8 sectors for investment incentives in T&T
Government has published a full list of investment incentives available to Trinidad and Tobago citizens.
Here is a selection of eight options from the list which for which citizens may be eligible:
(i) Customs duties on the construction of an approved project;
(ii) Value Added Tax; and
(iii) Income tax on dividends or other distribution, other than interest, out of profits or gains derived from the manufacture of the approved product during the tax holiday period.
(Fiscal Incentives Act, Chapter 85:01)
Import Duty Concessions
Exemptions from Customs Duties on raw materials, machinery and equipment and in some cases packaging material based upon the provisions of the Third Schedule of the Customs Act, Chapter 78:01 (as amended).
(Third Schedule of the Customs Act, Chapter 78:01)
Approved Small Company Status
Approved Small Company Status is a designation granted to a Limited Liability Company, allowing it to derive a tax relief for a period of five (5) years.
(Corporation Tax Act, Chapter 75:02)
Free Trade Zones
Free Zone activities that qualify for approval include manufacturing for export, international trading in products, services for export and development and management of free zones. Sales into the customs territory are treated as extra regional imports.
(Free Zones Act, Chapter 81:07)
Allowances to the manufacturing sector
Where a person carrying on a trade incurs capital expenditure on the provision of machinery or plant for the purposes of that trade, there shall be made to him, for the year of assessment in the basis period for which the expenditure is incurred, an allowance (in this Part referred to as “an initial allowance”) equal to 90% of the expenditure incurred in the provision of machinery and plant for the purposes of that trade.
(Chap. 85:04 Income Tax (In Aid of Industry) Act)
Tax exemptions for sale of residential houses
There shall be exempt from income tax until the year ending 31st December 2018, the gains or profits derived from the initial sale of a residential house site, being part of a land development project, provided the owner of the land produces a certificate from the Minister with responsibility for housing in support of the claim for exemption
(Section 45C (1) of the Income Tax Act, Chapter 75:01)
Some of the incentives include:
- Citrus establishment per ha. - 100% of cost up to a maximum of $6,000
- Citrus rehabilitation per ha. - 100% of cost up to a maximum of $4,000
- Cocoa/coffee establishment per ha. - 100% of cost up to a maximum of $6,000
- Cocoa/ coffee rehabilitation per ha. - 100% of cost up to a maximum of $4,000
- Cocoa fermentaries establishment - 10% of cost up to a maximum of $10,000
- Coconut establishment per ha. - 100% of cost up to a maximum of $6,000
- New Ponds - 25% of cost up to a maximum of $25,000
- Alternative culture system construction - 25% of cost up to a maximum of $25,000
- Ponds rehabilitation - 100% of cost up to a maximum of $7,000
- Water pumps, hoses and accessories - 50% of cost up to a maximum of $20,000
- Rebate - Startup costs 50% of cost up to a maximum of $30,000
- Import semen and embryos per year - 50% of cost up to a maximum of $20,000
- Imported breeding stock per animal - 100% of cost up to a maximum of $2,500
Cost to build pond - 75% of cost up to a maximum of $24,000
Cost of establishing ponds, wells and dams - 25% of cost up to a maximum of $30,000
Water pump 1.5 h.p and over - 50% of cost up to a maximum of $20,000
Cost of irrigation equipment/ watering systems - 50% of cost up to a maximum of $40,000
Import Duty Exemptions
Import Duty Exemptions are granted for “machinery, equipment materials and parts for the manufacture or assembly of Solar Water Heaters”.
Zero-Rated Vat granted for complete Solar Water Heaters, solar PV systems and wind turbines.
Tax Credit for Solar Water Heaters
Where an individual, in a year of income commencing 1st January, 2011, purchases solar water heating equipment for household use, that individual shall be entitled to a tax credit of 25% of the cost of the solar water heating equipment, up to a maximum of TT $10,000 (maximum tax credit of TT $2,500.)
150% Wear and Tear Allowance
A 150% wear and tear allowance of the expenditure incurred on:
1. The acquisition of plant, machinery, parts, and materials for use in the manufacture of Solar Water Heaters; or 2. The acquisition of: wind turbines and supporting equipment; solar photovoltaic systems and supporting equipment; or Solar Water Heaters.
Customs and Excise Duty Exemptions
According to the Act, several items “will be allowed for importation free of customs and excise duties as long as they are not manufactured in the desired quantities and quality in Trinidad and Tobago.” The list of items includes “environmentally-friendly and/or energy-saving devices such as solar panels, heating equipment.
4. CNG vehicles
The new CNG retail price of TT$1.00 per liter and price structure were made effective on 03 October 2014 by Legal Notice 294 of 2014, The Price of Compressed Natural Gas (Amendment) Order, 2014.
Fiscal incentives for import of CNG Vehicles
- MVT and VAT removed on imported new and used (less than 4 years old) OEM natural gas vehicles.
- Removal of Customs duty on components for the retrofit of vehicles to use CNG
- Removal of Customs Duty and VAT on CNG Systems
Fiscal Incentives for Conversion to CNG Vehicles
1. For individuals – 25% tax credit for conversion cost up to a limit of TT $2,500 per vehicle.
- For business – Capital uplift of 130% for wear and tear allowance.
- For installers - Capital uplift of 130% for wear and tear allowance on the cost of the plant, machinery and equipment needed to provide CNG installations.
Fiscal incentives for Electric and hybrid electric vehicles
- MVT, VAT and Customs Duty was removed on imported new and used (less than 4 years old) electric vehicles.
- MVT, VAT and Customs Duty was removed on imported new and used (less than 2 years old) Hybrid electric vehicles.
