­fort to­ward align­ment with the stan­dards and laws that pre­vail on an in­ter­na­tion­al tax lev­el.

This ar­ti­cle aims to re­flect on the var­i­ous tax in­cen­tives and tax poli­cies that were im­ple­ment­ed over 2024, their rel­e­vance on an in­ter­na­tion­al scale, and a brief pre­view with re­spect to what is cur­rent­ly planned for 2025.

As briefly dis­cussed, the 2024 bud­get state­ment was unique in the sense that, de­spite in­tro­duc­ing a num­ber of tax in­cen­tives of vary­ing de­grees and across dif­fer­ent sec­tors in pre­vi­ous years, on­ly three clear in­cen­tives were promised, and were in­deed in­tro­duced, for fis­cal year 2024.

These in­cen­tives were as fol­lows:

• An ex­emp­tion from busi­ness levy for man­u­fac­tur­ing com­pa­nies taxed at 30 per cent, in re­spect of gross sales or re­ceipts from ex­port sales;

• An al­lowance equal to 150 per cent of the ex­pen­di­ture in­curred up to $500,000, for the en­hance­ment and pro­mo­tion of ed­u­ca­tion through cor­po­rate spon­sor­ship to pub­lic or pri­vate schools reg­is­tered with the Min­istry of Ed­u­ca­tion. The ex­pen­di­ture has to be cer­ti­fied by the prin­ci­pal or most se­nior ad­min­is­tra­tor of the school; and

• An al­lowance up to $500,000 for ex­pen­di­ture in­curred from in­vest­ments made in cy­ber­se­cu­ri­ty soft­ware and net­work se­cu­ri­ty mon­i­tor­ing equip­ment.

The cy­ber­se­cu­ri­ty soft­ware and net­work se­cu­ri­ty mon­i­tor­ing equip­ment are re­quired to be cer­ti­fied by iGovTT.

The fis­cal year 2024 al­so saw the for­mal rein­tro­duc­tion of the prop­er­ty tax regime, with own­ers (ie own­ers for the pur­pos­es of the leg­is­la­tion), be­ing re­quired to pay prop­er­ty tax at the rate of two per cent on the an­nu­al tax­able val­ue of their res­i­den­tial prop­er­ties.

There has been some teething is­sues with the tax regime, both at the val­u­a­tion lev­el and at the as­sess­ment to tax lev­el, but own­ers are nonethe­less re­quired to pay the tax by De­cem­ber 20, 2024, fol­low­ing two pre­vi­ous ex­ten­sions of time for pay­ment. It is an­tic­i­pat­ed that the teething is­sues will be re­solved in time.

The Spe­cial Eco­nom­ic Zones regime (the SEZ regime) came in­to force in Ju­ly 2024, with a SEZ Au­thor­i­ty to over­see the ap­pli­ca­tion and ad­min­is­tra­tion of the regime, be­ing ap­point­ed prompt­ly there­after.

The SEZ regime is an­tic­i­pat­ed to be cru­cial for a num­ber of rea­sons. Over the past few decades, the pre­vi­ous regime, the free zones regime, has been a sig­nif­i­cant at­trac­tor of for­eign di­rect in­vest­ment in T&T.

How­ev­er, with the free zones regime came gaps in polic­ing, a breed­ing ground for crim­i­nal­i­ty, and more rel­e­vant­ly for these pur­pos­es, as­sess­ment by the Eu­ro­pean Union as be­ing a harm­ful pref­er­en­tial tax regime.

The con­se­quence of this, to­geth­er with oth­er fac­tors such as T&T’s lack of ap­pro­pri­ate au­to­mat­ic ex­change of fi­nan­cial in­for­ma­tion frame­works, fail­ure to have a rat­ing of at least “large­ly com­pli­ant” by the Glob­al Fo­rum for Tax Trans­paren­cy and In­for­ma­tion Shar­ing, and a fail­ure to sign on to and rat­i­fy the OECD’s Mul­ti­lat­er­al Con­ven­tion on Mu­tu­al Ad­min­is­tra­tive As­sis­tance, ren­dered T&T to be a non-co­op­er­a­tive ju­ris­dic­tion for tax pur­pos­es; ie, a place on the EU black­list.

