Imbert: Energy sector tax legislation coming soon

Senior Multimedia Reporter

peter.christopher@guardian.co.tt

Legislation geared towards increasing the amount of US dollars paid to the Government by energy sector companies is set to come into effect by early 2025.

This was announced by Finance Minister Colm Imbert during a panel discussion at the Trinidad and Tobago Manufacturers Association’s (TTMA) Post Budget Discussion at the Hyatt Regency in Port-of-Spain yesterday.

The Finance Minister explained that the country was currently missing out on approximately US$2 billion annually from energy sector companies. During the budget, the Finance Minister said by 2025 he would introduce legislation to encourage energy sector companies to pay all their taxes in US dollars, given all of their products are exported.

“I made a statement in the budget, and I want to explain why I did it. We earn about $28 billion in a good year from the energy sector in T&T. We are supposed to get about $28 billion in terms of energy taxation. Now, if you do the math, that’s about four billion US dollars more or less: $26, 27, 28 billion TT is four billion US, but the amount that we actually receive is only $2 billion. So there’s a missing two billion somewhere,” said Imbert.

“So what the energy companies are doing is they’re converting US outside of the government system. That doesn’t make any sense, because if you’re a producer of oil or a producer of petrochemicals, all your products are exported, and all of them are going to generate foreign exchange in terms of revenue for the company.

“So I said to myself, rather than try and figure out what’s going on here, why is it we’re only getting two billion out of the four billion reported before? Are we going to encourage them to pay more on their taxes in the US?”

Imbert said that legislation should add US$2 billion to the local economy; however, he explained there would still be a need for a further injection of foreign exchange even when this legislation comes into effect.

“The injection is still required, but we could send more money through the Exim Bank because that is a structure-focused system that’s working so that the foreign exchange will then go to the productive sector,” said Imbert.

Economist Dr Marlene Attzs immediately asked him when the legislation would likely come into effect, to which he said, “Three to four months. People are working on it already.” Former finance minister Karen Nunez-Tesheira said she supports the move given the significant challenges to accessing foreign exchange locally.

“A lot of the international energy companies did; they bought up a lot of the VAT bonds, and then instead of having to change a lot of the US dollars to pay their local debts, they sold their bonds to the banks, and therefore we’re able to save the US currency and use the local currency to do that. So I guess that’s one of the things he wants to address; I support it. We need foreign exchange,” said Nunez-Tesheira in an interview with Guardian Media immediately after the presentation.

The availability of foreign exchange has been a recurring issue with business owners as well as the wider public raising concerns about the limited availability of foreign currency.

Over the past two years, several commercial banks have adjusted their US spending limits downward on credit and debit cards amid the limited supply of foreign exchange.

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