In September 2014 the 2014/15 national budget of Trinidad and Tobago was predicted to be TT$60.35bn ($9.3bn) for the fiscal year. This budget was based on the assumption that oil prices would not dip below $80 a barrel. However, they continue to fluctuate and have averaged just below $60 a barrel. The decline brings the need for diversification into a focus today.
The government’s diversification plan focuses on seven strategic business clusters to drive the process, namely: culture and creative industries, tourism, food sustainability, information and communication technologies (ICT), maritime industries, financial services and energy. There is a strong case for diversifying in the services industry, a sector that employs over 80% of the nation’s citizens and contributes over 50% to real GDP. The government has identified a framework of tax and investment incentives to facilitate the development of these industries. In addition to the fiscal incentives that companies can benefit from – such as exemptions on Customs duties, value-added tax (VAT) and income tax on dividends or other distributions – more specific incentives apply to the individual industries.
The culture and creative industries in T&T present untapped opportunities for both local and international investors. In this respect, the Production Expenditure Rebate Programme seeks to attract international film producers to T&T by providing cash rebates for expenditures accrued while filming in T&T. For international crews, the rebate follows a tiered system of 27.5-50% on labour and 12.5-35% on other expenditures from $100,000 to $8m. The programme also allows for duty-free concessions on machinery, equipment and materials for the production of movies. Under the provision of art and culture allowance, corporate sponsors can benefit from sponsoring a registered artist, cultural workers or supporting audio, fashion, visual or video production. Sponsors can claim 150% of actual expenditure up to a maximum of TT$3m ($462,600) for funding a registered artist and full acquisition of a work of visual art certified by an art gallery. Furthermore, allowance is admitted for 150% of expenditure incurred in the promotion of the fashion industry up to a maximum of TT$3m ($462,600); and 150% of expenditure up to a maximum of TT$3m ($462,600) to fund a producer that has developed its own audio, visual or video product. In the tourism industry there are tax exemptions on profits not exceeding seven years and profits on initial sale of villas within an integrated resort development, accelerated depreciation, capital allowances, carry forward losses, tax exemption on dividends received by non-resident shareholders and exemptions on motor vehicle tax. Customs and excise duty exemptions are granted for the importation of building materials and equipment. Benefits in the agricultural industry include rebates of 10-100% on a percentage of total cost up to a maximum dollar value.
With respect to the maritime industry, locally registered firms that engage in ship building and ship repair are allowed duty-free treatment on their machinery, equipment and materials. A VAT exemption also applies to firms engaged in the repair of ships and yachts.
Finally, there are a number of incentives applied across sectors. Investment in research and development, for instance, is promoted by offering a maximum grant of TT$500,000 ($77,100) for a single company project and TT$1m ($154,200) for business alliances of two or more companies. In addition, the registration of a patent is rewarded with a grant of TT$300,000 ($46,260) maximum. With respect to trade, co-financing services offer companies reimbursements on financial costs associated with the entry into selected export markets. Additional trade financing options can be accessed through the nation’s export credit agency, the Export Import Bank of T&T, while the T&T Free Zone is designed to encourage local and foreign interest in export-driven projects that create jobs, develop skills, and create external markets for products and services.
The concessions under the free zone include exemption from corporate tax, import duties, VAT, withholding tax, work permits, and land and building taxes.
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