Trinidad And Tobago Releases 2016 Budget
by Mike Godfrey, Lowtax.net, Washington
16 October, 2015
Trinidad And Tobago's Finance Minister, Colm Imbert, has unveiled plans for tax hikes to achieve a fiscal balance by 2018.
To achieve this, the Government plans to initiate a reform of the value-added tax system; enhance tax collection and compliance; commence the process for reforming the fuel subsidy; increase the Business Levy; increase the Green Fund Levy; phase in a property tax regime; and introduce a tax regime for the gaming industry.
Imbert said: "The Trinidad and Tobago economy needs to embark on a programme of economic adjustment," but acknowledged "too large a withdrawal of fiscal stimulus could aggravate the current slowdown in the economy."
Over the next fiscal year, the Government plans to reduce the deficit from TTD7bn (USD1.1bn) to TTD2.8bn, or from 4.2 percent of GDP to 1.7 percent of GDP, through a combination of revenue measures and one-off revenue raisers, including asset sales.
From January 1, 2016, companies will face an increase in the Business Levy from 0.2 percent to 0.6 percent per quarter, along with an increase in the Green Fund Levy from 0.1 percent to 0.3 percent per quarter.
The biggest changes will come from a widening of the VAT base, with plans to review and adjust exemptions, zero-rated items, and to improve on collection and compliance. This will boost revenues, despite plans also announced to lower the headline VAT rate from 15 percent to 12.5 percent and to raise the VAT registration threshold to TTD500,000 from TTD360,000.
Individuals will face higher social security taxes from July 2016 as well as a new property tax from January, but they will benefit from an increase to personal income tax exempt allowance to TTD72,000 from TTD60,000.
The Government has also announced plans to introduce more stringent transfer pricing rules, alongside other recommendations from the OECD on base erosion and profit shifting, noting that "a majority of the volume and value of global trade in goods and services is transacted through branches and subsidiaries of multinational corporations." The Government said: "Intragroup trade poses significant challenges to taxing authorities as the multinational corporations seek to minimize their global tax liabilities."
Last, the Government has announced that it will increase regulation and taxation on the gaming sector through the Gambling (Gaming and Betting) Control Bill 2015.
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