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$2 billion from transfer
pricing crack down
The Finance Minister said that he has received a preliminary
report from an international financial institution on the issue
of tax reform, which has identified what the country needs
One of the challenges that the ministry needs to address
is the issue of transfer pricing---the price of goods sold between
different parts of the same company.
He has got approval to hire consultants who would assist
in the implementation of a transfer pricing mechanism---the
lack of which is "having a significant impact on our income."
He said the amount of revenue that is being foregone because
there is no transfer pricing framework in place "is big money,
at least $2 billion a year."
Asked if he was referring to energy companies operating
in T&T, Howai said: "We think there are a couple of them
that we need to pay some attention to."
Without going into the specifics, the minister said: "I think
it is a big leakage and if we could plug that hole it could be
quite significant for government's revenues." (See page 2)
Although Energy Minister Kevin Ramnarine said the Gov-
ernment will not tamper with the fuel subsidy in today's
budget, his colleague, the Minister of Finance, says the pro-
gramme by state-owned National Gas Company (NGC) to
increase the CNG (compressed natural gas) filling capability
of gas stations around the country is on track. (See page 2)
By the end of this calendar year, NGC would have installed
11 CNG pumps in existing gas stations throughout the country
and the planning for the construction of 22 new stations is
He said he is confident that the implementation of the CNG
programme will proceed as planned because he has confidence
in Curtis Mohammed, the NGC officials who is in charge of
the project. NGC plans to invest just over $2 billion dollars
over a five year period to assist in vehicle conversion as well
as to increase the number of CNG stations nationwide.
He said the completion of the CNG project is still about
18 months away and "it means that we have to carry this
thing (subsidy) for that period of time."
Land and building taxes
Work has been going on within the Government so that
the much-delayed land and building tax system can be imple-
mented when the land valuations have been brought up to
date, said the minister.
"The process of valuing industrial land---the first phase in
the implementation of the tax---is continuing," he said.
"Industrial land will give you most of your income anyway
because that is where you are dealing with Atlantic LNG,
Petrotrin, NGC, PCS Nitrogen and Methanex. It's easier to
collect and it's the bulk of the land and building taxes that
can be collected. The rates for individuals will be lower."
He said that by the time he was appointed as Minister of
Finance on June 25, 2012, the public service infrastructure for
collecting the land and building taxes had fallen apart---in
terms of the public servants.
The valuation process restarted with the state enterprises.
budget special 2015
Monday, September 8, 2014 www.guardian.co.tt Guardian
• Nominal GDP for 2014 fiscal year---$176.6 billion
• That's GDP per capita, in nominal terms of
• Estimated revenue---$55 billion
• Predicated on crude oil price---US$80 a barrel and
• Natural gas price---US$2.8 per mmbtu
• Estimated average oil price---US$104 a barrel
• Estimated average gas price---US$10.8 per
• Estimated expenditure---$65.1 billion (includes
$3.8 billion supplemental in July)
• That's 37.8 per cent more than the PP's first
budget in 2011;
• Highest subvention---transfers and subsidies at
• That's 53 per cent of the original budget
expenditure and 18.5 per cent of GDP
• Lowest subvention---interest payments at $2.96
billion of original budget
• That's less than 5 per cent of original expenditure
• Estimated fiscal deficit--- 1.5 per cent of GDP or
$2.74 billion (IMF figure)
• Growth in real GDP---2.3 per cent (IMF estimate)
• Inflation rate---3.7 per cent (IMF estimate)
• Unemployment rate---3.7 per cent of labour force
(based on CSO estimate for 2013)
• Central government debt (excluding fuel
subsidy)---$30.8 billion or 16.5 per cent of IMF's
$186.8 billion GDP figure
• Non-Financial Public Sector debt---$57.72 or 30.9
per cent of GDP (IMF figure)
• External public sector debt---6.9 per cent of GDP
• ross official reserves---US$10.43 billion
Reform is a slow process
"We think there are
a couple of them
that we need to pay
some attention to."
MINISTER OF FINANCE
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