I've been reading: "Puerto Rico, The Puerto Rico Section 936 Funds Order, 1990 "

Over the last few days in an attempt to bolster my knowledge on taxes, I was browsing  some of the treaties and Tax Information Sharing Agreements to which  Trinidad and Tobago is a party. Being one of those who start to read a book from the back to see how it ends before I start reading the book, I came across "The Puerto Rico Section 936 Funds Order, 1990 and  the Tax Information (Declared Agreement) Order 1990 between the United States of America and Trinidad and Tobago. The Tax Information Order came into effect on 9th February,1990 was called The Tax Information Exchange Agreement Act, 1989 in Trinidad and Tobago.
However one of the main points of the Puerto Rico Section 936 Funds Order is as follows:
 #2 "Withholding tax applicable to income derived from Puerto Rico Section 936 Fund investment is reduced from 30 percent to .001 per cent." While I have not checked to see if this agreement was modified or if it was "retracted," if that is what is done to agreements which may not appeal to the public any longer, if I held funds in Puerto Rico under the "Section 936 Funds Order"  or otherwise, unless there was a restriction as to the use of funds internally, I would consider doing the following:

1. Ascertain where Puerto Rico, being defined as a territory of the USA, falls under "Avoidance of Double Taxation Treaties between the USA and other countries.  See the  link  to  and the extract from to the following article  which highlights the concepts re Section 936 Investment Order: "Puerto Rico is in worse shape than you think — and US bankers aren't helping" http://www.sheknows.com/living/articles/1119737/john-oliver-on-puerto-rico "Because Puerto Rico is a territory and not a state, it remains "foreign to the United States in a domestic sense." Oliver didn’t have any interest in settling the contentious topic of Puerto Rico statehood, but focused instead on how problematic it is that many state laws have loopholes on the island. ... One law that created an abundance of wealth in Puerto Rico was Section 936, a tax break that was given to businesses to encourage them to set up shop in Puerto Rico instead of moving overseas."
2. Once the definition of the tax status of Puerto Rico is clarified (in light of "Section 936 Funds Order"), it would allow:
• Individuals and countries to explore which set of withholding tax rates they are to use when complying with the treaties and the movement of funds into and out of Puerto Rico. This would allow them to remain tax compliant.
• Investment choices such as the rental of land, property in Puerto Rico  as these are all business concepts which involve withholding tax and which impact on the choices which an investor can make.
3. If there are no restrictions and the "regular rates of withholding tax" are being adhered to, then being a small investor and being in support of persons who live and reside in Puerto Rico, I would:
• Rent the land surrounding a person's home and plant  green bananas, plantains, and fruit trees. While this would not be done on a large scale, I would export the short term and longer term crops to near by islands. If ten such properties in each area are being rented, while persons look at the returns of such a project and develop the skills needed to make this type of investment successful, this would benefit the island as Puerto Rico is located in the middle of a number of small islands and there are boats moving up and down these islands which would facilitate the movement of the goods.. Yes agriculture is labor intensive, however if I do not sell it, I can eat it, so plant what you would like to eat.... In this day and age, I am not looking at major investments as the country, being located in a tropical area in the midst of climate change, my crops would be exposed to weather forces which are relatively unpredictable. Thus I would need to manage my risks...
• I may not have a lot of competition with this type of project in the Puerto Rico location as unlike the Cayman Islands where  because of my geographical location I am facing competition from the agriculture rich Cuba and Jamaica,
4. Consider eco tourism, which may be impacted upon by withholding taxes. However in light of the recent Paris climate agreement it may be easier to rethink our residential choices and let certain geographical areas rest, while we look at the impact of achieving milestones as identified in the  following extract " The US, for example, has pledged to reduce emissions 26% below 2005 levels by 2015; the European Union is aiming for 45% below 2005 levels by 2030. China hopes to reach the same target by 2020. 
   It also includes provisions designed to protect the global poor, who are almost certainly going to bear the brunt of the warming sparked by the rapid industrialization of other, richer countries.
   This includes allocating funding from wealthy states to developing ones as well as committees tasked with exploring solutions to issues like the inevitability of climate refugees.( See the following link:   http://www.businessinsider.com/global-warming-paris-climate-change-accords-earth-day-2016-4?utm_source=feedburner&utm_medium=referral. 
5. The story which is accessed via the link represents one of the best short term options which can impact positively on  climate/ temperature control in streets and in other areas, developing community spirit  and inculcating a sense of social responsiblility, corporate or otherwise. 

