Tuesday, 27 October 2015

Budget (Statement) of the Republic of Trinidad and Tobago 2016

Many times we refer to the Budget Statement which  is usually presented by the Minister of Finance as "The Budget" either because we have calculated the maths on the probability of :

  • The Statement being adopted  by those who belong to the party which is in power and, or 
  • Who  in the Opposition and in the Independent Senators will support the position being outlined,
  • How close are we to the next elections and the general feeling of the population towards the accomplishments of the Govt. which is in power
In real terms the Statement is a proposed piece of legislation which has to be read, debated and approved with references to the Acts which are being impacted upon and the Acts which are to be amended. This process can take three months in some instances and this can be a time of agony, especially in a year when a Tax Amnesty is proposed.
This concept of a Tax Amnesty  is one which produces anxiety as the period between the approval and the conclusion  of the amnesty is so  short. So much so that persons (clients) may not commit to certain types of work at the earliest time when the due date is almost six months down the road. This is true when they have other commitments within their company for which they may have budgeted and for which they may  have received approval. Thus usually the scope of work which is allowed by a Tax Amnesty may need special approval from a Board or Committee so much so that the client  may seek tentative approval at the earliest opportunity, subject to the approval of the Budget i.e. the Act of Parliament.
 On the side of the accountants, they may want to maximise their clients cash flow, yet manage the commitments with respect to their staff. This is important for several reasons in that:

  • There are clients whose work have been scheduled  months in advance and to whom commitments have been made. These clients may be their bread and butter clients and who may have their own commitments and deliveries and thus these clients may be the priority for some persons.
  • Usually  there are long lines at the Board of Inland Revenue close to the due date for filing of any document and persons work through a two step process where  a voucher is approved by a clerk  which allows the transaction to be entered into the system.
  • The next step is the acceptance of the payment and the issuance of the official receipt.
Anyway in real terms, here is a link to the Budget Statement  for 2016 and some of the points which  now appeal to me: http://finance.gov.tt/wp-content/uploads/2015/10/Budget-Speech-2016.pdf

  1. Agricultural Incentives: " Madam Speaker, consistent with our 2015 Election Manifesto promise, in pursuit of our objective for achieving food security, we will exempt from all duties and taxes, inputs into the agricultural sector, including approved chemicals, pest control, approved vehicles, approved fishing vessels and equipment. These measures will take effect from January 1, 2016."
  2. Public Services:" Madam Speaker, we are improving and facilitating the delivery of public services, commencing with the reintroduction of a 10-year validity period for passports, for adults over the age of 18, as well as removing the requirement for our citizens to complete immigration forms at all official ports of entry. This measure will take effect on January 1, 2016."
  3. Infrastructure Incentives: "Madam Speaker, the present tax incentive framework for the construction of facilities necessary for national development such as affordable housing, recreational, sporting and community facilities and multi-storey car parks has proven to be largely ineffective. We need to motivate the private sector to invest in the construction of public facilities, in particular car parks in urban areas, in order to generate employment and economic activity and to provide much needed public amenities. After consultation with all of the major stakeholders and in particular the construction industry, I propose to introduce a comprehensive and workable tax incentive framework for such facilities at the time of the mid-year review of the fiscal year 2016 Budget."
  4. Transfer Pricing "Madam Speaker, we intend to secure our revenue base. A significant leakage in our revenue stream is our inability to capture the full potential of the tax liability of foreign branches of multinational corporations operating in Trinidad and Tobago. A majority of the volume and value of global trade in goods and services is transacted through branches and subsidiaries of multinational corporations. Intragroup trade poses significant challenges to taxing authorities as the multinational corporations seek to minimise their global tax liabilities. Transfer pricing rules with the application of the principle of arms-length transactions represent modern, fair and transparent practices utilised by taxing authorities. These rules will determine the tax liabilities of branches and subsidiaries of multinational corporations thereby constraining multinational corporations to utilise tax mitigating structures, including moving transactions to lower tax jurisdictions with lower tax rates. Almost one hundred advanced, emerging and developing countries have adopted transfer pricing rules based on a model pioneered by the Organisation of Economic Cooperation and Development (OECD). We are advancing work on the introduction of transfer pricing legislation which will represent another mechanism in our thrust to optimise our tax revenue."
  5. Taxes on Receipts: "BUSINESS FUND LEVY Madam Speaker, in order to spread the burden of adjustment across the society, I propose to increase the Business Levy from 0.2 percent per quarter to 0.6 percent per quarter. This measure will increase revenue by $327.5 million and will take effect from January 1, 2016. • GREEN FUND LEVY Madam Speaker, for similar reasons, I propose to increase the rate of contribution to the Green Fund from 0.1 percent per quarter to 0.3 percent per quarter. This measure will increase revenue by $544.5 million and will take effect on January 1, 2016"
  6. Value Added Taxes: " Madam Speaker, the base and efficiency of the Value Added Tax regime have been consistently eroded since its establishment in 1990. I propose to improve efficiency in collection and to broaden the base by reviewing and adjusting exemptions and zero-rated items which are associated with nonessential or luxury items, and which are not critically important to the livelihoods and basic cost of living of our citizens. And consistent with our 2015 Election Manifesto Promise, I propose to reduce the Value Added Tax rate from 15.0 percent to 12.5 percent. The combination of widening the base, increasing collection and compliance, and reducing the rate is expected to yield approximately $4.0 billion. Further, for better administrative efficiency, I also propose to increase the threshold for Value Added Tax registration from $360,000 to $500,000. These measures will take effect on January 1, 2016."
  7. Personal Deductions from Annual Emoulment Income: "Madam Speaker, consistent with our 2015 Election Manifesto Promise, I propose to provide relief to working families by increasing the personal income tax exemption limit from $60,000 to $72,000. All taxpayers earning $6,000 a month or less will now be exempt from tax and will not be required to file tax returns. This will put additional income into the pockets of these individuals by reducing personal tax revenue by $250.0 million. This measure will take effect on January 1, 2016."
© Jennifer Bailey jennifernbailey24d@gmail.com

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