Trinidad and Tobago

Executive Summary

Trinidad and Tobago (TT) is a high-income developing country with a gross domestic product  (GDP) per capita of $17,320 and an annual GDP of $23.9 billion (2018).  It has the largest economy in the English-speaking Caribbean and is the third most populous country in the region with 1.4 million inhabitants.  The International Monetary Fund predicts GDP for 2020 to fall by 4.5 percent due to the early 2020 collapse in global energy prices and the economic impact of coronavirus mitigation.  TT’s investment climate is generally open and most investment barriers have been eliminated, but stifling bureaucracy and opaque procedures remain.
Positive aspects of TT’s investment climate:

  • Stable, democratic political system
  • Educated, English-speaking workforce
  • Well-capitalized and profitable commercial banking system and insurance industry
  • Established rule of law
  • Independent judicial system that is substantively fair
  • In certain sectors, lack of domestic competition
  • No foreign ownership limits

Negative aspects of TT’s investment climate:

  • Foreign exchange shortages that delay payments to foreign firms
  • Widespread perception of corruption among public officials
  • Lack of transparency in public procurement
  • Inefficient and complicated government bureaucracy
  • Time-consuming resolution of legal conflicts, such as enforcement of contracts
  • Violent crime

Energy exploration and production drive TT’s economy.  This sector has historically attracted the most foreign direct investment.  The energy sector usually accounts for approximately half of GDP and 80 percent of export earnings.  Petrochemicals and steel are other sectors accounting for significant foreign investment.  Since the economy is tethered to the energy sector, it is particularly vulnerable to fluctuating prices for hydrocarbons and petrochemicals.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 85 of 183 http://www.transparency.org/
research/cpi/overview
World Bank’s Doing Business Report 2020 105 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2019 91 of 129 https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2018 $6,338 http://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2018 $15,950 http://data.worldbank.org/
indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The government of Trinidad and Tobago seeks foreign direct investment and has traditionally welcomed U.S. investors.

The U.S. Mission is not aware of laws or practices that discriminate against foreign investors, but some have seen the decision-making process for tenders and the subsequent awarding of contracts turn opaque without warning, especially when their interests compete with those of well-connected local firms.

InvesTT is TT’s investment promotion agency that assists investors through the process of setting up a business and provides aftercare services once established. Specifically, it provides market information; offers advice on accessing investment incentives; and assists with regulatory and registry issues; property and location services; creation of business linkages; problem solving; and advocacy to the government.  The TT International Financial Center is another investment promotion agency whose mission is to attract and facilitate foreign direct investment in the financial services sector.

While Trinidad and Tobago prioritizes investment retention, the U.S. Mission is not aware of a formal, ongoing dialogue with investors, either through an Ombudsman or formal business roundtable.

Limits on Foreign Control and Right to Private Ownership and Establishment

Both foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activity.

Under the Foreign Investment Act of 1990, a foreign investor is permitted to own 100 percent of the share capital in a private company. A license is required to own more than a 30 percent of a public company.

The U.S. Mission is not aware of any sector-specific restrictions to U.S. investors.

TT maintains an investment screening mechanism for specific projects that have been submitted for the purpose of accessing sector-specific incentives, such as for those offered in the tourism industry.

Other Investment Policy Reviews

The World Trade Organization conducted a trade policy review for Trinidad and Tobago in 2019: https://www.wto.org/english/tratop_e/tpr_e/tp488_e.htm 

Business Facilitation

The government’s business facilitation efforts focus primarily on investor services (helping deal with rules and procedures) through its investment promotion agency and trying to make the rules more transparent and predictable overall.  However, more work needs to be done to achieve efficient administrative procedures and dispute resolution.  Trinidad and Tobago ranks 158th of 190 countries for registering property, 174th for enforcing contracts, and 166th for payment of taxes in the World Bank’s Doing Business 2020 report, representing a deterioration of indicators that reflect a difficulty of doing business.

The business registration website is www.ttbizlink.gov.tt.  The process is clear but is not complete, as payments cannot be done online and aspects of the process must be completed in person.  Foreign companies can use the website. The agencies with which a company must typically register include:

  • Companies Registry, Ministry of Legal Affairs
  • Board of Inland Revenue
  • National Insurance Board
  • Value Added Tax (VAT Office, Board of Inland Revenue)

The Global Enterprise Registration Network (GER) gives the TT business registration website a below-average score of 3 out of 10 for its single electronic window and 4.5 out of 10 for providing information on how to register a business.  The inability to make online payments, submit certificates online, and engage in simultaneous requests are the three main reasons for the low score.  A feedback mechanism allowing users to communicate with authorities is a strength of the TT business registration website.  According to GER, two areas for improvement are:

  • Development of an online payment portal
  • Provision of online certificates

Business registration requires completion of seven procedures over a period of 10 days.

