Overview of Withholding Tax

Overview of Withholding Tax
• Section 50(1) of the Income Tax Act, Chapter 75:01 imposes a Withholding Tax on Income
arising in Trinidad and Tobago payable to all non-resident persons including companies.
• In this Section Income is defined as Distribution and Payments arising in Trinidad and Tobago
where the individual or company is not engaged in trade or business here. Income also includes
Branch Profits.
There are circumstances where non-resident individuals/companies are Subject to Income
Tax/Corporation Tax and Not Withholding Tax –
(i) e.g. a non-resident employee is subject to Income Tax
(ii) e.g. a non-resident Company with a permanent Establishment in Trinidad and Tobago is subject
to Corporation Tax
• PAYMENTS:-
• The Income Tax Act defines a “payment” as a payment without any deductions whatsoever.
• Payment includes:
• interest, discount annuities, or other annual or periodic sums
• rentals
• royalties
• Professional fee
• Payment to artiste/Athletes
• Management changes or charges for the provision of personal services and technical and
managerial skills
• Premium (other then those paid to insurance companies and contributions to pension fund and
schemes) commissions fee and licenses
• Any other payment as may from time to time be prescribed.
• All the above listed payments are subject to Withholding Tax when paid to non-resident
individuals or companies.
DISTRIBUTIONS:-
• Distributions as defined by Section 49 of the Income Tax Act Chapter 75:01 includes
Dividends, as well as dividends paid from Capital
• Any distribution of assets of the company in respect of shares
• A bonus issue of redeemable share capital or security which is not issued for new consideration

• Any interest or distribution out of assets in respect of securities
• Benefit derived by the difference between the market value and the “new consideration” given
on a transfer of assets or liabilities from a company to its members
• Branch Profit
• 50 (6) “Where an office or a branch or agency of any non-resident company engaged in trade or
business in Trinidad and Tobago, remits or is deemed to remit any part of the profits of such
non-resident company accruing in or derived from Trinidad and Tobago, such office or branch or
agency of the non-resident company shall be liable to account for and pay over Withholding
Tax in respect of such profits in accordance with the provisions of this Section as if the remitting
of such profits was a distribution”
• 50 (7) “For the purpose of subsection (6) an office or a branch or agency of a non-resident
company shall be deemed to have remitted all the profits thereof, except to the extent the
office or the branch or agency has reinvested to the satisfaction of the Board such profits or any
part thereof in Trinidad and Tobago, (other than in the replacement of fixed assets)”.
WITHHOLDING TAX AND RELATED SECTIONS IN THE INCOME TAX ACT
Section 49 to 55 of the Income Tax Act Chapter 75:01 outlines the provisions governing the
imposition of Withholding Tax
TAXATION
The Gross Payments, without any deductions whatsoever, are subject to Withholding Tax. The
obligation to deduct Withholding Tax and remit to the Board is on the person or company
making the payment or distribution to the non-resident person or company
The Taxpayer who wishes to pay Withholding Taxes MUST SUBMIT to the International Tax
Unit, (except in special cases):-
C5 – Payments other than Dividends and Distribution
WT2 – Distribution including Dividends
Invoices for payments
Wire Transfer documents and other supporting information as requested
For Branch Profit-
‣ C5 and
‣ The relevant schedules of the Corporation Tax Return/Petroleum Profit Tax Return in respect of
the Profits remitted or deemed remitted by the branch to the Head office.

The documents would be examined, approved and stamped by the International Tax Unit
before the taxpayer proceeds to the Cashiering Unit to effect the payment
Withholding Tax is calculated on each transaction
• A General Rate of Withholding Tax is applied except where a DOUBLE TAXATION
AGREEMENT exists:-
The General Rate is as follows: (Part II Schedule 3)
• Payments (2001 – 2007) - 20%
• w.e.f (01/01/08) - 15%
• Dividends (2001 – 2007) - 15%
• w.e.f (01/01/08) - 10%
• Branch Profits (2001 – 2007) - 10%
• w.e.f (01/01/08) - 5%
• Refer to Rate Schedule Appendix 1 for rates in accordance with Double Tax Treaties.
• In addition to the principal amount of Withholding Tax-Interest and Penalty are also due.
• The payer is responsible to account for and remit Withholding Tax to the Board within thirty
(30) days of making each payment
• Penalty with a due date prior to 31st December 2007 – 100%
• Penalty with a due date with effect from 1st January 2008 – 25%
• Interest 20% per annum on both the principal sum (withholding tax) and the penalty applicable.
Bulk Transactions Of C5 / WT2
• From April 21 st 2008 there would be a new system for the processing of C5/WT2 for the
payment of Withholding Tax.
Persons/Companies with Fifteen (15) or more Transactions on the same day should submit the
information in our new Electronic format. A template is provided.
Person/Company must use the template provided to facilitate the processing of the information.
The Payer/Company is required to fill out:
Name of payees
Country of payee (Full address)

Type of transaction
Gross amount
Date paid/credited/deemed remitted and to submit a summary coversheet with:
The total number of the transactions
Total gross payments
Total withholding tax remitted
Date paid/credited/remitted or deemed remitted.