Trinidad and Tobago payroll and tax overview.

Trinidad & Tobago is an island in the Caribbean situated just under 7 kilometres from Venezuela’s north-east coast. One of the richest countries in the region, and the third-richest in the Americas by GDP, Trinidad & Tobago has a highly developed, high-income economy. Although historically reliant on agriculture and fishing, Trinidad & Tobago’s modern economic success is based on foundations in the oil and gas industry, which accounts for around 80% of exports and 40% of GDP. Investments in fossil fuels have driven the economy since the 1970s, although ventures in oil production have recently started to transition to natural gas. Beyond fossil fuels, the economy is diversifying in other ways: important new industries include concrete, chemicals, textiles, pharmaceuticals and telecommunications. Tourism has also grown in significance: Trinidad & Tobago’s’ climate and natural beauty attract millions of visitors - a trend seen across the Caribbean, with an estimated 7% regional industry growth in 2016. After ongoing government efforts to encourage investment, Trinidad & Tobago was ranked 96 on the World Bank’s Ease of Doing Business Survey 2017.

Why Invest in Trinidad & Tobago?

Financiers interested in Trinidad & Tobago will discover a number of reasons to invest:

• Economic Profile: Trinidad & Tobago has experienced annual growth rates of around 4% over the past decade, leading to an economic surplus of around $4 billion. With an increasingly diversified economy, Trinidad & Tobago is seen as the industrial and commercial capital of the Caribbean.
• Investment Potential: The government of Trinidad & Tobago encourages investment in all sectors, aiming to stimulate non-oil-based industries, such as financial services, renewables, energy ICT and tourism. The Foreign Investment Act 1990 permits 100% foreign business ownership.
• Geographic Importance: At the heart of the Americas, Trinidad & Tobago’s location has enabled its economic success. A gateway to South America, the United States, and Canada, businesses are also benefiting from expanding trade links between South American and Pacific Rim countries.
• Skilled Workforce: The population of Trinidad & Tobago tends to be highly skilled, and educated. The country’s literacy rate is 98% and it produces over 7000 university-level graduates each year. Numerous special vocational school and training programs deliver a capable workforce to industry employers on a regular basis.
• Business Infrastructure: Businesses in Trinidad & Tobago are served by a highly developed infrastructure. Communications networks benefit from the latest fibre-optic technology, public transport services reach every corner of the island, and the country’s highways are undergoing an ambitious expansion program.

Foreign Direct Investment in Trinidad & Tobago

After over 140 years of success in oil and gas, Trinidad and Tobago has a well-established economy with gas-based production exceeding oil production.

The twin-island republic has one of the most diversified economies in the English-speaking Caribbean from energy and manufacturing to services and eco-tourism.

The Government of Trinidad and Tobago has embarked on a thrust to further diversify the economy by inviting both local and foreign investors to take advantage of available investment opportunities within the country’s non-energy sectors.

Registering a Company and Establishing an Entity in Trinidad & Tobago

A local entity must be established in order to process a payroll.

The company must -

1. Register as a legal entity with the company’s registrar
2. Register with the Board of Inland Revenue (BIR) to obtain a BIR number and a PAYE number

This process can take approximately two months.

Companies are legally obligated to register for a Board of Inland Revenue (BIR) file number to be used in payment of taxes and filing of returns.

All companies who hire employees must also obtain a Pay as you Earn (PAYE) number from the BIR. The PAYE number is used to remit taxes withheld from employees’ earnings for PAYE and Health Surcharge.

Employers are required by law to register as an employer for national Insurance within 14 days of hiring their first employee.

The registrations process can take on average 10 to 15 working days.

Business Banking in Trinidad & Tobago

Employees can be paid using domestic bank transfers (ACH) or via cheque payment.

The authorities must be paid via cheque. There is an online payment option for NIS, which is in its initial implementation stage; it is not available for public use yet.

Banks are open Monday to Thursday from 8am to 2pm and Fridays from 8am to 1pm and then 3pm to 5pm. Some mall branches are open Monday to Friday from 10am to 5pm. Royal Bank of Canada Trinidad & Tobago Limited opens in certain malls on a Saturday.