Outward Investment

The host government does not promote or incentivize outward investment.

The host government does not restrict domestic investors from investing abroad.

2. Bilateral Investment Agreements and Taxation Treaties

TT has bilateral investment treaties (BIT) with Canada, China, France, Germany, Guatemala, India, Korea, Mexico, Spain, Switzerland, United Kingdom and the United States. TT has signed free trade agreements with the following countries, either bilaterally or as a part of CARICOM: Costa Rica, Cuba, Dominican Republic, Panama, and Venezuela. TT is not currently engaged in any BIT or FTA negotiations.

A bilateral taxation treaty with the United States took effect in 1970: https://www.irs.gov/pub/irs-trty/trinidad.pdf .  The Trinidad and Tobago government is in the process of modernizing its tax collection regime with the establishment of a new central revenue authority.  There are no ongoing systemic tax disputes between the government and foreign investors or other taxation issues of general concern to U.S. investors.

3. Legal Regime

Transparency of the Regulatory System

Legal, regulatory, and accounting systems are generally transparent and consistent with international norms.

There are no informal regulatory processes managed by non-governmental organizations or private sector associations.

Rule-making and regulatory authority exist within the ministries and regulatory agencies at the national level. The government consults frequently, but not always, with international agencies and business associations in developing regulations.  The government submits draft regulations to parliament for approval.  The process is the same for each ministry.

Accounting, legal, and regulatory procedures are transparent and consistent with international norms.  IFRS standards are required for domestic public companies.

Proposed laws and regulations are often published in draft form for public comment, though there is no legal obligation to do so.  The government solicits private sector and business community comments on proposed legislation.

All draft bills and regulations are printed in the official gazette, and an electronic version is available (listed below).  The content is usually the actual draft text.

www.news.gov.tt/content/e-gazette# 

www.ric.org.tt ;

www.ttparliament.org 

The U.S. Mission is not aware of an oversight or enforcement mechanism that ensures the government follows administrative processes.

There has not been any announcement regarding reforms to the regulatory system, including enforcement, since the last ICS report.  Regulatory reform efforts announced in prior years, such as the mechanism to calculate and collect property tax and the establishment of the revenue authority, have not been fully implemented.

Establishment of the revenue authority is intended to increase collections and streamline the system for paying taxes.

At present, regulatory enforcement mechanisms are usually a combination of moral suasion and the use of applicable administrative, civil or criminal sanctions.  The enforcement process is not legally reviewable.

Regulation is usually reviewed based on scientific- or data-driven assessments.  Scientific studies or quantitative analyses are not made publicly available.  Public comments received by regulators are generally not made public.

Public finances and debt obligations are transparent and publicly available on the central bank website

International Regulatory Considerations

Trinidad and Tobago is not part of a regional economic block, though it is part of the Caribbean Community (CARICOM), a regional trading bloc that gives duty-free access to member goods, free movement to some members and establishes common treatment of non-members on specific issues.  The Caribbean Single Market and Economy (CSME) is an initiative currently being explored by CARICOM that would eventually integrate its member-states into a single economic unit.  When fully completed, the CSME would succeed CARICOM.

Legal, regulatory, and accounting systems are generally consistent with United Kingdom standards.

The government has not consistently notified the World Trade Organization (WTO) Committee on Technical Barriers to Trade (TBT) of draft technical regulations.

Legal System and Judicial Independence

TT’s legal system is based on English common law.  Contracts are legally enforced through the court system.

The country has a written commercial law.  There are few specialized courts, making the resolution of legal claims time consuming.  An industrial court exclusively handles cases relating to labor practices but also suffers from severe backlogs and is widely seen to favor claimants.

Civil cases of less than $2,250 are heard by the Magistrate’s Court.  Matters exceeding that amount are heard in the High Court of Justice, which can grant equitable relief.  There is no court or division of a court dedicated solely to hearing commercial cases.

TT’s judicial system is independent of the executive and the judicial process is competent, procedurally and substantively fair, and reliable, although very slow.  According to the World Bank’s Doing Business 2020 report, Trinidad and Tobago ranks 174 of 190 in ease of enforcing contracts, and its court system requires 1,340 days to resolve a contract claim, nearly double the Latin American and Caribbean regional average.

Decisions may be appealed to the Court of Appeal in the first instance.  The United Kingdom Privy Council Judicial Committee is the final court of appeal.

Laws and Regulations on Foreign Direct Investment

TT’s judicial system respects the sanctity of contracts and generally provides a level playing field for foreign investors involved in court matters.  Due to the backlog of cases, however, there can be major delays in the process.  It is imperative that foreign investors seek competent local legal counsel.  Some U.S. companies are hesitant to pursue legal remedies, preferring to attempt good faith negotiations in order to avoid an acrimonious relationship that could harm their interests in the country’s small, tight-knit business community.

