Business

Investment Regulation, Incentives, Licences - Investing in Trinidad and Tobago

  • Investment Regulation

    • Circumstances Under Which Licences Are Required

      There is no approval or licence required for foreign investors in Trinidad and Tobago, except :

      • to hold interest in land in excess of 5 acres for commercial purposes;
      • to hold interest in land in excess of 1 acre for residential purposes;
      • where the shareholding results in 30% or more of the total cumulative shareholding in local public companies, being owned by foreign investors;
      • where a licence is required by anyone, whether national or non-national. (In such a case, an application would have to be approved by the Ministry or authority responsible for that activity, for example, drilling or mining activities, the Ministry of Energy; certain commercial activities, the Ministry of Trade and Industry; financial institutions, the Central Bank).

      Where investors wish to obtain fiscal incentives offered by the government, an application and approval is required.

    • Applications for Incentives

      Applications for incentives are made through TIDCO which recommends to the various Ministries, whether a project should be approved for incentives. Final approval lies, however, with the Ministries.

      For the purpose of obtaining the incentives, Government is interested in factors such as:

      • Environmental impact of the project
      • Proposed value of the investment
      • Employment potential of the proposed project, for nationals
      • Net foreign exchange cash flow
      • Local value added
      • Potential export sales
      • Value of imports of raw materials and other goods
      • Potential income arising from taxes and duties imposed

      A number of applications are processed by TIDCO, then passed to the relevant Government Ministry for approval. These include applications for:

      • Import duties concessions under Customs Act Sec. 56 for raw materials for approved activities
      • Fiscal reliefs under the Fiscal Incentives Act for Approved Industries
      • Hotel development incentives under the Hotel Development Act
      • Incentives for tourism projects
      • Incentives under the Finance Act 1988
      • Tax exemptions on rental income for commercial/industrial property gains or profits under the Income Tax Amendment Act 1992
      • Foreign investment licence to hold commercial land in excess of 5 acres
      • Foreign investment where 30% or more of the total cumulative shareholding in a local public company will be held by foreign investors
      • Work Permits.

  • Investment Incentives

    • Regulation

      Investment incentives are coordinated through the Industrial Development Division of the Tourism and Industrial Development Company of Trinidad & Tobago Limited (TIDCO). TIDCO will assist investors in applying for approval of investment incentives.

      There are many different investment incentives:

      • Concessions from import duty on raw materials, machinery, and equipment for approved industrial projects.
      • Exemption from corporation tax on profits, and from tax on dividends (under the Fiscal Incentives Act and Hotel Development Act).
      • Loss write-off provisions.
      • Training subsidies for developing new skills.
      • Provision of industrial sites and developed industrial accommodation.
      • Export allowances, promotion and assistance.
      • Export credit insurance.
      • Double taxation relief.
      • Exemption from Value Added Tax on inputs for companies exporting 80% of production.
      • Free Zones under Act 19 of 1988.

      Incentives in some cases are available only to locally incorporated companies or locally owned companies.

    • Import Duty Concessions

      The Customs Act Sec.56 allows for concessions to be granted to approved enterprises for approved industrial projects.

      The applications for approval are made to the Ministry of Trade and Industry via TIDCO and are granted to a wide range of manufacturing companies which provide increased employment and use local materials to add value.

    • Tax Holiday - Fiscal Incentives Act

      The Fiscal Incentives Act allows for the granting of a tax holiday (or partial holiday) for periods up to ten years for the manufacture of approved products by approved enterprises.

      Approved enterprises fall into separate classifications including:

      • Highly capital intensive enterprises investing in excess of TT$50 million (US$8.3million)
      • Export enclaves, where products are manufactured exclusively for export.
      • Enterprises using a significant portion of local inputs.

      These concessions are discretionary and require applications to the Ministry of Trade and Industry via TIDCO. Recent precedents include the grant of five year tax holidays to major petrochemical plants in Point Lisas.

      An approved enterprise will also be granted exemption from customs duties and VAT on the construction of the approved project. These projects have usually been large scale manufacturing within one of the three classifications, and are available only to locally incorporated companies. The tax exemption can be extended to dividends which may be tax exempt and free of non-resident withholding tax on any taxes in excess of the investor's tax rate on the dividend in his country of residence.

    • Tax Holiday - Hotel Development Act

      The Hotel Development Act provides for tax holidays of up to ten years and duty free concessions for hotel developments.

      In addition to the tax holiday the approved Hotel may be granted accelerated capital allowances on the construction cost of the hotel after the holiday period. No depreciation is charged during the holiday period and an allowance at 20% per annum is allowed for the five years after the holiday period. Tax exempt profits may be distributed tax free by way of dividend.

      This tax concession is granted on a discretionary basis by the Ministry of Tourism based on the size of the hotel (minimum 10 rooms) and the capital expenditures involved.

      It should be noted that this legislation is at present being reviewed particularly with respect to inclusion for provisions for coordinated infrastructure and transportation access.

    • Free Zones Act

      Free Zone incentives have been developed in Trinidad and Tobago to promote the establishment of companies in Trinidad and Tobago that export the majority of their goods and services. Free Zone companies generally produce large volumes of goods or services and therefore offer potential to improve employment in this country.

