Indirect tax snapshot
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Value Added Tax (VAT) is the main type of indirect taxation in Trinidad and Tobago.
It is a tax on consumption, which is applied during the production and distribution process to most goods and services. It is also applied to goods, and certain services, entering the country. Although VAT is ultimately borne by the consumer by being included in the price paid, the responsibility for charging, collecting and paying it to the tax authority at each stage of the process rests with the business making the supply ie the sale.
A business registered for the tax will charge VAT (output tax) on its sales, and incur VAT (input tax) on its purchases (including any VAT paid at importation). The difference between the output tax and the deductible input tax in each accounting period will be the amount of VAT payable by the business to the tax authority. Where the input tax exceeds the output tax, a refund can be claimed.
A transaction is within the scope of Trinidad and Tobago VAT if the following conditions are met:
• it is a commercial supply
• it takes place in Trinidad and Tobago
• it is made by a taxable person. For these purposes, a taxable person is a person or entity who is registered for VAT in Trinidad and Tobago, or has a liability to become so registered
• it is made in the course or furtherance of any business carried on by that person or entity.
There are two rates of VAT that are applied to goods and services in Trinidad and Tobago; the standard rate, and the zero rate. In addition, some goods and services are exempted from the tax.
Businesses that make only exempt supplies are unable to claim any input tax that they incur, so the VAT paid to suppliers will be a ‘real’ cost.
Most goods imported into Trinidad and Tobago are subject to VAT. The tax will have to be paid by the importer at the time of importation. Where the importation is for business purposes and the importer is registered for VAT, the VAT can be claimed against the output VAT. The Customs and Excise Division is responsible for the collection of VAT at the port where the goods arrive.
VAT is charged on the cost of the item imported plus any duties imposed at importation.
A ‘person’ who either makes or intends to make taxable supplies of goods or services in the course or furtherance of a business must register for VAT if the value of its taxable supplies in Trinidad and Tobago exceeds the annual registration limit, or is expected to exceed the limit in the near future. A business can register on a voluntary basis even if the registration limit has not been exceeded.
For these purposes, a ‘person’ includes any legal entity. Therefore, once a person is registered for VAT, all of his business activities can be covered by the registration. However, it may be permissible to register different business activities separately, but separate accounts will have to be maintained for each business activity.
There is no group registration in Trinidad and Tobago.
The normal VAT registration limit applies to all businesses regardless of whether they’re established in Trinidad and Tobago or not.
The Threshold for registration in Trinidad and Tobago is TT$500,000.
To date there is no special legislation enacted which specifically deals with electronically supplied/digital services.
The tax authority in Trinidad and Tobago may direct a person to appoint a VAT representative to act on their behalf for VAT purposes where the person:
• is a taxable person or makes taxable supplies in Trinidad and Tobago
• is not established, and does not have a ‘fixed establishment’ in Trinidad and Tobago
• in the case of an individual, they do not have their ‘usual place of residence’ in Trinidad and Tobago.
VAT returns normally cover an accounting period of two months, There are two cycles A and B, ie January-February or February- March ending on the last day of a calendar month, A businesses can request a specific accounting cycle if the nature of the business is such that warrants such a request, eg businesses with seasonal income and expenditure.
All VAT returns have to be submitted within 25 days of the end of the relevant accounting period, together with any tax due except where the due filing date falls on a weekend or holiday, in such a case the due date is the next working day.
There is no prescribed penalty for the late submission of a VAT Return per se, however, it is an offence and a penalty may be imposed on the summary conviction in a court of law.
There is a penalty of 8% for the late payment of tax due together with interest at the rate of 2% per month or part thereof from the due date to the date of Payment.
There are no other declaration required other than those already mentioned.
Yes. A range of penalties can be imposed where businesses do not comply with the VAT rules.
Penalties can also be applied where the business has failed to maintain adequate records, provide information (including additional declarations) or upon summary conviction where an offence has been committed.
Criminal proceedings may be brought in the case of more serious matters such as fraud.
A VAT invoice must show:
• the words 'Tax invoice'
• an identifying serial number and date on which invoice was given
• the seller's name and address
• the seller's VAT registration number
• the customer's name and address
• a description sufficient to identify the goods or services supplied to the customer
• the value of supply
• the rate of VAT applicable to the amount claimed from the recipient in respect of tax
• any other particulars if any required by the regulations to be included in the tax invoice.
The following categories of business are exempt from the requirement for supplying a tax invoice:
• fast food outlets
• gas stations
However, if the recipient requests a tax invoice such business will be obligated to comply.
Currently there is no requirement to submit any supporting files with the VAT Return. However, the VAT regulations specifies the minimum amount of records that are required to be kept by a VAT registrant. This does not include any electronic/Digital filing requirements.
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