VISHNU D.K. MUSAI & CO.

BUDGET 2003

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CHANGES IN TAXATION MEASURES
 

Reduction in Individual Income Tax

The lower band (up to $50,000 chargeable income) has been reduced from 28% to 25% and the upper band (greater than $50,000 chargeable income) from 35% to 30% effective January 1,2003.

Reduction in Corporation Tax

The Corporation Tax rate will be reduced from 35% to 30% effective January 1, 2003. This reduction does not apply to the Petrochemical and related sectors.

3.   Removal of Export Allowance

In compliance with the dictates of the World Trade Organisation, the Export Allowance under the Corporation Tax Act has been removed effective January 1, 2003.

4.   Removal of Customs duty and VAT from Pharmaceuticals

The removal of Customs duty and VAT from medication takes place with immediate effect.

5.   VAT on Services provided to Foreign Recipients

The VAT Act is to be amended so that only services that are physically performed outside Trinidad & Tobago and

o        are supplied to a non-resident recipient

o        who is outside  Trinidad & Tobago when the service is performed can be classified as zero-rated.

Where services are performed

o        in connection with land or any land improvement in              Trinidad & Tobago

o        to movable personal property situated in Trinidad &         Tobago at the time services are performed

VAT will be charged at 15% effective January 1, 2003.

6.   Increase of Motor Vehicle Tax on Roll on-Roll off vehicles

The existing Tax Bands have been reduced from six to one. All fully assembled foreign vehicles regardless of age will be subject to 75% of the Motor Vehicle Tax payable on the registration of a new vehicle, effective January 1, 2003.

7.   Increases in taxes payable on Gambling Tables and Other Devices

A 200% increase in Gaming Taxes payable on the gambling activity carried on at Private Member Clubs, with immediate effect.

 

 ALLOWANCES

Credit Union tax deduction

Individuals will be granted a deduction of up to $10,000 per annum in respect of shares bought in a Society registered under the Cooperatives Society Act, effective January 1, 2003.

9.   Housing Allowance

A Housing Allowance of $10,000 per year for five years has been granted to first time homeowners who purchase their own homes on or after January 1, 2003.

10. Expenditure on Sports and Culture

o        An allowance of 150% of the actual expenses incurred up to a maximum of $450,000 in respect of companies promoting/sponsoring Sporting Activities and Sportsmen who are nationals of Trinidad & Tobago is to be granted effective from January 1, 2003.

o        Companies involved in sponsoring local Cultural, Educational and Entertainment Productions that broadcast to local, regional and international audiences will be given an Allowance of 150% of the actual expenses incurred up to a maximum of $450,000.

o        Production Companies that produce local Cultural, Educational and Entertainment Productions that broadcast to local, regional and international audiences will be given an Allowance of 150% of the actual expenses incurred up to a maximum of $450,000.

CHANGES IN THE OPERATIONS OF THE BOARD OF INLAND REVENUE 

         Time period for VAT Audit

The time limit for the BIR to raise a VAT Audit is six years after the end of the Tax Period. This Period has been extended to: within six years of the end of the Tax Period to which the assessment relates, or within three years of the date of filing of the Return, whichever is the later.

 

This measure will allow the BIR more time to assess those companies that file VAT Returns just prior to the end of the six year assessment period and is effective January 1, 2003.

Insurance Industries and Financial Institutions

 

Effective January 1, 2003 power will be delegated to the BIR to

o        Refund or remit Insurance Premium Tax

o        Waive or reduce interest on outstanding payments of Insurance Premium Taxes/Penalties

o        Audit Insurance Companies and Financial Institutions

 

These measures should speed up any delay in handling these items

         Health Surcharge

o        Penalty payable for the late remittance of Health Surcharge has been increased to be in line with that of PAYE to 100%.

o        Interest payable for late payment is similarly increased from 15% to 20%. 

         Refund of Pension Contributions and Deferred Annuities

o        Taxes on Refunds of Pension Contributions and Deferred Annuities are to be due on the 15th day of the month following which the tax was deducted.

o        In addition Penalty and Interest are imposed at the rate of 100% and 200% respectively. 

         Filing of Income Tax Returns

Currently an Individual who is only in receipt of emolument Income is not obligated to file an Income Tax Return. Effective January 1, 2003, the BIR can require such persons to file tax returns.

         The BIR will be empowered to

o        Waive or reduce the interest payable for the late remittance of PAYE (as well as penalties payable as currently exists)

o        Waive or reduce the interest payable for the late remittance of Health Surcharge

o        Waive or reduce the penalty for late filing of returns for Individuals and Companies

o        Waive or reduce interest accruing in respect of outstanding balances on Installments of Tax

THE GREEN FUND

This fund has been the subject of much criticism. It is currently being reviewed and one proposal under consideration is the harmonization of the Green Fund and the Environmental Trust Fund so that both are managed by the Trustees of the Environmental Trust Fund.

11. Guest House Allowance

A Capital Allowance of 100% of the cost of Building Materials in respect of approved Capital Expenditure incurred by the owner or operator in the conversion of Existing Homes to Guest Homes.