Imbert: Trinidad and Tobago removed from list of countries with harmful tax practices

FINANCE Minister Colm Imbert has said that in January, TT was deemed by the Organisation for Economic Co-operation and Development (OECD) Forum on Harmful Tax Practices to be free from harmful tax practices and was removed from the list of countries with such practices in February 2025.

In a release on February 8, Imbert said the OECD Forum on Harmful Tax Practices has been conducting reviews of preferential tax regimes for the last 25 years to determine whether the regimes could be harmful to the tax base of their jurisdictions.

Imbert said base erosion and profit shifting (BEPS) – where multinationals shift profits to low or no tax locations where they have little or no economic activity or erode tax bases through deductible payments, such as interest or royalties – cost countries throughout the world billions in lost revenue annually.

He added BEPS practices undermine the fairness and integrity of tax systems because businesses that operate across borders can use them to gain a competitive edge advantage over enterprises operating at the domestic level.

Imbert said in a broader context, when large corporations avoid income tax, they undermine voluntary compliance by all taxpayers.

Owing to the operation of free trade zones in this country, with duty-free and tax-free regimes, TT was found to be non-compliant with the FHTP and non-compliant with the BEPS standards, he said.

“As a result, we committed to making the necessary legislative changes to abolish free trade zones.”

Imbert said this process took years of work but in 2024, the country’s free trade zones were replaced with special economic zones (SEZs) and the Free Trade Zone Act was repealed, leading to the abolishment of the Free Trade Zone in TT.

He said in the new special economic zones, a minimum global tax rate of 15 per cent is imposed on multinationals operating in SEZs, in accordance with the BEPS standards.

“Our SEZ regime was examined comprehensively by the OECD in 2024 as part of our action plan to make TT compliant with the requirements of the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes.”

The Global Forum is a multilateral framework for tax transparency and information sharing, within which over 170 countries participate equally.

Imbert said, “TT is currently engaged in a formal peer review process with the Global Forum and if all goes according to plan, we expect to be deemed complaint by the Global Forum later in 2025, which will also lead to us being declared compliant by the European Union in due course.

“The acknowledgement by the OECD that we are no longer considered to have harmful tax practices is an important step in our journey towards full compliance with the Global Forum and the EU.”