CORPORATE TAXES
SIGNIFICANT DEVELOPMENTS
There have been no significant tax or regulatory developments in the pastyear.
TAXES ON CORPORATE INCOME
Corporation tax/With effect from January 1, 1996 the standard rate of taxis 35%, but this varies significantly in the case of certain classes of companies (e.g., life insurance companies). Tax rates for 1999 remain unchanged and are as follows.
%
Ordinary companies……………………………… 35
Life insurance companies ………………………… 15
Petroleum companies (petroleum profits tax) … 50
CORPORATE RESIDENCE
Corporate residence is determined by reference to the location of the central management and control of the business of a company. The place ofincorporation is regarded as merely one of the factors to be taken into account in determining where central management and control are located.
OTHER TAXES
Business levy/with effect from January 1, 1996 corporations are subject to a business levy at the reduced rate of 0.25% (1998-0.33%) of gross revenue or receipts. Exemption is available for certain companies, including petroleum companies and companies whose annual turnover is less than TT$200,000. This levy is payable quarterly, and the taxpayer is entitled to a tax credit of corporate tax up to a maximum of the business levy liability.
Unemployment levy/Only petroleum companies remain liable to the
unemployment levy, at the rate of 5% of taxable profits.
Supplemental petroleum tax/The supplemental petroleum tax (SPT) is Chargeable on the gross income (derived form the sale of crude oil) less certain allowance at scale rates, which increase with the price of crude.The tax is computed separately in respect of land and marine operations.Incentives are available in the form of enhanced allowances for workovers
and repair costs and include a deduction for geological and geophysical costs.
The SPT is deductible in arriving at profits subject to petroleum profits tax.
Value-added tax/VAT is applicable to a wide range of goods and services. The standard rate applicable to commercial supplies is 15%.Certain basic unprocessed foods and agricultural supplies are zero-rated, as are crude oil, natural gas and all exported goods and services. Effective January 1,1995 hotel accommodations and yachting services to nonresidents are
zero-rated.
A number of services, including financial services, real estate brokerage,residential rentals, and educational services, are exempt. However, with effect from January 1, 1994 financial services (as specified) are subject to a transaction tax at a rate of 15%. From January 1, 1993 imported inputs of highly capital-intensive manufacturers are exempt from VAT.
Hotel accommodation tax/With effect from January 1, 1995 hotels are subject to a hotel accommodation tax at a rate of 10% of the value of the accommodation.
Insurance premium tax/Also effective January 1, 1995 a tax at the rate of 6% has been imposed on insurance premiums in respect of general insurance contracts. Life insurance and reinsurance premiums are exempt.
BRANCH INCOME
The tax rates applicable on branch profits are the same as on corporate profits. In addition, branch profits, after deduction of corporation tax and reinvestments, are subject to withholding tax at varying rates, regardless of whether the profits are remitted to the head office.
INCOME DETERMINATION
Inventory valuation/Inventories are generally stated at the lower of cost or market value. Cost may be determined by the FIFO or the average-cost method. The LIFO and bases-tock methods are not generally accepted for tax purposes.
Capital gains/Gains on the disposal of chargeable assets within 12 months of acquisition are subject to tax at standard corporate rates. (See “Depreciation and depletion” below.)Intercompany dividends/Dividends received from both domestic subsidiaries and other domestic corporations are fully exempt from tax.
Foreign income/A Trinidad and Tobago corporation is taxed on worldwide income. Foreign branch income is taxed as earned, and foreign dividends are taxed when received. Double taxation is avoided by means of foreign tax credits.
Stock dividends/A Trinidad and Tobago corporation can distribute tax free a dividend of common stock (bonus issue) proportionately to all common stockholders.
DEDUCTIONS
Depreciation and depletion/With effect from January 1, 1995 tax
depreciation rates (wear-and-tear allowances) have been standardized by statute. Fixed assets are to be classified into on of four cla
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