TRINIDAD & TOBAGO: An Introduction to General Business Law

Background 

Trinidad and Tobago (T&T) has emerged from the challenges of the COVID-19 pandemic with a renewed focus on the diversification of its economy, and continues to be an attractive destination for international investment. Efforts are being made to increase investment and business optimisation as a means of strengthening the economy post-pandemic.

With an established common law legal system, commercial disputes are regularly tried in the High Court of T&T. If applicable, appeals can be made to the Court of Appeal and the Judicial Committee of the Privy Council in London, the country’s highest court of appeal save for CARICOM Treaty-related disputes (whose jurisdiction lies with the Caribbean Court of Justice). In addition, there are specialist courts such as the Tax Appeal Board, Industrial Court and Equal Opportunities Tribunal. While challenges arise from delays in having matters determined, the introduction of electronic filings and continued use of virtual hearings prove to be efficient for all stakeholders.

Commercial parties regularly engage in various methods of alternate dispute resolution. Arbitration agreements are widely used and are considered irrevocable except with specific leave from the High Court, unless otherwise agreed. Foreign judgments are also enforced by the local courts, either by way of registration under statute or by common law.

Legislation and Tax 

T&T continues to adopt legislative measures for greater transparency. A new and proposed tax incentive regime embodied in the Trinidad and Tobago Special Economic Zones Act, No 58 of 2022 (SEZA) is expected to be fully operational soon. The SEZA provides for:

• the designation, development, operation and management of special economic zones, the establishment of the Special Economic Zones Authority;

• the repeal of the current Trinidad and Tobago Free Zones Act (TTFZA);

• the regulation of special economic zones; and

• related matters.

The SEZA is partially a response to T&T becoming a member of the OECD’s Base Erosion and Profit Shifting project (which focuses on eliminating harmful tax practices) and T&T’s continued commitment to meeting its international obligations. At present, the SEZA is only partially proclaimed and neither its substantive provisions nor the provisions repealing the TTFZA are in force. Once the new regime is fully operational, concessions pertaining to various types of taxes will be granted.

The Public Procurement and Disposal of Public Property Act (the “Procurement Act”) was fully proclaimed in April 2023 after having been partially in force for eight years. The Procurement Act overhauls the previous procurement legislation with a focus on the principles of good governance (accountability, transparency, integrity and value for money). It also establishes the Office of Procurement Regulation as the regulator (the “Office”). Full proclamation of the Procurement Act was highly anticipated and considered a positive step for T&T, as a means of combating public corruption and fraud. Importantly, the Procurement Act provides for:

• a database of information on public tenders;

• detailed due diligence procedures during procurement processes; and

• reporting of contract awards to the Office.

From a fiscal perspective, various measures to encourage investment in T&T are to be introduced, including an exemption from business levy charges (0.6% tax on the gross sales or receipts for each year of income) for manufacturing companies whose gross receipts fall within the 30% tax bracket on export sales only.

Controversially, the government of T&T (GORTT) has signalled its intention to introduce legislation disallowing expenditures incurred in earning tax-exempt income (subject to specific statutory exceptions). While details of these proposals have not been disclosed, if introduced, without appropriate diligence and care, they may have a significant effect on commercial taxpayers.

For the energy sector, the sustainability incentive will be increased from 20% to 25% with respect to the rate of supplemental petroleum tax (SPT) for any mature marine or small marine oil fields, in order to encourage smaller producers and lease operators in those oil fields to promote further production. Additionally, there will be adjustments to the SPT regime for shallow water areas, introducing a new threshold of USD75 per barrel for SPT for those producers.

Challenges and Future Outlook 

While the exploitation of hydrocarbons continues to dominate the economy, T&T has recently experienced challenges due to the historical lapse in exploration activity, volatile energy prices and natural gas shortages affecting the mid and downstream sectors. Concerted efforts are being made by GORTT and upstream operators to alleviate these challenges. GORTT has increased its offering of onshore and offshore acreage in competitive bid rounds, and production sharing contracts for three deep water blocks were recently granted to a BP and Shell consortium.

