|Name of the tax||Value-added tax (VAT)|
|Trading bloc membership||Caribbean Community (CARICOM)|
|Administered by||Board of Inland Revenue Value Added Tax Administration Centre 20, St. Vincent Street Port-of-Spain Trinidad|
|Standard||12.5% (from February 2016)|
|Other||Zero-rated and exempt|
|VAT number format||999999 (6 digits)|
|VAT return periods||Two-monthly, or otherwise determined|
|Registration||TTD500,000 (from 1 January 2016)|
|Recovery of VAT by non-established businesses||No|
Scope of the tax
VAT is charged on the entry of goods imported into Trinidad and Tobago and on the commercial supply of goods or prescribed services by a registered person.
Who is liable
The Trinidad and Tobago VAT law imposes a registration requirement on any person that makes commercial supplies in Trinidad and Tobago in excess of TTD500,000 in a 12-month period.
A person that intends to make commercial supplies may apply for registration. However, the application must be supported by additional information indicating that the value of the person’s commercial supplies will exceed TTD500,000 in a 12-month period. Suitable evidence includes incorporation documents, cash-flow projections for 12 months (the month and year to be included) that are signed and dated by a director or the company’s accountant, and contracts showing evidence of commencement of business.
Group registration. VAT grouping is not allowed under the Trinidad and Tobago VAT law. Legal entities that are closely connected must register for VAT individually.
Divisions of companies. On request, the Board of Inland Revenue may approve the separate registration of the divisions of a company, and in such cases, supplies between divisions would be subject to tax.
Non-established businesses and tax representatives. A branch of a foreign corporation is registered in the same manner as a resident taxable person. A “non-established business” is a business that does not have a fixed establishment in Trinidad and Tobago. A non-established business that makes commercial supplies in Trinidad and Tobago must register for VAT if it meets the registration requirements.
A foreign individual or company that must register for VAT may need to appoint an agent or manager who is resident to assume the responsibilities of principal relating to compliance under the VAT Act.
Reverse charge. No reverse-charge mechanism applies in Trinidad and Tobago.
Registration procedures. A written application for registration must be submitted on the prescribed form. The application must be supported by evidence to show that the value of the person’s commercial supplies will exceed TTD500,000 in a 12-month period. Such evidence may include incorporation documents, cash-flow projections and contracts entered into. An applicant will be registered within one working day after the receipt of the application provided that all the relevant documentation has been provided. There is no provision for online registration.
Late-registration penalties. Summary conviction and penalties and interest are imposed for late registration for VAT and for other offenses (see Section J).
Digital economy. There are no special rules that apply.
Deregistration. A registered person who is not required and will not be required under the VAT Act to be registered may apply to the Board of Inland Revenue to have his or her registration cancelled. The Board of Inland Revenue may refuse to cancel the registration on the grounds that the person has, within the last two years, made supplies requiring that he or she be registered.
The term “taxable supplies” refers to supplies of goods and prescribed services that are made in the course or furtherance of any business that is liable to VAT. Taxable supplies are referred to as “commercial supplies.” Taxable supplies include supplies that are standard rated and zero rated. Schedule 3 of the VAT law determines what constitutes a supply of goods or services. The term “prescribed services” means any services not listed as exempt services in Schedule 1 of the VAT Act.
In Trinidad and Tobago, the applicable VAT rates are the standard rate of 12.5% and the zero rate (0%). The standard rate of 12.5% applies to all supplies of goods or services, unless a specific measure provides for the zero rate or an exemption.
Examples of goods and services taxable at 0%
- Exported goods
- Water and sewerage services supplied by a public authority
- With certain exceptions, most items of food and non-alcoholic beverages
The term “exempt supplies” refers to supplies of goods and services that are not liable to tax. Exempt supplies do not give rise to a right of input tax deduction (see Section F).
Examples of exempt supplies of goods and services
- Financial services
- Medical services
- Residential property rentals
- Real estate brokerage
- Public postal services
- Prescribed bus and taxi services
- Betting and gaming
Option to tax for exempt supplies. Not applicable.
Time of supply
The time when VAT becomes due is called the “time of supply” or “tax point.” In general, the tax point for goods and services supplied by a taxable person is the earliest of the following events:
- The date of issuance of the invoice by the supplier
- The date of receipt of payment for the supply
- The date on which the goods are made available to the recipient or the services are performed
A taxable person must account for VAT in the VAT period in which the tax point occurs, regardless of whether payment is received. A person registered for VAT may recover input VAT indicated on the tax invoices.
Imported goods. VAT on the entry of imported goods becomes due and payable at the time when the goods have entered. The importer is liable to account for the tax and must pay it.