      Under the Trinidad and Tobago Free Zones (Amendment) Act of 1995, an area may be designated a free zone becoming eligible to the incentives under Act. These incentives include:

      • exemption from customs duty on the importation of goods into the free zone
      • exemption from income tax
      • corporation tax
      • business levy
      • withholding taxes on remittance of profits, dividends and other distributions
      • exemption from land and building taxes on land, buildings, improvements to buildings, plant and machinery in the free zone.

      The prescribed activities which may be carried on in a free zone include:

      • Warehousing and storing
      • Manufacturing operations
      • Transshipment operations
      • Loading and unloading operations
      • Exporting
      • Importing
      • Service operations including banking, insurance and professional services Packaging and shipping
      • Assembling
      • Processing, refining, purifying and mixing
      • Merchandising, including international trading on products.

      Approved Free Zone Companies cannot supply more than 20% of goods produced in the Free Zone to the market in Trinidad and Tobago. They must also maintain separate accounts including the particulars of materials and goods imported, exported or used in manufacture within the Free Zone.

      The Trinidad and Tobago Free Zones Company Limited regulates companies in free zones and makes recommendations to the Ministry of Trade and Industry on enterprises eligible for free zone status. For more information contact:
      TTFZ Trinidad and Tobago Free Zones Company Ltd. (TTFZ)
      Albion Court
      2nd Floor West
      61 Dundonald Street
      Port of Spain
      Trinidad, West Indies
      Tel: (868) 625-4749 or 623-8363
      Fax: (868) 625-4755
      Email: ttf...@tstt.net.tt
      Opening hours: 8:30 am to 12:00 pm and 1:00 pm to 4:00 pm, Monday to Friday, except public holidays

    • TTBS - The Trinidad and Tobago Bureau of Standards

      The Trinidad and Tobago Bureau of Standards (TTBS) has responsibility for the quality of all goods and services in Trinidad and Tobago, except food, drugs and cosmetics. Detailed information on TTBS services and the laws that govern standards and measurements in Trinidad and Tobago. More details, Contact:
      Trinidad and Tobago Bureau of Standards (TTBS)
      1-2 Century Drive
      Trincity Industrial Estate
      Macoya
      Trinidad, West Indies
      Tel. (868) 662-8827
      Fax. (868) 663-4335
      Trinidad and Tobago Bureau of Standards (TTBS) website: http://www.ttbs.org.tt/

  • Construction Incentives

    Local construction is provided with a range of tax incentives some of which are discretionary and some of which are performance based.

    • Approved Property Development Company

      Companies engaged in both urban and rural property development may apply to the Board of Inland Revenue to be "approved" as an urban and rural property development company. To be approved, companies must be locally owned and undertake construction in both rural and urban areas. Once approved they are entitled to an allowance against their taxable income of 15% of construction costs for commercial properties completed in the year of income.

    • Housing Act Exemptions

      The Housing Act allows for the approval of the profits from construction of certain dwelling houses to be tax exempt. To be exempt the houses must have construction costs of less than TT$250,000.

      An approved housing company will also be allowed to distribute tax exempt profits by way of tax free dividends.

      Any houses constructed by an approved housing company may then be exempted from income tax on rentals for a period of ten years from the construction date.

    • Other Construction Tax Incentives

      The Income Tax Act also provides for construction incentives that are performance based. Any taxpayer may now obtain a wear and tear allowance on a newly constructed commercial property at the rate of 10% per annum on the declining balance.

      As an alternative rental income can be exempted until the year 2000 but once the taxpayer has elected for one of these incentives, the election is irrevocable.

  • Special Classes of Company

    The Income Tax Act provides for several special classes of company which are entitled to a tax credit of 15% of their chargeable income for seven years. This reduces their effective tax rate to 20% from the statutory rate of 35%.

    These special classes of company include:

    • approved small companies
    • approved companies trading in a regional development area
    • an approved activity company.

    These special companies must be locally incorporated and owned and are subject to a rigorous approval process to ensure criteria defined in the Income Tax Act are complied with. The approval process is via TIDCO except for approved small companies which is via the Small Business Development Company Limited.

  • Loss Relief

    The Income Tax Act and Corporation Tax Act provide for the carry-forward of tax losses without limitations. Tax losses cannot be transferred and may be lost if a company's ownership changes with a view to transferring the losses.

  • Special Tax Allowances for Exporters

    Performance based incentives exist to encourage exports, in particular:

    • Promotional Expenses

      Promotional expenses wholly and exclusively incurred in order to create or promote the expansion of foreign markets (outside Caricom) for the export of goods or construction industry services are allowed to be grossed up to 150% of the expenses incurred.

    • Export Allowance

      Manufactured products exported outside Caricom (excluding petrochemicals, and certain products) are granted a tax credit. The tax credit covers the profits on the proportion of export sales to total sales so that profits on exports are effectively tax exempt.

  • Non-Tax Incentives

    Several non-tax incentives exist to assist increased production and Extra-Caricom exports. These are administered by TIDCO and include: Industrial sites and developed industrial accommodation (See section Industrial Property)

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