Highlights of 2021-22 Budget Presentation

By: Employers Consultative Association (ECA)  |   October 6th, 2021

The ECA is pleased to provide this quick snapshot of the national budget presentation held on Monday Oct 4, 2021, with a focus on estimates of revenue and expenditure, and the main measures that will specifically impact employers/business in Trinidad and Tobago. We trust that you find this information useful.

A full copy of the budget presentation, as delivered by the Minister of Finance, can be found HERE.

Major Fiscal Measures Impacting Businesses

1. Reduction of 5% in tax rate for significant exporters of Local Goods, the annual revenue of which is over $500,000.00 (effective January 1, 2022). Will be reviewed after three (3) years.
2. Reduction of 5% in tax rate for SMEs whose core business, relating to technology solutions, digitization, and construction, is more than 50% of their annual revenues (effective January 1, 2022). Will be reviewed after three (3) years.
3. A tax exemption for new companies, whose core business activities are digitization and technology solutions. The exemption will be 50% on the first $100,000.00 of chargeable income for the 1st year and 50% on the first $200,000.00 of chargeable income for the 2nd year (effective January 1, 2022).
4. Research and Development (R&D) capital allowance of up to 40% of expenditure (in calculating taxable profits) incurred by companies (effective January 1, 2022). Will be reviewed after three (3) years.
5. Tax credit of 30% of the cost of investment in carbon capture and storage and enhanced oil recovery, for companies that make such investments, up to a maximum of $500,000 (effective January 1, 2022).
6. Full-tax holiday for the first 5-year period to new SMEs listing on the Trinidad and Tobago Stock Exchange (TTSE). This tax holiday includes exemption on Business Levy and Green Fund Levy, in addition to tax incentives in the Finance Act 2020 (Act 30 of 2020). For the second 5-year period, new SME listings will be taxed at 50.0 percent (Corporation Tax, Business Levy and Green Fund Levy).
7. Introduction of an SME Mentorship Programme, to be operationalised and integrated into the broader set of services currently provided to SMEs by various government agencies (effective January 1, 2022).
8. Increase in penalty for overweight trucks, as outlined under the Motor Vehicles and Road Traffic (Enforcement and Administration) Act, from $750.00 to $8,000.00 (effective January 1, 2022).
9. Reduction of 5% in tax rate for developmental/advancement projects in the manufacturing sector, limited to $500,000.00, which attract new foreign direct investment. Qualifying projects and activities must be related to information technology and digitization, manufacturing, and technology development (excludes companies in the petrochemical industry). This takes effect from January 1, 2022.
10. Reduction in the rates of withholding tax on any distribution made, from 10% to 8%. Where such distribution is made to a parent company the rate shall be reduced from 5% to 3%. This takes effect from January 1, 2022.
11. Strengthening of the Board of Inland Revenue (BIR) through the recruitment of 100 recently qualified accountants and university graduates in a field relevant to the Inland Revenue Division, with a view to improve tax collection. Intention is to enhance revenue collection through strategic monitoring, impact visits, reviews, and audits of businesses.
12. Electric vehicles. Removal of all custom duties, motor vehicle tax and value-added tax on the importation of battery-powered electric vehicles with an age limit on imported used battery powered electric vehicles of 2 years. This takes effect from January 1, 2022 and will be reviewed after 2 years.
13. A 150% tax allowance of up to $1,000,000.00 on corporate sponsorship to Heritage properties under the oversight of the National Trust.
14. Removal of all VAT and custom duty charges on specified Therapy Equipment, Hearing Impaired, Visually Impaired, Physical Mobility Disabilities, Disability Safety Peripherals and Communication.
15. Removal of ALL duties and taxes on ALL remaining computer hardware, software and peripherals that are not yet tax free. This takes effect from January 1, 2022.

Conclusion

Employers are asked to take cognisance of this information, especially in relation to their respective areas of operation. Should you wish to share any comments or suggestions, please fill out our online feedback form here: https://forms.gle/Zk21u8tTcT5QzUyE6 or send your feedback/comments to [email protected]