Coun­tries on the black­list face tax con­se­quences such as in­creased au­dits, in­creased with­hold­ing tax­es, non-de­ductibil­i­ty of ex­pens­es, loss of in­vest­ment, lim­it­ed fund­ing from across the EU, and dif­fi­cul­ty in fi­nan­cial trans­ac­tions as banks and fi­nan­cial in­sti­tu­tions may be re­luc­tant to process trans­ac­tions in­volv­ing black­list­ed ju­ris­dic­tions.

T&T’s place on the EU black­list has al­ready re­sult­ed in Nor­way and Den­mark ter­mi­nat­ing their dou­ble-tax­a­tion treaties with T&T. The ter­mi­na­tion of these treaties has ham­pered the op­er­a­tions of multi­na­tion­al com­pa­nies in­volved in cross-bor­der trans­ac­tions with T&T and these coun­tries, and pos­es a sig­nif­i­cant risk to the con­tin­ued in­vest­ment in T&T.

As such, while the re­peal of the free zones regime was an im­por­tant step to­ward in­ter­na­tion­al com­pli­ance, a re­place­ment regime, one that com­plies with in­ter­na­tion­al stan­dards but main­tains at­trac­tion for for­eign di­rect in­vest­ment, was crit­i­cal.

Un­der the SEZ regime, SEZ li­censees are en­ti­tled to in­cen­tives such as:

• A re­duced Cor­po­ra­tion Tax rate of 15 per cent;

• A ze­ro-rate of VAT on goods sup­plied to a SEZ zone, ser­vices sup­plied by non-res­i­dents to an SEZ zone, per­mit­ted eco­nom­ic ac­tiv­i­ty and cer­tain spec­i­fied BPO ser­vices;

• Ex­emp­tions and waivers on im­port cus­toms du­ties on cer­tain items such as cap­i­tal goods, ma­chin­ery and equip­ment, spare parts, raw ma­te­ri­als and stock in trade;

* An ex­emp­tion from prop­er­ty tax;

* An ex­emp­tion from stamp du­ty on cer­tain in­stru­ments for op­er­a­tors of an SEZ; and

* Non-fis­cal ben­e­fits, such as stream­lined reg­u­la­to­ry ap­provals, to en­hance the ease of do­ing busi­ness.

There are al­ready a num­ber of ge­o­graph­i­cal ar­eas that have been des­ig­nat­ed as SEZ zones. Busi­ness­es that are de­sirous of op­er­at­ing with­in a SEZ zone and that sat­is­fy li­cens­ing re­quire­ments, can ap­ply to the SEZ Au­thor­i­ty for the des­ig­na­tion.

T&T has al­so passed leg­is­la­tion that seeks to meet its oblig­a­tions to the Base Ero­sion and Prof­it Shift­ing (‘BEPS’) In­clu­sive Frame­work, to fur­ther as­sist with be­ing delist­ed as a non-co­op­er­a­tive ju­ris­dic­tion for tax pur­pos­es. BEPS refers to tax plan­ning strate­gies that ex­ploit gaps and mis­match­es in tax rules to ar­ti­fi­cial­ly shift prof­its to low or no-tax lo­ca­tions where there is lit­tle or no eco­nom­ic ac­tiv­i­ty.

Mem­bers of the BEPS In­clu­sive Frame­work are re­quired to con­form to the four BEPS Min­i­mum Stan­dards, name­ly (a) Ac­tion 5 – To com­bat harm­ful tax prac­tices; (b) Ac­tion 6 –To pre­vent grant­i­ng treaty ben­e­fits in in­ap­pro­pri­ate cir­cum­stances; (c) Ac­tion 13 – Coun­try-by-coun­try re­port­ing; and (d) Ac­tion 14 – Mak­ing dis­pute res­o­lu­tion mech­a­nisms more ef­fec­tive.

The In­come Tax Act, Chap. 75:01 has al­so been amend­ed to widen the in­for­ma­tion shar­ing pow­ers of the tax au­thor­i­ty (i.e., cur­rent­ly the Board of In­land Rev­enue but to be re­placed with the T&T Rev­enue Au­thor­i­ty), in or­der to en­able it to share tax­pay­er in­for­ma­tion (and in­deed to re­strict the in­ap­pro­pri­ate shar­ing).