5. Trade financing for exporters
A short-term loans aimed at assisting exporters with meeting confirmed export orders, this short-term loan is extended to companies to assist in the payment of inventory.
The tenor is customized to the exporter’s needs and usually ranges between 30-270 days. After the agreed tenor has passed, the exporter must repay EXIMBANK 100% of invoice plus interest at a rate of 5-9%.
Exporters can receive financing in the form of a loan to cover 85-95% of the invoice value of export sales. The loan must be repaid at rates varying between 5-9% from the assigned proceeds of payments from EXIMBANK approved buyers. This credit period usually ranges between 30-270 days and one hundred and twenty (120) days Bill of Lading or Drawdown
Demand loans are accessible by manufacturers seeking to perform equipment upgrades to improve the quality of their export products or renovate their premises. The demand loan must be repaid within one (1) year to five (5) years at rates varying between 5% to 9%. The payment terms usually offered to clients include moratorium on principal, interest and principal monthly or interest monthly principal on maturity.
Export Credit Insurance
Export Credit Insurance provides risk protection on goods and services exported on credit. This insures exporters against payment defaults by foreign buyers. This service is afforded up to ninety (90) days and the premiums vary based on the buyer’s credit worthiness, payment terms and the economic environment.
Promotional Expenses Allowance
Promotional Expenses allowance is equivalent to 150% of the amount actually expended for the purpose of creating or promoting the expansion of foreign markets for the export of certain goods and services. The allowance is given for:
(i) advertising in foreign markets;
(ii) providing promotional literature for overseas distribution;
(iii) participating in trade fairs and similar promotional activities;
(iv) overseas travel for the purposes of conducting promotional activities; (v) providing free samples and technical information on products; (vi) inviting buyers to Trinidad and Tobago;
(vii) the recruitment of specialist sales personnel operating in foreign markets, for a maximum of two (2) years; (viii) conducting foreign market surveys
6. Research and Development
Research and Development Facility (RDF)
(i) for a single company project is TT $500,000;
(ii) for a business alliance of two or more companies is TT $1,000,000; and
(iii) for patent registration is TT $300,000.
1. Tax exemption on profits not exceeding seven (7) years;
2. Tax exemption on profits from the initial sale of villas, condominiums and sites thereof within an Integrated Resort Development;
3. An accelerated depreciation of depreciable equipment owned by the owner or operator and used in an approved product;
4. A capital allowance in respect of approved capital expenditure incurred by the owner or operator in the creation of a new tourism project or expansion of an existing tourism project;
5. A carry-over of losses from a tax exemption period arising out of the operation or renting of an approved tourism project;
6. Tax exemption on the dividend received by a non-resident shareholder if the recipient is not liable to tax on the dividend in his country of residence;
7. Owner or operator of a vehicle imported for use in an approved tourism project shall be exempt from the payment of motor vehicles tax.
Customs and Excise Duty Exemptions
Where a person has been granted interim approval or additional interim approval for a tourism project, the Minister or Tourism may, upon application, grant that person a permit:
1. For the importation of materials or entry into Trinidad and Tobago free of customs duty
2. For a drawback of customs duties or excise duties, of such building materials which are not already duty free and of such articles of tourism equipment
3. To import vehicles with the payment of customs duty at a reduced rate of 10%.
Tourism Accommodation Upgrade Project (TAUP)
The Tourism Accommodation Upgrade Project (TAUP) is an incentive in the form of a partial reimbursement of the cost of upgrade works undertaken to eligible tourist accommodation. The incentive is extended to eligible properties containing:
a) 6-150 guest rooms will receive 25% reimbursement grant as a proportion of the cost of refurbishment and upgrade for improvements/upgrade works to the interior or exterior of the property up to TT$750, 000.
b) 1-5 guest rooms will receive 20% reimbursement grant as a proportion of the cost of refurbishment and upgrade for improvements/upgrade works to the interior or exterior of the property up to TT$75,000.
8. Creative sector
Expenditure Rebate Programme
The Production Expenditure Incentive Rebate Programme currently provides for cash refund offered to any national or international producer on expenditure incurred while filming in Trinidad and Tobago:
1. For nationals: 35% rebate on expenditure between TT $100,000 to TT $51,200,000.
2. For non-nationals: Tiered system of 12.5% to 35% on initial expenditure of US $100,000 to US $8,000,000.
3. Additional 20% cash rebate on expenditure incurred on use of qualifying local labour.
Tax Deduction for Sponsorship of Audio, Visual and Video Productions
From 2003 onward, companies which sponsor audio, visual or video productions for local education or entertainment or reflecting local culture for radio or television, can apply for an allowance of 150% of the actual expenditure incurred, to a maximum of TT$3,000,000.
Tax deduction for artistic work
A company producing artistic work from 2001 onward can apply for a tax break up to a maximum of TT$3,000,000.
Tax deduction for production company
From 2006 onward, production companies producing audio, visual or video productions for educational or cultural purposes can apply for a tax allowance equal to 150%, up to a maximum of TT$3,000,000.
Production companies can also claim an aggregate allowance up to TT$2,000,000 regarding sums paid to finance sporting activities and artistic works not related to its own business.
Customs Duty Exemptions
Film projects can be given duty-free concessions on machinery, equipment and materials for the production of motion pictures.
Terminal equipment or other equipment to be installed or used for a public telecommunications network, service or radio service are also eligible for import duty concessions based upon the provisions of the Third Schedule of the CustomsAct, Chapter 78:01. The service must be certified by the Telecommunications Authority of Trinidad and Tobago
Visit the Ministry of Finance online for more information at www.finance.gov.tt
The entire list can be viewed online here: http://bit.ly/2whlDEC