   "Food Street: Feeding off the kerbside and creating close communities

    Disgruntled over the price of a lime, two Queensland locals have started Australia's first integrated, edible streetscape in a bid to live a simple organic lifestyle of community and fresh food.
   Urban Food Street began in 2009 in the leafy green Sunshine Coast suburb of Buderim, and now acts as a blueprint for the nation to give purpose to the great Australian nature strip.
   "It started with us deciding to plant limes, and then it evolved into this notion that if we put the limes out on the nature strip people could pick a lime for whatever they need it for," graduate architect and one of the masterminds behind Urban Food Street, Caroline Kemp said."

http://www.abc.net.au/news/2016-04-22/food-street-feeding-off-the-kerbside-creates-close-community/7343456

© Jennifer Bailey jennifernbailey24d@gmail.com

Financial Planning Tip - April 9,2016 -001 Tax - Residency 101

April 2016 would be the month, all things being equal when you can pay the final 20% on your income tax for the year of Income 2015. In keeping with the thinking of having my taxes as materially correct as possible, I will review concepts which impact on Income and the related tax. Here is my assessment #1 which is based on residency. I am using the Canadian model because of the following reasons:

1. Trinidad and Tobago has a treaty with Canada which was set out to reduce the occurrence of double taxation. See the link which would allow you to view a copy of the treaty. http://www.ird.gov.tt/double_taxation_treaties
2. The concept of residency and income impacts upon a person in a basic way on several areas:

•  The rate of tax on which you are assessed will differ because there are different rates of tax for Income Tax and for withholding Tax
• There is a (TTDollar sixty thousand) TT$60,000 personal allowance which is available to residents of Trinidad and Tobago. This allowance reduces the Income Tax which is liable on the Income earned in Trinidad and Tobago. Most persons would have elected to have  Pay as you earn (PAYE) deducted from their income as employees. This PAYE is remitted to the Board of Inland Revenue on your behalf, monthly. At the end of the calendar year, the information is provided to you in an annual TD4 certificate,  and a copy is provided to the Board of Inland Revenue. 

However in keeping with the concept of reviewing income, I will leave you with an extract from the Certificate in Financial Planning Education Programme which covers residency and income source.
According to Jamison Aldcorn, author of Contemporary Practices in Financial Planning (CCH/Advocis Education Programm) "Canada imposes tax on the twin basis of residency and income source. For example, Canada taxes its residents on their world wide income. It taxes non - residents on income earned in Canada"
The question therefore arises "Where do I fit in relation to income which is generated in Canada? Think: dividend income from companies which are traded on the T&T Stock Exchange whose parent company is registered in Canada; bank accounts which hold Canadian dollars, rental income from properties located in Canada.... Was tax deducted at source on the funds (income) earned over the year?
© Jennifer Bailey jennifernbailey24d@gmail.com

Divine Mercy Sunday in the Jubilee Year of Mercy -2016 April, 3rd

Visited the city of San Fernando via Claxton Bay!  In Claxton Bay, the road is located close to the sea shore, so that at several points along the road, one can look out and see the waves touching the shore gently as the sun rises or sets in the background. 

San Fernando, on the other hand is a city of hills, slopes and beautiful views of the sea in the distance. It is also a city of renovations in progress as seen in the Carnegie Free Library and other buildings which show restoration in progress.

There are businesses which attract cash via attractive prices and which compete with one another because of the products and markets which they serve, such as Wendy's, Royal Castle and KFC. 

These three fast food restaurants have been placed in close proximity to one another either by accident or because of the choice or preference of floor space or their proximity to Library Corner, the taxi stands and the nearby supermarket. After all, a Library will serve so many patrons, a supermarket so many and other businesses so many... 

Given that Wendy's entry into the Trinidad and Tobago fast food market was fairly recent, while Royal Castle is a local brand, having been founded in 1968 according to Wikipedia, it is possible that in San Fernando, that branch of Royal Castle was opened earlier than the other restaurants, hence their location was deliberately chosen.  https://en.wikipedia.org/wiki/Royal_Castle_(restaurant)

With Library Corner being the centre to taxi stands  which serve various outlying areas such as Fyzabad, Marabella, there may be a need to soften and or blend the cultures and the peoples who inhabit the space to allow for more than survival and perhaps that is what was intended with the placement of these three fast food outlets!
© Jennifer Bailey jennifernbailey24d@gmail.com

I've been reading: Extracts from the Hong Kong Budget 2016-2017

Over the last few days, I came across a post on Linked In which was submitted by EY which dealt with extracts from  the Hong Kong Budget for 2016-2017. http://www.ey.com/CN/en/Services/Tax/Country-Tax-Advisory/EY-hong-kong-2015-16-budget-insights  Now I am not too familiar with the activities of the Far East, partly due to language barriers (MPGM), lack of knowledge of many areas of operation of those countries, having given up my search of companies listed on the Tokyo (Japanese) Stock Exchange some time ago. My recent areas of learning as an adult were based on interaction with persons who worked for a Chinese company (who provided a bit of insight into their reporting such as the difference in time zones in which they operated as compared to us and to their parent company or from someone who worked with a company where travel to different parts of the world allowed for losing days or gaining days depending on  the location to which they were travelling.  However on researching some of my questions, here is what I learnt:

