Annual Financial Statements and Tax Return

Every company in Trinidad and Tobago must maintain meticulous financial records throughout the year. These records culminate in the preparation of annual financial statements, which provide a clear picture of the company’s financial health. These statements are a crucial component of the documentation that must be lodged with the Board of Inland Revenue. Once the financial statements are completed, the company is required to file its Corporation Tax return by April 30th of the year following the tax year. This return details the company’s income, expenses, and allowable deductions, ensuring that the correct amount of tax is computed.

Corporation Tax Payments
The computation of Corporation Tax is based on a 30% rate applied to the company’s net profits—after all business expenses and allowances have been deducted. To facilitate smoother cash flow and ensure ongoing compliance, companies are required to pay 80% of their anticipated Corporation Tax liability in the same year that the tax becomes due. This payment is typically calculated using the previous year’s assessed liability, helping companies manage their tax obligations in a timely manner while providing an element of predictability in their financial planning.

Additional Tax Levies
In addition to Corporation Tax, companies face other levies that are based on their gross sales or receipts:
 

1. Green Fund Levy: This levy is imposed at a rate of 0.3% on gross sales or receipts, and it applies even if the company is exempt from paying Corporation Tax. The funds collected are generally earmarked for environmental initiatives and sustainable practices.

2. Business Levy: Companies that generate an income exceeding $360,000 after three years of trading—typically measured from the date of incorporation—are subject to a Business Levy at a rate of 0.6% on gross sales or receipts. Importantly, a company only pays the higher amount between the Business Levy and the Corporation Tax. Any amounts remitted under these categories are combined and used as a credit in the final tax computation for the income year.

VAT Registration and compliance
With the revised threshold for Value Added Tax (VAT), companies must be mindful of their income levels. If a company’s income exceeds $600,000 in any successive twelve-month period, it is required to register for VAT. This obligation ensures that companies contributing above a certain level to the economy are appropriately taxed on their transactions, aligning with broader fiscal policy objectives.

Value added tax returns are due bimonthly and on the 25th of the following month following the period end.

Payroll and Statutory Deductions
Managing payroll is another critical area of compliance. Companies must adhere to a schedule—whether weekly, fortnightly, or monthly—to process payroll accurately. As part of this process, statutory deductions must be made from employees’ salaries. A key component is the contribution to the National Insurance Scheme (NIS), where the burden is shared between the employee and the employer in a ratio of 1:2, respectively. These deductions, along with any other required statutory contributions, must be remitted to the National Insurance Board and the Board of Inland Revenue by the 15th day of the month following the closure of the payroll period.

Annual Returns and Other Regulatory Requirements
Beyond tax filings, companies must also comply with broader statutory obligations. One such requirement is the filing of annual returns with the Companies Registry. This filing must be completed within 30 days of the anniversary of the company’s incorporation. These annual returns help ensure that the registry’s records are up-to-date, reflecting any changes in the company’s structure or operations over the year.
Changes to the companies structure or appointments may prompt additional filings which falls due within 30 days of the change.