What Are the Working Days and Working Hours in Trinidad & Tobago?

The regular working week in Trinidad and Tobago is Monday to Friday 8:00am – 4:00pm.

Basic Facts about Trinidad & Tobago

The Republic of Trinidad and Tobago lies in the Caribbean Sea, and comprises two island landmasses just off the north-eastern mainland of South America. In the 15th century, the territory was a Spanish colony - having been discovered by Christopher Columbus in 1498 - but changed hands several times over the next few centuries. Trinidad and Tobago was eventually ceded to Britain in 1802, but declared its independence in 1962 and became a republic in 1976. After declaring independence, Trinidad and Tobago ventured onto the world stage and became a member of the United Nations - today, it also plays a leading role in CARICOM, the Summit of the Americas, and the Free Trade Area of the Americas. Long an important international trading destination, Trinidad and Tobago also contributes a rich heritage to the wider Caribbean, as the birthplace of steelpan, limbo, calypso and many other musical styles and traditions. With a tropical climate, Trinidad and Tobago experiences an annual rainy season, and dry season, while its scenic beauty and impressive biodiversity make it an increasingly popular tourist destination to visitors from across the world.

General Information:

Population: 1.369 million (World Bank, 2017)

Capital: Port of Spain

Main Exports: Petroleum and petroleum products, natural gas, chemicals

Main Language: English

Monetary Unit: 1 Trinidad and Tobago dollar = 100 cents

Internet domain: .tt

International Dialling Code: +1868

The tax year in Trinidad and Tobago runs from January 1st to December 31st.

Income Tax in Trinidad & Tobago

The Pay-As-You-Earn System (PAYE) is applicable in Trinidad and Tobago and was introduced in 1958.

The employer has the responsibility to deduct taxes from the emoluments (salary, wages, etc.) of their employees in accordance with the PAYE regulations each time a payroll is processed and paid. The employer should ensure that they receive a TD1 Form from the employee to accurately determine the amount of tax to be deducted.

An individual under 60 years, who is non-resident in Trinidad & Tobago and is in receipt of emolument income arising in Trinidad & Tobago, is subject to tax under the PAYE system.

The total amount of income earned in Trinidad and Tobago is taxable whether or not it is received here.

All taxpayers are entitled to a Personal Allowance of TT$72,000.00 per year (as of January 1st, 2016). This means that you do not pay income tax on your first TT$72,000.00 of income, so you pay no income tax at all if you earn less than this amount. The excess is taxed at a rate of 25% if the chargeable amount is below $1M annually. As of January 1 2017, chargeable income above $1M attracts a PAYE tax rate of 30%.

PAYE must be paid by the 15th of the following month. If the 15th falls on a weekend or holiday then taxes are due on the first working day thereafter.

You can reduce the amount of tax to pay by declaring tax-deductible expenses. There are certain tax allowances and credits that may apply.

If taxes are not paid on time then a penalty of 25% of the tax payable will apply and interest at a rate of 20% on the combined tax and penalty.

More information can be found here.

Health Surcharge in Trinidad & Tobago

Health Surcharge is a tax, which is charged on employment.

The Health Surcharge is charged and payable;

• By every employed person who pays or who is liable to pay contributions under the National Insurance Act
• By individuals other than self-employed persons who are liable to furnish a return of income

Those exempt from payment of the Health Surcharge are those;

• Under the age of 16
• 60 years and over

Health Surcharge is payable at two rates as follows;

• Where the weekly income is more than TT$ 109 the rate is TT$8.25
• Where the weekly income is less than TT$ 109 the rate is TT$4.80 per week

For employed persons, the employer must make this payment after deducting the correct amount from the salaries of their employees at each pay period. This amount is payable to the board on or before the 15th day of the month following the month in which the deduction was made. Health Surcharge is payable in cash or cheque and must be accompanied with the PAYE/Health Surcharge Monthly Return.

For individuals other than employed persons, the Health Surcharge shall be paid to the board on or before 31st March, 30th June, 30th September and 31st December in each year of income.

An employer who fails or neglects to deduct health surcharge and/or remit to the board is guilty of an offence. In addition to the amount not deducted and/or remitted is liable to a penalty of 25% of such amount and interest at the rate of 20% on both the outstanding amount and penalty from due date of payment.

