Gopee-Scoon: Government to announce countrywide special economic zones

TRADE and Industry Minister Paula Gopee-Scoon has said Cabinet has designated several spaces as special economic zones (SEZ) under the Special Economic Zones Act.

She said these will be announced during the budget presentation on September 30.

Speaking at the TT Chamber of Industry and Commerce forum on private-sector opportunities in the special economic zones, Gopee-Scoon said this is part of government’s implementation of the act to ensure the programme gets off to a quick start.

“These areas will be spread throughout TT to encourage new investment and create jobs that would not have otherwise been available. The jobs created will not only exist within the zones, but will trickle down to the local communities and help create new opportunities for small business owners and aspiring entrepreneurs.”

The minister said the act was fully proclaimed on July 5, 2024, and robust regulations, a new incentive framework and a fully operational SEZ Authority have been created.

“Our intention is that the incentive framework be consistent with international best practice and enhance the attractiveness of the business climate of TT, while also protecting the domestic revenue base to the greatest extent possible.”

She called for collaboration between the private sector and the government to make the SEZs successful.

“Special Economic Zones are a popular policy tool by governments to boost industrialisation and attract investment across the globe; however, their success and impact are not a fait accompli. For SEZs to be successful, it is critical that the process be driven by constant collaboration among all stakeholders, just as we are doing today.”

Gopee-Scoon said the SEZ incentives will cover all three types of SEZ entities. These are SEZ operators, which act as landlords of special economic zones; SEZ enterprises, which do business in spaces managed by operators; and Single Zone enterprises, which are large stand-alone operations.

The incentives include 15 per cent corporation tax, a generous portfolio of concessions and exemptions on import duties and value added tax, as well as other taxes such as property tax and stamp duty.

Gopee-Scoon emphasised that not every business in TT will be eligible to participate in the SEZ regime, as it is meant to incentivise new investment activity in producing new goods and services, as opposed to the standard investments to upgrade plant and machinery associated with existing businesses.

She said the ministry was well aware of the need of the need to reduce red tape involved in doing business. It was working with the Customs and Excise Division, the Inland Revenue Division, Town and Country Planning Division, and the Environmental Management Authority, among others, to ensure SEZs would be models of efficiency and productivity that could be replicated throughout TT’s economy.

The event was hosted by the chamber in collaboration with Ernst & Young (EY).

EY Caribbean executive chairman Wade George said the act was the most comprehensive pro-private-sector legislation he had ever seen in TT.

In a presentation, he said the establishment of the SEZ was part of TT’s strategy for moving off the European Union blacklist.

He said consequences of TT's remaining on the blacklist included reputational damage, where TT would seem less legitimate and prone to money laundering, tax evasion and other financial crimes; the termination of double tax agreement, which has already happened, as Norway and Denmark have terminated their double tax agreement with TT; penal tax consequences in terms of increased audits, increased withholding taxes, and non-deductibility of expenses; loss of investment, where investors were deterred and foreign and direct investment decreased; limited funding from across the EU; difficulty in financial transactions, as banks and financial institutions may be reluctant to process transactions involving blacklisted jurisdictions leading to delays and additional costs; and reduced economic growth, as countries seem less attractive for investment.

George said the short-term goal was to move to the greylist, where the country is monitored but not restricted. He said the Second Round Peer Review began on June 28, with an on-site visit planned for October.

George outlined the SEZ incentives as well as the requirements to be met to apply for the zones.

He said the SEZs catered to all levels of business. For micro-enterprises to be considered, they would have to have a minimum investment of US$10,000 (after January 31, 2022) with a sales turnover of less than $250,000 and one-five employees. Small- and medium-enterprises would have US$50,000 in investment, with a sales turnover of more than $250,000 up to $10 million and employ six-50 people. Large enterprises would have US$1 million with a sales turnover of $10 million and employ more than 50 people.

George said applicants would need to have a completed Anti-money laundering/countering the finance of terrorism/Financing the proliferation of weapons of mass destruction risk assessment questionnaire (Know Your Customer); evidence of sufficient funds to meet eligibility criteria, a five-year operation plan; consent for entry from inspectors; compliance with relevant regulations and permits; and an economic substance test applied by the SEZA to ensure all eligibility criteria are met in relation to proposed income-generating activities.

In addition, he said there would be ongoing reporting requirements, including the filing required under TT laws such as tax returns, VAT returns, annual corporate filing, Single Zone and SEZs would have to file semi-annual reports. He said all three entities would have to file annual operation plans, submit annual audited financial statements and data and information requested by the SEZA.

With reporting by Mya Quamie