sses.
RATE
%
Class A-Furniture and fittings ………………………………… 10
Class B-Motor vehicles ………………………………………………… 25
Class C-Heavy equipment, motor lorries, trucks, computer equipment 33.33
Class D-Extra heavy equipment…………………………………… 40
The allowance will be calculated at the rate applying to aggregate expenditure incurred on assets within the class acquired after January 1,1995 on a declining-balance basis.
A wear-and-tear allowance at the rate of 10% (calculated on a declining balance basis) has also been introduced for new buildings and structures and capital improvements completed on or after January 1, 1995. This allowance will apply to all buildings or structures, as well as capital improvements thereto, that are used in the trade, business, profession,
or vocation for the production of income. However, companies currently enjoying benefits under the Income Tax (In Aid of Industry) Act or under the Fiscal Incentives Act, the Hotel Development Act or the Free Zones Act will be unable to claim this allowance.
For buildings constructed between January 1, 1993 and December 31,1995 that qualify for tax exemption in respect of the profit, sale or rental income therefrom, an election must be made to claim either the tax exemption or the wear-and-tear allowance.
Accelerated tax depreciation is allowed to certain trades in the form of an initial allowance in the year of acquisition on capital expenditure,including expenditure on industrial buildings. The rates are 10% for industrial buildings and 50% for machinery and equipment. For those companies engaged in the production of sugar, petroleum, or petrochemicals or enjoying concessions under the Fiscal Incentives Act, the rate is 20%.
An annual allowance of 2% on cost (petroleum operations, 5%) is granted on industrial buildings referred to above, subject to the provisions relating to buildings or structures completed after January 1, 1995.In addition to the initial allowance, companies engaged in petroleum production operations enjoy a first-year allowance of 20% of the capital expenditure incurred on plant and machinery, with the remaining cost being written off on a straight-line basis over five years.
Gains on sale of tax-depreciable assets are taxable as ordinary income (i.e., a balancing charge). Where the gain is not a short-term capital gain (see "Capital gains" above), the taxable gain is limited to the tax depreciation received. Tax depreciation is not required to conform to book depreciation.
A depletion allowance (an annual allowance) is granted on certain expenditures incurred on winning access to the mineral source. The allowance includes a first-year allowance, an initial allowance and an annual allowance.
Net operating losses/A loss may be carried forward indefinitely to be set off against future profits.
Loss carrybacks are not permitted.
Effective January 1, 1997 a limited form of group loss relief has been introduced, whereby losses may be surrendered to a claimant company within the group, except that the claimant's tax liability cannot be reduced by more than 25%. Companies must be resident in Trinidad and Tobago. Only losses incurred after January 1, 1997 qualify for this relief.
Payments to foreign affiliates/A Trinidad and Tobago corporation may claim a deduction for royalties and interest charges paid to foreign affiliates,provided the amounts are paid at arm's length and the appropriate withholding tax is deducted and properly accounted for. For interest to be deductible for tax purposes, the recipient must be subject to tax in Trinidad and Tobago or otherwise specifically exempt therefrom. Deduction for management charges is restr
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