The Ministry of Energy and Energy Industries (MEEI) also launched the 2023 Shallow Water Competitive Bid Round with the introduction of several key changes geared towards improving investor appeal, including:

• the removal of the pre-bid fee;

• a reduction in the bid fee; and

• the payment of royalty from GORTT’s share of profit petroleum.

In an effort to enhance T&T’s gas security, NGC (a state-owned gas company) and Shell also announced the signing of an amended gas sales contract for the purchase of gas produced from Shell’s Manatee field (one of T&T’s largest offshore fields), which forms part of the cross-border Loran-Manatee discovery, straddling the T&T and Venezuela maritime borders. Gas production is expected to improve as other upstream operators intensify their efforts in existing and upcoming projects.

As T&T moves towards the global energy transition, the reduction of greenhouse gas emissions and adoption of low-carbon technologies play an important role, as the exploitation of traditional hydrocarbons remains a significant factor in the energy supply chain. Several initiatives continue to be progressed to ensure energy sustainability and efficiency in the future. These projects include:

• the progression of a proposed twin solar power farm project by a BP and Shell consortium;

• the advancement of the Green Hydrogen Roadmap, including a Wind Resource Assessment Programme led by the IDB in collaboration with the MEEI and National Energy;

• a green hydrogen project initiative by Kenesjay Green Ltd and Hydrogen De France; and

• the restructuring of the four Atlantic LNG trains, in recognition of the significant role LNG plays in the energy transition.

Over the years, T&T has experienced foreign currency shortages in the local foreign currency market, which have had a significant effect particularly on the operations of small to medium-sized enterprises (SMEs). The Minister of Finance recently announced that GORTT intends to aggressively develop strategies to increase the repatriation of foreign exchange earned overseas by local and foreign businesses. As part of this strategy, in early 2024 the GORTT proposes to implement preferential access to foreign exchange by qualified SMEs.

In February 2023, the Companies Registry of the Registrar General’s Department launched a new digitised system called the Companies Registry Online System (CROS), which is intended to facilitate the paperless, electronic and remote transaction of business with the Companies Registry. The introduction of CROS directly affects the manner in which filings are to be effected going forward, including:

• the incorporation of a company;

• registration of a branch of a foreign company;

• registration of a non-profit organisation; and

• filing post-incorporation documents. 

In order to conduct business via CROS, persons are required to apply for a Companies Registry Account (CRA) to facilitate electronic submissions and electronic signatures. The introduction of CROS dovetails with existing legislation geared towards enhancing the ease of doing business in T&T – such as the Electronic Transactions Act (ETA), Chapter 22:05 and the Data Protection Act (DPA), Chapter 22:04, although these Acts are not yet fully in force. While some initial teething challenges have been experienced, it is expected that as the changeover progresses CROS will operate seamlessly.

In a post-pandemic world, T&T’s digitisation efforts have renewed discussions on bringing fully into force legislation governing electronic transactions and data protection. According to ministerial statements, GORTT is actively working towards the full operation of the ETA and DPA in 2024. As it stands, there are legislative provisions in force which generally give legal effect to electronic transactions, documents and signatures, but with certain specified exceptions. For example, conveyances of real or personal property, or the creation of wills, require original signatures and documents and may not be executed electronically. As for the DPA, general privacy principles are established and in force, but the substantive provisions concerning the collection, storage and handling of private information and sanctions are not yet proclaimed.

GORTT’s Vision 2030 places emphasis on ESG (environmental, social and governance). Particular focus is being placed on climate change mitigation in the formation of national development objectives. T&T’s private sector has already taken steps towards implementing ESG initiatives, including the adoption of sustainable development practices. This suggests a change in the business landscape as local businesses and GORTT actively work towards limiting their carbon footprint. We anticipate that legislative and policy changes will soon be made to enhance T&T’s ESG commitments.