Recovery Committee to Govt: Review taxation of businesses in 2020

Businesses have been hit hard over the past few months owing to the country-wide covid19 lockdown but the post-covid19 Roadmap for Recovery Committee has outlined numerous initiatives to provide relief.

In its final first report, the first suggestion was for government to accelerate VAT payment refunds and other outstanding payments to the business community. The report stressed, “This must allow a revisiting of potential tax liabilities for 2020 given the likelihood of potential losses in 2020.”

Other initiatives from the report included a further reduction of the Reserve Requirement and the Repo Rate in order to lower commercial lending rates; additional availability of US dollars for local non-energy manufacturers and the insurance sector; the provision of a moratorium on principal payments on liquidity support Government loans for at least 12 months; increased facility for the Credit Union Sector through NEDCO and other approved non-governmental institutions to enhance execution capabilities in providing immediate financial assistance to under-banked stakeholders from $100 million to $200 million; and the introduction of utility payment plans for SMEs, where necessary.

In a recent Newsday article, CEO of the TT Chamber of Industry and Commerce, Gabriel Faria, said government was placing a stranglehold on businesses by insisting they pay taxes based on last year's profits even as many are facing losses because of the covid19 pandemic.

He said the Chamber had tried to discuss tax waivers or allowing taxes to be paid based on 2020 profit estimates, but the Ministry of Finance and the Board of Inland Revenue did not engage with the organisation.

During a virtual media conference in April however, Finance Minister Colm Imbert said income from taxes would help fund the government’s social programmes to offset the economic impact of covid19.

“We have to give people help. Where is money supposed to come from? So, if we were to say yes, we will defer tax collection, (that) we will allow people not to pay taxes, where is the money going to come from to produce the salary relief grant and other assistance? We can’t defer. It’s unfortunate so that’s just how it is. We need every single cent.”

In a Twitter post on Friday Imbert said, so far, his ministry paid $2.36 billion to businesses and individuals to provide relief during the covid19 period. He said it paid $1.33 billion in cash in tax refunds, $1 billion in VAT bonds, and salary relief grants to 24,750 people as of Thursday. In a June 11 post he said, at the time, the ministry had paid 22,000 salary relief grants, 70 per cent of eligible applicants, valued at $32 million.

In another post on Friday he added that, based on a June 2020 review, the Caribbean Information and Credit Rating Services Ltd gave TT its second highest rating of AA+.