icted to the amount of the management charges or 1% of outgoings and expenses exclusive of the charges, whichever is the lower. Tax depreciation allowances may not be treated as an expense
for this purpose. Withholding tax may also be applicable to management charges.
Taxes/Other than the supplementary petroleum tax, no taxes or levies are deductible in arriving at taxable profit (see "Other taxes" above).
Other significant items/Charitable contributions to approved charities under a deed of covenant are deductible.
From 1994 contributions by local insurance companies to Catastrophe Reserve Funds become deductible for tax purposes up to the value of 20% of net premium income from property insurance business.
GROUP TAXATION
There is no provision for group taxation in Trinidad and Tobago, but with effect from January 1, 1997 a limited form of group loss relief has been introduced (see“Net operating losses” above).
TAX INCENTIVES
Tax holidays/Incentives are as follows.
1. Fiscal Incentives Act, 1979: An approved enterprise, which must be a locally incorporated resident corporation, may be granted an exemption from corporation tax for a period of up to ten years, depending on the category under which it is approved. Exemption may be total or partial. Subject to
approval, profits may be distributed tax free to shareholders except in the case of certain nonresident shareholders, where the relief is restricted to so much of the tax as exceeds their liability in their country of residence. Net losses during the tax holiday period (i.e., the excess of total losses over total profits) may be carried forward for setoff without limitation for five years from the end of the tax holiday period, after which the normal setoff provisions for losses apply.
2. Hotels: Under the Hotel Development Act, approved hotels are granted a tax holiday for periods of five to ten years. In addition, capital investment may be written off against profits in any five of the eight years subsequent to the tax holiday period. With effect from January 1, 1996 the incentives available under the Act are to be extended to “approved tourism projects.” The latter are, however, not yet defined.
3. Approved mortgage and other companies: The profits of an approved company are exempt from corporation tax. The exempt profits when distributed to shareholders are exempt from corporation tax and income tax.
4. Business expansion scheme: The business expansion scheme was introduced in 1988 to allow approved small companies carrying on business in a regional development area and companies carrying out certain approved activities a tax credit of 15% of their chargeable profit. This scheme is to be restructured to encourage both individual and corporate investors to invest in venture capital companies by allowing a "tax rebate" on their
investment.
5. Construction companies: Profits and income derived from trading in properties constructed between January 1, 1993 and December 31, 1996 are exempt from income and corporate taxes until the year 2000. However, from January 1, 1995 such companies may elect to claim the 10% wear-and-tearallowance applicable to chargeable to tax in the normal manner (see “
Deductions” above).
Export incentives/These incentives are as follows.
Export allowance-An export allowance is available in respect of the export
of goods manufactured or processed by a company in corporated in Trinidadand Tobago. A branch of a foreign corporation is not eligible for this allowance. The export allowance is calculated as follows.Export allowance = (Export sales / Total sales) × Total sales profit
Export sales do not include exports to countries within the boundaries ofthe Caribbean Community (Caricom). The export allowance is a deduction in arriving t the company's taxable profits. The allowance is not available to the petroleum industry or to companies enjoying tax incentives under
the Fiscal Incentives Act or similar earlier legislation.
The export allowance is to be reviewed in the year of income 2000.
Customs duty rebate-Effective July 1, 1995 the 5% customs duty payable on raw material inputs by manufacturers has been removed.
Promotional expenses-Promotional expenses incurred by local firms to promote the expansion of existing markets and/or the creation of new ones for the export of specified services or locally produced goods w
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