Recovery of VAT by taxable persons
The tax paid on goods and services that are acquired for the purpose of making taxable supplies is deductible as input tax. Input tax is offset against output tax, which is the tax charged on the making of commercial supplies. Input tax is deductible when the goods and services are acquired.
Goods or services are deemed to be for the purpose of making commercial supplies if the supplier acquired, imported or produced the goods or services for any of the following purposes:
- Their supply or resupply as a taxable supply
- Their consumption or use (whether directly or indirectly, or wholly or partly) in producing goods or services for supply as a taxable supply
- Their consumption or use (whether directly or indirectly, or wholly or partly) with respect to a commercial enterprise
Nondeductible input tax. Input tax may not be recovered on purchases of goods and services that are not used for business or where the person only makes exempt supplies.
Partial recovery. The Trinidad and Tobago VAT law provides that if all the supplies made by a taxable person during a tax period are commercial supplies, the input tax incurred in the period is deductible in full. However, if some, but not all, of the supplies made by the person during the tax period are commercial supplies, a partial recovery calculation is required. The following are the rules for the calculation of allowable input tax:
- All of the input tax for the period that is directly related to the making of commercial supplies (regardless of whether the supplies are made during that tax period) is recoverable.
- None of the input tax for the period that is directly related to supplies that are not commercial supplies (regardless of whether the supplies are made during that tax period) is recoverable.
- A proportion of the input tax for the period that relates both to commercial and non-commercial supplies is recoverable. The recoverable portion is calculated based on the value of commercial supplies made during the period compared with the value of total supplies made during the period.
If a taxable person makes no commercial supplies during the tax period, the recoverable input tax is the portion, if any, of the input tax for the period that the tax authorities consider to be “fair and reasonable.”
Refunds. If the amount of input VAT recoverable in a VAT period exceeds the amount of output VAT payable for that VAT period, the excess may be refunded. VAT returns must be submitted within 25 days after the end of the VAT period. If this deadline is met and if the refund is unpaid after six months, the tax authorities must pay interest on the outstanding balance, at the rate of 1% per month or part of a month, chargeable from the day after the expiration of the period until the date on which the outstanding amount is satisfied.
Preregistration costs. Input tax may be claimed in respect of any stock in trade that is on hand at the time of registration. Evidence showing that the inventory on hand was audited by a chartered accountant must be produced at the time of registration.
Recovery of VAT by non-established businesses
Foreign businesses that make commercial supplies in Trinidad and Tobago may register and recover tax with respect to their local operations in the same manner as resident businesses. However, Trinidad and Tobago does not refund VAT paid by foreign businesses that are not registered for VAT in the country.
Sales invoices and credit notes. A taxable person must generally provide a VAT invoice for all taxable supplies made, including exports. A VAT invoice is necessary to support a claim for input tax deduction.
A credit note may be used to reduce the VAT charged and reclaimed on a supply of goods and services. A credit note generally mentions the same information as a VAT invoice.
Exports. VAT is not chargeable on supplies of exported goods. However, to qualify as VAT-free, exports must be supported by evidence that the goods have left Trinidad and Tobago.
Foreign-currency invoices. If a supply is made to a person outside of Trinidad and Tobago, the invoice may be issued in a foreign currency. However, in accounting for the tax payable, the taxable person must account for the tax in Trinidad and Tobago dollars. In converting the invoice, the exchange rate used must be the rate at which the Central Bank of Trinidad and Tobago would have purchased that currency in the form of notes at the time of the supply.
VAT returns and payment
VAT returns. The tax year is divided for taxable suppliers into two-month tax periods, and suppliers are required to submit a VAT return covering all taxable transactions up to and including the last day of each tax period. For administrative convenience, the total number of registrants is divided into two basic categories and an ad hoc category, whose tax periods are as follows:
- Category A: two-month periods ending with the last day of January, March, May, July, September and November
- Category B: two-month periods ending with the last day of February, April, June, August, October and December
- Category C: tax periods as determined by the Board of Inland Revenue
Every registrant is required to submit a VAT return on the prescribed form, along with the amount of tax due, to the Board of Inland Revenue by the 25th day of the month following each tax period.
Special schemes. Not applicable.
Electronic filing and archiving. Not applicable.
Annual returns. Not applicable.
Penalties are assessed for errors and omissions with respect to VAT accounting. A fine of TTD1,000 is imposed for the late submission of a VAT return. In addition, a penalty of 8% and interest at the rate of 2% per month or part of a month is charged on late payments of VAT.
In addition to the above, the VAT Act provides for other penalties including a penalty of TTD6,000, which is imposed for a failure to notify the tax authorities of changes relating to the registration.
Certain offenses may give rise to criminal penalties.