There is no “one-stop-shop” website for investment providing relevant laws, rules, and procedures.  Useful websites to help navigate foreign investment laws, rules, and procedures are:

http://www.legalaffairs.gov.tt 

https://www.rgd.legalaffairs.gov.tt 

http://www.tradeind.gov.tt 

Competition and Anti-Trust Laws

The Fair-Trading Commission is responsible for promoting and maintaining fair competition in the domestic market.  It is tasked with investigating the various forms of anti-competitive business conduct set out in the Fair-Trading Act. Legislation operationalizing this agency in 2006 was not proclaimed by the president until February 2020, so the agency is untested with regard to will and capacity to fulfill its mission.

Expropriation and Compensation

The government can legally expropriate property based on the needs of the country and only after due process including adequate compensation, generally based on market value.  Various pieces of legislation make provisions for compulsory licensing in the interest of public health or intellectual property rights.

The U.S. Mission is not aware of any direct or indirect expropriation actions since the 1980s.  All prior expropriations were compensated to the satisfaction of the parties involved.  Energy sector contacts occasionally describe the tax regime as confiscatory, pointing to after-the-fact withdrawal or weakening of tax incentives offered to entice investment once investment occurs.

Claimants did not allege a lack of due process in prior expropriation cases.

Dispute Settlement

ICSID Convention and New York Convention

TT is a party to the International Centre for the Settlement of Investment Disputes (ICSID Convention) and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York convention).

Local courts recognize and enforce foreign arbitral awards according to chapter 20 of the Arbitration (Foreign Arbitral Awards) Act 1996.

Investor-State Dispute Settlement

The bilateral investment treaty between the United States and TT recognizes binding arbitration of investment disputes.

The U.S. Mission is not aware of any claims by U.S. investors under the bilateral investment treaty with the United States.

The U.S. Mission is unaware of any disputes involving U.S. or other foreign investors over the past 10 years.

There is no history of extrajudicial action against foreign investors.

International Commercial Arbitration and Foreign Courts

Some of the available types of alternative dispute resolution include mediation and arbitration.  The Civil Proceedings Rules encourage parties to make reasonable attempts to resolve their disputes amicably with litigation as a last resort. Mediation and arbitration are most commonly used.

There is a domestic dispute resolution center that offers arbitration services.  Domestic legislation, the Arbitration Act of 1939, is based on early English arbitration legislation and is not modeled on internationally accepted regulations.

The U.S. Mission has no records of any investment disputes involving an SOE.

Bankruptcy Regulations

Creditors have the right to be notified within 10 days of the appointment of a receiver and to receive a final report, a statement of accounts, and an assessment of claim.  Claims of secured creditors are prioritized under the Bankruptcy Act.  No distinction is made between foreign and domestic creditors or contract holders.  Bankruptcy is not criminalized.

The World Bank ranked TT 83rd of 190 countries in resolving insolvency in its Doing Business 2020 report.  This reflects TT’s recovery rate (cents on the dollar), which is worse than the regional average, and cost as a percentage of estate.

4. Industrial Policies

Investment Incentives

Investment incentives include the following: exemption from import duties and customs duties; tax credits and deferrals; cash refunds; carry-over of losses; and access to loans.  These are available equally to foreign and domestic investors, but delays in cash refund payments are a frequent complaint of those due them.  Additional information is available on the following websites:

https://www.finance.gov.tt/mof-investment-incentives-in-trinidad-and-tobago/ 

www.investt.com 

The government sometimes jointly finances foreign direct investment projects, but it not common.  One recent example was the government-driven proposal for a Sandals resort in Tobago, for which the government would provide financing for the construction of the development. (This deal eventually fell through.)

Foreign Trade Zones/Free Ports/Trade Facilitation

The Free Zones Act of 1988 (last amended in 1997) established the TT Free Zones Company (TTFZ) to promote export development and encourage both foreign and local investment projects in a relatively bureaucracy-free, duty-free, and tax-free environment.  Foreign owned firms have the same investment opportunities as Trinidad and Tobago entities.  There are currently 15 approved enterprises located in eight free zones.  The majority are located within a multiple-user site in north-central Trinidad, but the minister of trade and industry can designate any suitable area in TT as a free zone.

Free zone enterprises are exempt from customs duties on capital goods, parts, and raw materials for use in the construction and equipping of premises and in connection with the approved activity; import and export licensing requirements; land and building taxes; work permit fees; foreign currency and property ownership restrictions; capital gains taxes; withholding taxes on distribution of profits and corporation taxes or levies on sales or profits; VAT on goods supplied to a free zone; and duty on vehicles for use only within the free zone.