Where a taxpayer (including an employee) has outstanding taxes and refuses or neglects to make payments to liquidate this arrears, the Board of Inland Revenue can enforce collection using various methods empowered by the Income Tax Act. One of these methods is the issuing of a Garnishee Order. A copy of the Garnishee Order is also sent to the taxpayer.

Section 112 of the Income Tax Act enables the board to instruct the employer via a Garnishe Order to deduct arrears of taxes from emolument of the delinquent employee for a specific period.

These arrears are deducted in addition to any tax which is due under the PAYE System. A deduction under a Garnishee Order must be remitted to the Board of Inland Revenue at the end of the month in which the deduction was made.

This payment must not be included in the monthly PAYE deductions. A separate PAYE Remittance Form must be used.

For National Insurance purposes, earnings include more than the basic wage or salary. Earnings also include -

• Acting allowances
• Overtime payments
• Stipends
• Housing allowance
• Cost of living allowance
• Commission on sales
• Production or efficiency bonuses
• Danger or dirt money
• Payments for standby duty
• Allowances for dependents

The payment of National Insurance contributions is compulsory for employees and unpaid apprentices who are registered or eligible to be registered under the system.

Contributions are -

• Weekly payments fixed in relation to the wages/salaries of the insured person
• Structured into 16 earnings classes

With effect from September 5th 2016, contribution rates have been increased to 13.2% of insurable earnings. With effect from September 5th 2016, the income ceiling of $12,000.00 per month was increased to $13,600.00 per month in order to maintain the real value of insured income.

Payment of the contribution is shared between the employer and employee according to the rate set out in the act. The employer is statutorily obligated to deduct the employee's share no later than on the date of payment of salaries/wages.

Notwithstanding the cost sharing, the employer is responsible for remitting the total Contribution to the NIBTT.

Any employer who fails to pay contributions, or deducts part of the employer's contribution from the employee' s wages, or contravenes any other requirement of the law, commits an offence and is liable to be prosecuted and fined.

In addition, the employer is obligated to maintain pay records for each of his employees including the unpaid apprentice and domestic. Contravention of this requirement attracts a fine of $500.00 and 3 months imprisonment upon summary conviction.

If an employer has an employee who is in insurable employment and that employee is required to work abroad, then contributions must be paid for the employee at the normal rates during the period that he/she is working abroad providing that:

1. The employee is ordinarily resident in Trinidad and Tobago; and
2. The employer maintains a place of business here

The following are instances in which no deductions are made from the employees’ wages/salaries and in which the employer only pays a contribution -

• Employees under 16 and over 65 years
• Employees aged 60 years to under 65 years who have retired, and have started to receive their Retirement Benefit and subsequently returned to work

Payments are due on the 15th of the month following the month for which salary/wages were paid. Where contributions remain unpaid after the 15th day of the following month, a 25% penalty will be applied from the 16th of the next month, followed by interest of 15% on the total amount outstanding from the following month.

More information regarding social security and the contribution rates can be found here.

New Employees in Trinidad & Tobago

New employees must be registered with the National Insurance Board (NIB) if they were not previously registered. The employer needs to complete this registration within the first 7 days of employment.

Employees should make sure that they are also registered with the Board of Inland Revenue (BIR). There is no mandatory time period to apply for a BIR file number but it is advised that the employee does the registration when they become an employee for the first time.

New employees should have the form TD1 from the Board of Inland Revenue at the beginning of employment.

The above applies to both expat and local employees.

Leavers in Trinidad & Tobago

In Trinidad and Tobago, there are no legislative specifications regarding the time scale for an employee’s final payment.

A Termination Certificate must be submitted to the NIB. If the employee is being granted a severance (redundancy) payment then notification and approval has to be obtained from the BIR for the payment to be exempt from PAYE and NIS.

Payroll in Trinidad & Tobago

There is a legal requirement to provide a payslip, which must show the period earnings, the amount of taxes deducted and the National Insurance Board needs the NIS number to be shown on the payslip.

There are however no further legal specifications as to the format of the payslip, an online payslip would be acceptable.

Payroll reports should be kept for 10 years.