Inland Revenue Division - Ministry Of Finance and The Economy
 
 

 

 

News/Updates-Tax Tips- Business Levy

BUSINESS LEVY

 

Business Levy is a tax on the gross sales or receipts of Companies and Individuals in receipt of Income other than Emolument Income, viz. self-employed persons – (Small Businesses and Partnerships).  It was introduced by Finance Act. # 6/1993.  (companies only) and made applicable to individuals by Finance Act. # 3/94.

 

Gross Sales or Receipts mean all income received in the ordinary course of business activities before allowing any deductions for business expenses.

 

The rate of Business Levy is 0.2% of the gross sales/receipt for each quarter of the current year of income.

 

PARTNERSHIPS

With respect to a partnership, the Individual Partner’s Share of the Gross Sales/Receipts must exceed the threshold for the respective income year for him to be liable for Business Levy payments.

 

N.B: The Partnership is not liable to Business Levy.   The Partners who form the partnership may be liable to these payments.

 

WHEN IS BUSINESS LEVY PAYABLE

The Business Levy is due and payable in quarterly installments on or before

                         March 31                    September 30

                         June 30                        December 31

 

in each year of income.

 

EXEMPTIONS

Companies

The following companies were exempt form the payment of Business Levy:-

 

(i)           Companies during the first twelve months following their registration.

             (1993 – 1998)

             w.e.f. January 1, 1999 – exemption for a 3 year period from registration of  

             that Business.

 

(ii)          Companies or Statutory Companies exempt from Corporation Tax under

             any Act.

 

(iii)          Companies whose Gross Sales or Receipts of a give rise to profits exempt from   

              Corporation Tax under any Act.

 

(iv)       -The Deposit Insurance Corporation

           

             -The Agricultural Development Bank

 

             -The Public Transport Service Corporation

 

             -Public Utilities under the jurisdiction of the Public Utilities Commission or exempt by  

              Order of the President.

 

             -Any other Public Utility exempted by Order of the President

 

(v)        Companies that are subject to Tax under the Petroleum Taxes Act.

 

(vi)       Companies whose Gross Sales or Receipts in the preceding year of income do not exceed 

            $200,000. unless there are reasonable grounds to believe that the Gross Sales or 

            Receipts of the company in the particular year will exceed this sum. ($150,000. for 1996 

            – 1998).

 

Individuals

With respect to individuals the Business Levy does not apply to:-

  • (i)The Gross Sales or Receipts of a person which give rise to income exempt from Income Tax under any Act.
  • (ii)The income of a person whose emolument income exceeds 75% of his total income.
  • (iii)The Gross Sales or Receipts of a person, whose Gross Sales or Receipts in the proceeding year of income do not exceed $200,000.00 (1996 – 1998 - $150,000) unless there are reasonable grounds to believe that the Gross Sales or Receipts in that particular year will exceed that sum.
  • (iv)The Gross Sales or Receipt of the business of a person for a period of 3 years following the commencement of the business.

COMPUTATION

Prior to January 1, 1995 where the Corporation/Income Tax Liability exceeded the Business Levy Liability, there was a Tax Credit equal to the amount of the Business Levy against the Corporation/Income Tax Liability.

 

With effect from January 1, 1995, the computation has been simplified.   There is now a Tax Credit against his Business levy Liability, for a year of income, of any payment made in respect of the Income/Corporation Tax Liability up to a maximum of the Business Levy Liability.

 

Therefore where the Corporation/Income Tax Liability exceeds the BLV Liability, a Tax Credit to the maximum of the BLV Liability will be granted and only the Corporation/Income Tax will be paid.

 

Example #1

Where the Corporation/Income Tax Liability exceeds the BLV liability only the Corporation Tax Liability is paid.

 

             Corporation Income Tax Liability                               =$10,000.00

 

             Business Levy liability                                             =$  3,000.00

 

             Tax Credit Entitlement                                            =$  3,000.00

 

             Payment Due: Corporation/Income Tax Liability         =$10,000.00

 

             BLV Payment                                                        =  NIL

 

Example #2

Where the Business Levy Liability exceeds the Income/Corporation Tax Liability, the Tax Credit entitlement will be equivalent to the Income/Corporation/Tax Liability, thus reducing the amount of the BLV Liability, to be paid.

 

             Income/Corporation Tax Liability                              =$3,000.00

 

             Business Levy Liability                                           =$7,000.00

 

             Tax Credit Entitlement                                           =$3,000.00

 

             Payments Due: Corporation/Income Tax                  =$3,000.00

 

                                     BLV ($7000-$3000)                        =$4,000.00

 

Example #3

Where the Corporation/Income Tax Liability is equal to the BLV Liability, Tax Credit to the maximum of the BLV Liability will be granted and only the Corporation/Income Tax will be paid.

 

             Corporation/Income Tax Liability                                 =$3,000.00

 

             Business Levy Liability                                             =$3,000.00

 

             Tax Credit Entitlement                                            =$3,000.00

 

             Tax Credit Entitlement                                            =$3,000.00

 

             Payment Due: Corporation/Income Tax Liability          =$3,000.00

 

             BLV Payable                        ($3000-$3000)              =    NIL

 

Example #4

Where there is no Corporation/Income Tax Liability but there is a BLV liability, there is not Tax Credit entitlement and the BLV must be paid.

 

             Income/Corporation/Tax Liability                                =NIL

 

             Business Levy Liability                                             =$10,000.00

 

             Tax Credit Entitlement                                             = NIL

 

             Payment Due: Business Levy Liability                        =$10,000.00

 

NB: At all times where there is a Corporation/Income Tax Liability, this must be paid. 

 

 

 

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