The 2022 budget statement presented by the finance minister of Trinidad and Tobago on October 4 includes several business tax measures, including incentives for digital sector start-ups, a research and development (R&D) capital allowance, and a reduced withholding tax on distributions. The measures are proposed to take effect on January 1, 2022.
To encourage more foreign investment, the budget would reduce the withholding tax rate on distributions from 10% to 8% and, in the case of distributions to parent companies, from 5% to 3%. The measure is intended to enhance competitiveness with certain other Caribbean nations, which in some cases offer 0% withholding rates.
For new companies with a digital/technology core business line, the budget proposes a 50% tax exemption on the first TTD 100,000 of chargeable income for the first year and TTD 200,000 of chargeable income in the second year.
The budget would also implement an R&D capital allowance equal to up to 40% of expenditures incurred by a company engaged in R&D. The finance minister estimated that the measure would cost TTD 28.5 million and would benefit about 1,000 companies. The measure would be reviewed after three years.
Other business tax measures in the budget include a manufacturing investment incentive, a carbon capture tax credit, and pandemic-related tax relief for small and medium companies and exporters.
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