Reforms support enforcement of Trinidad and Tobago property taxes

Upon assuming office in 2015, the administration of Prime Minister Keith Rowley announced its intention to reintroduce legislation to put into effect the collection of property tax in Trinidad and Tobago. This would build upon steps taken by the previous administration to reformulate the mechanism utilised to calculate and collect property taxes in the country. In preparation for doing so, the existing Land and Building Taxes Act of 1920 was repealed and replaced by the Property Tax Act of 2009.

Following the general election of 2010, the incoming government, in keeping with its election promise, signalled its intention to suspend the collection of property taxes and review implementation practices. Acknowledging that the collection of taxes relating to property was critical to state revenues, plans were announced in the FY 2014 budget speech to reintroduce the tax on a phased basis in a way that was designed to be less of a burden on the population. However, this was never fully implemented and, as a result, property owners have enjoyed a nine-year moratorium on the payment of property taxes. Local media has reported that the state has lost approximately TT$1.3bn ($192.8m) due to the non-collection of this tax.

Tax Rates

The Property Tax Act of 2009 stipulated that the Board of Inland Revenue would be responsible for preparing an assessment roll, which would record all of the lands and properties that are liable to tax. Based on the revised provisions, the rates payable would be 3% on the annual taxable value, or the gross annual rental value for residential properties; 5% for commercial properties; 6% for industrial properties; 3% for industrial properties without a building; and 1% for agricultural holdings.

Property owners would be required to complete a valuation return form (VRF) to calculate a property’s rental value, in accordance with the Valuation of Land Act. This form would then be submitted, along with the necessary supporting documents, to the Valuation Division of the Ministry of Finance. Upon receipt of the completed VRF, the commissioner of valuation may notify property owners of field visits to assess and verify the information that was submitted in the forms. Property owners would be charged 10% interest on property taxes that are unpaid by March 15 of each year.

Recent Progress

A bill of amendments to the Property Tax Act of 2009 was proposed in early 2018, which sought to address certain deficiencies. The amendment inserted a new section on how valuations would be conducted for townhouses, condominiums and multiple-owner commercial units. Additionally, charities, which are currently exempted from corporation tax under the Corporation Tax Act, would also be exempt from the application of taxes on properties used for approved charitable purposes. This exemption would also be applicable to schools, including occupied tertiary institutes, as well as land belonging to the state and occupied by public authorities. Importantly, deferral of payment would be allowed on the grounds of hardship, and such deferrals could be rolled over if the conditions of the applicant remain unchanged.

Criticism

At a time when the economic diversification is critical to easing the dependence on oil and gas, many in the private sector view the proposed implementation of the tax as a burden that could negatively affect business activity, particularly in the manufacturing sector, as the calculation of the tax would take into consideration plants and machinery as well. In an environment where other taxes on businesses have been hiked in recent times, many manufacturers claim that the proposed tax would have an adverse effect on their operations, and could potentially limit growth. Some have proposed that an exemption similar to that for the energy sector should be applied to them (see Industry chapter).