Home' Trinidad and Tobago Guardian : October 6th 2016 Contents Financial advisory firm PWC is hopeful that the new
tax bracket of 30 per cent on high income individuals
and companies is temporary and that the Government
returns to a single-rate system.
In delivering the 2017 budget last Friday, Finance Minister
Colm Imbert framed the introduction of the new tax rate---
which impacts individuals whose chargeable income exceeds
$1 million per annum and on companies with chargeable profits
also in excess of $1 million per annum---in the context of the
need to spread the burden of adjustment across the society.
In its budget memorandum 2017, PWC said that having
differing tax rates resulted in evasion of taxes within the tax
"The reversion to a progressive rate of tax will give rise to
a number of challenges which in the past had plagued the
system and was avoided by the simplification of the system
to a single rate.
"These include: income splits between two or more persons
and or entities as well as under reporting to avoid the uplift.
It would take astute auditors to detect and address, to the
extent that they can, such avoidance measures."
But PWC is not the only member of the business community
expressing concern about evasion of taxes. President of the
T&T Chamber of Industry and Commerce, Robert Trestrail
speaking at the Chamber's post-budget conference was highly
critical of the announcement to charge 30 per cent tax on
incomes of more than $1 million a year.
He noted that there were no measures in the budget to treat
with tax evasion and questioned why those who were adhering
to the tax regulations were being made to pay more tax.
Trestrail suggested that having higher taxes may increase
the cost of doing business by tearing into much needed capital
which is needed to expand businesses and become innova-
Finance Minister Colm Imbert in his budget presentation
said that effective January 1, 2017, individuals and companies
with chargeable income/profits in excess of $1 million will be
subject to tax at the rate of 30 per cent. Imbert had said that
the 30 per cent will be applicable on the incremental chargeable
income over $1 million.
PWC argued that traditionally T&T had a "progressive tax
rate system" which was applicable to individuals with rates
as high as 70 per cent while companies paid a flat rate.
"The flat rate of tax for individuals was introduced in 2006
with the applicable rate being 25 per cent which has remained
unchanged for both individuals and companies other than in
Calling for the Government's list of valuations which are
being applied to properties to be published, PWC said until
it has knowledge of the valuations that are being applied to
properties, "it is difficult to assess the reasonableness or oth-
erwise of the tax. It is hoped that those valuations will be
published shortly and that the mechanism to challenge those
valuations will be available, easily accessible and efficient."
PWC noted Imbert's intention to, "base the valuations on
returns that are to be submitted by the property owners/occu-
piers and that there was an exemption/deferral under the Act
for homeowners who could not afford the charge by reason
of age, impaired health or other special circumstances."
The property tax is expected to come into effect from 2017,
based on assessments on property to be published by BIR in
its assessment rolls and at the following rates:
Classification of Property Rate of Tax%
On vacant land the rates applicable are as follows:
Classification of property Rate of Tax%
Tax under the 2009 Act is computed based on the annual
taxable value which is the annual rental value less 10 per cent
to cater for periods when property is not rented or the landlord
does not collect rent, PWC stated.
When it comes to VAT on repair of yachts and pleasure
craft for non-residents, PWC warned if VAT is "reintroduced
as an exempt service (rather than zero-rated), it will mean
that service providers will not be able to recover as input tax
any VAT incurred in providing the service.
"If it is accepted that this is an industry that should be
developed and encouraged, we would recommend the services
be reinstated as zero-rated, rather than exempt which will
allow the supplier to recover his input VAT, and therefore
reduce the cost of providing the service."
According to PWC, before February 1, 2016, "items 25 and
26 of the VAT Act zero-rated the repair of yachts and pleasure
craft and any service supplied to yachts and pleasure craft
owned by persons who are neither citizens nor residents of
Imbert in his budget presentation had stated that in order
to maintain the competitiveness of the maritime sector the
measure will be introduced as an exempt service.
Calling for more clarification on this tax, PWC said there
was need for government to state whether the individual would
have to be taxed as well as the retailers who order online.
"Persons importing goods to T&T will now have to pay
customs duty, VAT and the new online tax. This will result
in a significant increase in the price that consumers pay on
foreign goods and it is hoped that this will serve to curb the
Internet shopping craze that has now become commonplace
in T&T, with 31 courier companies operating to fill the growing
demand for imported goods."
But speaking to reporters on Monday after the TTCIC post-
budget forum, Imbert clarified this saying that government
was justified in wanting to introduce the tax. Adding that it
would be collecting from everyone including the individual
and the retailer, Imbert said per annum, this country spends
US$1 billion in online purchases and that the initiative would
result in the collection of US$70 million, which can go to
fixing the hospitals.
PWC said it has always endorsed the concept of implementing
government projects via a PPPs because it helps to reduce
government spending and "brings private sector management
and other skills to bear in the execution of large projects which
potentially allow for a more efficient implementation of gov-
ernment's Public Sector Investment projects." PWC said it
hoped that it would encourage more private sector players to
step up and participate.
Overall, PWC said while it was relieved to get some of the
clarity which was previously lacking, it called for further clar-
1. The two per cent restriction on the deduction of man-
agement charges (specific to companies which are receiving
services from their parent company located outside of T&T)
2. Taxation of insurance companies
3. Fiscal tax regime reform
OCTOBER 6 •2016 www.guardian.co.tt BUSINESS GUARDIAN
COVER STORY | BG5
'New 30% tax will
PWC partner Alyson West, speaker at the
seminar this. PHOTO NICOLE DRAYTON
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