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Value Added Tax (VAT)
VAT is a consumption tax levied on the supply of goods and services in Trinidad and Tobago. It is collected at each stage of the production and distribution chain.
Overview & Legal Basis
Value Added Tax (VAT) was introduced in Trinidad and Tobago to replace the previous sales tax system. It is a broad-based consumption tax that applies to most goods and services, with businesses acting as collection agents for the government.
Legal Basis: Value Added Tax Act, Chapter 75:06
Key Features:
- • Standard rate of 12.5% on most supplies
- • Input tax credit system for registered businesses
- • Monthly filing and payment requirements
- • Electronic filing through Tax TT portal
- • Penalties for late filing and payment
- • Audit and compliance monitoring
VAT Registration Requirements
Registration Thresholds:
| Supply Type | Annual Threshold | Description |
|---|---|---|
| Goods | $500,000 | Annual taxable supplies of goods |
| Services | $250,000 | Annual taxable supplies of services |
| Mixed | $500,000 | Combined goods and services |
Who Must Register:
- • Businesses exceeding registration thresholds
- • Importers of goods for business purposes
- • Non-resident businesses making taxable supplies
- • Businesses choosing voluntary registration
Important: Registration is required within 21 days of exceeding the threshold. Voluntary registration is available for businesses below the threshold.
VAT Rates & Classifications
| Category | Rate | Description |
|---|---|---|
| Standard Rate | 12.5% | Most goods and services |
| Zero Rate | 0% | Exports, basic food items, medical supplies |
| Exempt | N/A | Financial services, education, healthcare |
Zero-Rated Supplies:
Exports of goods and services
Basic food items (rice, flour, cooking oil)
Medical equipment and pharmaceuticals
Books and educational materials
Agricultural inputs
Public utility services
International transportation
Diplomatic supplies
Exempt Supplies:
Financial services (banking, insurance)
Educational services
Healthcare and medical services
Residential rent (long-term)
Postal services
Public transportation
Charitable activities
Government services
VAT Calculation & Input Tax Credits
How VAT Works:
- Charge VAT on taxable supplies (Output Tax)
- Pay VAT on business purchases (Input Tax)
- Calculate net VAT: Output Tax - Input Tax
- Remit net amount to BIR (or claim refund if negative)
Example Calculation:
Monthly sales: $100,000 + VAT $12,500 = $112,500
Monthly purchases: $60,000 + VAT $7,500 = $67,500
Output Tax: $12,500
Input Tax: $7,500
Net VAT payable: $5,000
Filing & Payment:
- • Monthly VAT returns due by 21st of following month
- • Payment due with return filing
- • Late filing penalty: $1,000 per month
- • Late payment penalty: 5% per month
Required Documents & Records
- VAT registration certificate
- Sales and purchase invoices
- VAT account records
- Bank statements
- Import/export documentation
- Previous VAT returns
- Inventory records
- General ledger and trial balance
Invoice Requirements:
- • Sequential invoice numbering
- • VAT registration number displayed
- • Separate VAT amount shown
- • Customer details for supplies over $1,000
Record Retention:
- • All VAT records must be kept for 7 years
- • Records must be available for BIR inspection
- • Electronic records must be backed up
- • Original invoices required for input tax claims