1. The Hong Kong Fiscal year starts April 1 and ends on March 31, thus their  financial year may precede that of many western countries. This may impact either favourably or negatively on their future and that of other countries as their year starts when other countries are either in the middle of, or  are coming to the end of their financial year, hence the value of reserves, foreign exchange rates and so forth may need to include this type of information when discussing or reviewing them so as to allow for the  information to be relevant or reliable. See the following links for a comparison on the fiscal years of countries. https://en.wikipedia.org/wiki/Fiscal_year
2. According to the opening statement in Forbes' article "Dealing With The China Slowdown: Five Takeaways From The Hong Kong Budget"  Hong Kong is heading into election year and this may have impacted upon the budget which was presented. See the following link for more information on this: http://www.forbes.com/sites/alreyes/2016/02/24/monkey-year-gifts-five-takeaways-from-the-hong-kong-budget/#74a3957c1921. While I am still undecided on that opinion, I especially like Point # 4 on Demographic preparedness. This point  appears to deal with the need to have a different type of health care for a population where there is a large number of older persons who are living longer as compared to a population where there is a growth in births, which can create a demand for pediatrics and other types of support. See the extract on that concept! " 4 Demographic preparedness: Like China, Hong Kong must also deal with ageing demographics, though unlike the mainland, Hong Kong is a wealthy society that can cope with its growing ranks of elderly and spend the money needed to care for senior citizens. Medical and health expenditure in the 2016-17 fiscal year will account for 16.5% of total expenditure, more than 90% the share more than a decade ago. The government has set aside HK$200 billion ($25.7 billion) for a 10-year hospital development program. Hong Kong must be doing something right in the healthcare sector: Life expectancy for men (81 years) and women (87 years) is among the longest in the world. Since 2014, in response to its demographic challenges, the Hong Kong government has been moving forward to develop a comprehensive Population Policy. But the work done so far has been described by one legislator as “thin”."
3.  According to South China Morning Post, there may be a need to find ways to improve the tax system. "Financial Secretary John Tsang Chun-wah admitted on Sunday that the government had to think of ways to improve the tax system as he acknowledged that Hong Kong’s current tax base was rather “narrow”.
   Writing on his online blog, Tsang disclosed that only 40 per cent of the working population in the city paid salaries tax, with 60 per cent of the revenue coming from just 5 per cent of taxpayers." See the following link:  http://www.scmp.com/news/hong-kong/economy/article/1918429/   For information on the  tax profile of Hong Kong as of Nov, 2013  see the Country Tax profile from KPMG, which covers an array of topics, one of which is on the countries with whom Hong Kong has "Income Tax Treaties for the Avoidance of Double Taxation". See the following link for additional information.  http://www.kpmg.com/global/en/services/tax/regional-tax-centers/asia-pacific-tax-centre/documents/countryprofiles/hongkong.pdf

In conclusion, one thing which can put some of  the above points in perspective going forward, is that KPMG creates a weekly tax update which provides insight on the  possible tax changes of several countries which occurred over a week. This will provide updates over the next year which will allow us to track comparability of financial sysytems, growth in the various countries and changes which may help us all.  So perhaps writing to the various tax providers for opinions on the various transactions which one may enter into, in a country whiich may be foreign to you and I, may be a good start  for all of us!! See the following link for access to one of the providers: https://home.kpmg.com/xx/en/home/insights/2016/02/tnf-kpmg-week-in-tax-22-26-february-2016.html. P.S. I have included the link to another tax provider at the start of the post. © Jennifer Bailey jennifernbailey24d@gmail.com

Learning and Developing

In my early career, some of the companies  for which we  did work, utilised as part of their system of documentation a combination of Software, printed reports and manually prepared registers. This was the start of a love affair for me as  I started learning all about the types of errors which can be made in accounting (when I was in school) such as:

Errors Which do not Affect the Trial Balance

Accounting errors that do not affect the trial balance fall into one of six categories as follows:

1. Error of Principle in Accounting
2. Errors of Omission in Accounting
3. Error of Commission
4. Compensating Error
5. Error of Original Entry
6. Complete Reversal of Entries

(See the link for more information on this concept if you are interested. http://www.double-entry-bookkeeping.com/bookkeeping-basics/accounting-errors/.)