Fur­ther leg­isla­tive en­act­ments in­clude the Mis­cel­la­neous Pro­vi­sions (Glob­al Fo­rum) Act, Act No. 15 of 2024, and the Base Ero­sion and Prof­it-Shift­ing In­clu­sive Frame­work (Coun­try-by-Coun­try) Re­port­ing Act, 2024, Act No. 2 of 2024, both of which are de­signed to align with in­ter­na­tion­al stan­dards and to com­ply with the BEPS In­clu­sive Frame­work.

Most re­cent­ly, on the No­vem­ber 7, 2024, T&T signed on to the OECD’s Mul­ti­lat­er­al Con­ven­tion on Mu­tu­al Ad­min­is­tra­tive As­sis­tance in Tax Mat­ters. Mem­ber states of this con­ven­tion can en­gage in mu­tu­al as­sis­tance in tax mat­ters in­clud­ing the ex­change of in­for­ma­tion on re­quest, spon­ta­neous ex­change, au­to­mat­ic ex­change, tax ex­am­i­na­tions abroad, si­mul­ta­ne­ous tax ex­am­i­na­tions and as­sis­tance in tax col­lec­tion. The con­ven­tion al­so fa­cil­i­ties the im­ple­men­ta­tion of the Stan­dard for Au­to­mat­ic Ex­change of Fi­nan­cial Ac­count In­for­ma­tion in Tax Mat­ters, and is a tool in fight­ing against il­lic­it fi­nan­cial flows.

The ab­sence of trans­fer pric­ing leg­is­la­tion still re­mains an on­go­ing is­sue in T&T, how­ev­er. In the 2025 bud­get state­ment, the Min­is­ter of Fi­nance pro­vid­ed a fur­ther up­date on the rel­e­vant leg­is­la­tion, in­di­cat­ing that stake­hold­ers had been en­gaged to as­sist with fi­nal­is­ing draft trans­fer pric­ing leg­is­la­tion that was pre­pared by the In­ter-Amer­i­can Cen­tre of Tax Ad­min­is­tra­tion.

It is hope­ful that the draft can be fi­nalised soon, with prompt en­act­ment and procla­ma­tion to fol­low. The is­sue of re­lat­ed-par­ty trans­ac­tions in T&T re­main rid­dled with un­cer­tain­ty and un­pre­dictabil­i­ty, de­spite the ex­is­tence of re­cent help­ful ju­rispru­dence on the is­sue.

Leg­is­la­tion to im­ple­ment a tax amnesty in T&T en­tered in­to force on the De­cem­ber 6, 2024, aimed at en­cour­ag­ing the pay­ment of out­stand­ing and over­due tax and fis­cal li­a­bil­i­ties with­out in­cur­ring the pay­ment of any in­ter­est and penal­ties.

The tax amnesty is in­tend­ed to waive in­ter­est, penal­ties and cer­tain li­a­bil­i­ties on out­stand­ing (a) Val­ue Added Tax, (b) In­come Tax, (c) Stamp Du­ty, (d) Prop­er­ty Tax, (e) Na­tion­al In­sur­ance con­tri­bu­tions, and (f) Reg­is­tra­tion of Clubs Tax, up to a cer­tain pe­ri­od. The tax amnesty is cur­rent­ly sched­uled to run from the 1st Oc­to­ber, 2024 to the 31st De­cem­ber, 2024.

With the num­ber of in­ter­na­tion­al com­pli­ance re­quire­ments be­ing met by T&T over the past year, the ex­pec­ta­tion is that the ease of do­ing busi­ness in T&T will sim­i­lar­ly im­prove, as T&T aims to stim­u­late the in­flow of for­eign di­rect in­vest­ment, to as­sist in re­ju­ve­nat­ing the lo­cal econ­o­my.

Dis­claimer: This col­umn con­tains gen­er­al in­for­ma­tion on le­gal top­ics and does not con­sti­tute le­gal ad­vice.