Going forward in  time I learnt about using spreadsheets to capture information, to use them as a replacement for the 7 column page or the 14 column page  to which I had been accustomed using in work to capture information on tests. These sheets were specially designed to create conformity of work papers in one industry  which was located in many countries which had a common bond in thinking and knowledge.  There was to be conformity of design to promote comprehension of concepts, collaboration as to best practice and  growth and development of persons. This was the essence on which the spreadsheets were built. Yes, there was knowledge which was specialized, however due to learning and a supportive background which was in place,  there was the potential  to work with clients whose area of operation allowed those companies to  operate either vertically or horizontally to support other companies'  operating activity.

Then one day my learning and use of spreadsheets expanded as I was exposed to the use of spreadsheets to capture another type of information, which could be used to create multiple reports on data,  without creating a single graph, or bar chart. Yes, Excel has that capability also. Since then, most of the knowledge which I have gained over the years on data, the storage of data, has fed into the possible uses of spreadsheets and what can be gained from their use. While my knowledge is limited in lots of ways as there are many areas of learning which I have not pursued, such as programming which can provide knowledge of running queries on data; or learning to design the style of screens or how to source information within a programme to generate  reports, I can bypass those steps in  the design of software and capture the information well enough to allow for comparative purposes which suits me right about now!

© Jennifer Bailey jennifernbailey24d@gmail.com

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

Republic Day 2015

In many parishes in Trinidad and Tobago there is a  fair amount of respect for the country in which the parish operates, so much so that when masses are held either on a public holiday or close to one, the national anthem is sung during the mass. This tradition may have arisen from having so many priests function as school teachers during their careers so that the practices of the school come through into the life of the parish. Whatever the reason for or origin of  the practice, this morning on Republic day, it felt good to sing the national anthem.  I had  started the day with a bit of hangover from the day before, after celebrating the feast day of St. Pio so much so that I wanted to be in a state of grace and continue the year in that state. Having the anthem sung during the mass brought about a bit of remembrance of Dr. Eric Williams ( dec'd),  our country's first prime minister who like His Grace Archbishop Anthony Pantin ( dec'd) was another first for me. So much so that I was extremely mellow during mass.  Also being close to the Finbar Ryan Geriatric Home brought about a sense of reverence for both the Archbishop who held the post before Archbishop Pantin as well as his Auxilliary Bishop who laid the cornerstone at St. Finbars RC church'.  While they may have died before I was born, there are so many positive memories of them in persons who I encounter, that I am sorry that I may have overlooked them and their contribution to our society.  And then life returned to normal as I visited the Chapel of St Catherine of Sienna for a brief stay.... Here's to hoping that:

• A soup kitchen is opened in the area as there are a fair number of older persons who reside within close proximity to the area and this service will be of benefit to them. That we ask for contributions to maintain the kitchen, so as to provide employment to persons in the community and build a life "style" in the parish.
• We start a meditation area in that location and  in the surrounding areas as this will allow for the maintenance of mellow feelings. If meditation sessions are scheduled at regular intervals, there will be a flow of persons to the areas which will bring about a boost in foot traffic and in mellow feelings!
• We start yoga sessions so that persons can learn mindfulness and all of the other benefits associated with yoga!
• We start a mediation area to allow for the learning of new skills for everyone. This too will enhance the skills of both the receiver and the giver!
• We start saying the national pledge to bring about a sense of continuity of who we were in school into our adulthood.  See the National Pledge below!
• We document as much as possible on the lives of our priests, so that we keep information that will be soon gone in a state of readiness for the next generation. 

Here is a copy of the pledge, which you can say:
..


https://www.google.tt/search?q=The+national+pledge+of+trinidad+and+tobago&rlz=1C1TSNO_enTT512TT512&es_sm=93&tbm=isch&imgil=0M1uA-jYXLQLoM%253A%253BiKIie4Kbm6ey5M%253Bhttps%25253A%25252F%25252Fwww.pinterest.com%25252Fcaraibconnexion%25252Ftrinidad-tobago%25252F&source=iu&pf=m&fir=0M1uA-jYXLQLoM%253A%252CiKIie4Kbm6ey5M%252C_&biw=1600&bih=799&usg=__ikdrkqtPp2sGRGGsvbEzgZp_-0c%3D&ved=0CDkQyjdqFQoTCNvdlvXHkMgCFYc8HgodVZML2A&ei=_GMEVtvvBof5eNWmrsAN#imgrc=0M1uA-jYXLQLoM%3A&usg=__ikdrkqtPp2sGRGGsvbEzgZp_-0c%3D

© Jennifer Bailey jennifernbailey24d@gmail.com