A corporation tax exemption for entities that qualify for free zone status is also in force.  Application to carry out an approved activity in an existing free zone area is made on specified forms to the TTFZ.

Free zone activities that qualify for approval include manufacturing for export, international trading in products, services for export, and development and management of free zones.  Activities that may be carried on in a free zone but do not qualify as approved activities include exploration and production activities involving petroleum, natural gas, or petrochemicals.  For more information, please review the following website: http://ttfzco.com/ 

Performance and Data Localization Requirements

The government does not mandate—although it strongly encourages, through negotiable incentives—projects that generate employment and foreign exchange; provide training and/or technology transfer; boost exports or reduce imports; have local content; and generally contribute to the welfare of the country.

The government does not mandate that locals be recruited to senior management and boards of directors.

Several foreign firms have encountered inconsistencies leading to long delays in the issuance of long-term work permits, but there are no explicit, onerous requirements.

There are no government/authority-imposed conditions on permission to invest.

There are no forced localization requirements.

There are no performance requirements, and thus no enforcement procedures.  There is no indication of an intention to implement across-the-board performance requirements.

Investment incentives are uniform for domestic and foreign investors but offered on a case-by-case, vice across-the-board, basis.

There are no requirements for foreign IT providers to turn over source code and/or provide access to encryption.

There are no measures that prevent or restrict companies from freely transmitting customer or other business-related data outside the country.

There are no rules on local data storage within Trinidad and Tobago.

9. Corruption

Various pieces of legislation address corruption of public officials:

  • The Integrity in Public Life Act requires public officials to disclose assets upon taking office and at the end of tenure.
  • The Freedom of Information Act gives members of the public a general right (with specified exceptions) of access to official documents of public authorities. The intention of the act was to address the public’s concerns of corruption and to promote a system of open and good governance.  In compliance with the act, designated officers in each ministry and statutory authority process applications for information.
  • The Police Complaints Authority Act establishes a mechanism for complaints against police officers in relation to, among other things, police misconduct and police corruption.
  • The Prevention of Corruption Act provides for certain offences and punishment of corruption in public office.

The laws are non-discriminatory in their infrequent application.  Effectiveness of these measures has been limited by a lack of thorough enforcement.

The laws do not extend to family members of officials or to political parties.

TT does not have laws or regulations to counter conflicts of interest in awarding contracts or government procurement.

The government has been a party to the development of corporate governance standards (non-binding) to encourage private companies to establish internal codes of conduct that, among other things, prohibit bribery of public officials.

Some private companies, particularly the larger ones, use internal controls and compliance programs to detect and prevent bribery of government officials, though this is not a government requirement.

Trinidad and Tobago adheres to the UN Anticorruption Convention.

There are no protections for NGOs involved in investigating corruption, but investigations are not feared since corrupt actors are rarely punished.

U.S. firms often say corruption is an obstacle to FDI, particularly in government procurement, since TT’s procurement processes are not transparent.

Resources to Report Corruption

Name: Mr. Justice Melville Baird
Title: Chairman
Organization: The Integrity Commission
Address: P.O. Box 1253, Port of Spain
The Integrity Commission of Trinidad and Tobago Level 14,
Tower D, International Waterfront Centre, 1A Wrightson Road, Port of Spain
Telephone number: 868-623-8305
Email address: registrar@integritycommission.org.tt

Name: Mr. Dion Abdool
Title: Chairman
Organization: Trinidad and Tobago Transparency Institute (local chapter of Transparency International)
Address: Unit 4-12, Building 7, Fernandes Industrial Centre, Laventille
Telephone number: 868-626-5756
Email address: admin@transparency.org.tt

10. Political and Security Environment

While non-violent demonstrations occur on occasion, widespread civil disorder is not typical.  There have been no serious incidents of political violence since a coup attempt in 1990.

Subsequent to the closure of state oil firm Petrotrin in November 2018, which resulted in the lay-off of nearly 6,000 workers, there were reports of damage to installations.

Certain areas of TT are increasingly insecure due to a critical level of violent crime.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2018 $23,705 2018 $23,808 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data: BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) No data available 2018 $6,338 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data 
Host country’s FDI in the United States ($M USD, stock positions) No data available 2018 $163 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data 
Total inbound stock of FDI as % host GDP No data available 2018 38.8 UNCTAD data available at
https://unctad.org/en/Pages/DIAE/
World%20Investment%20Report/
Country-Fact-Sheets.aspx
 

* Source for Host Country Data: Ministry of Finance.

Table 3: Sources and Destination of FDI
Data not available.

Table 4: Sources of Portfolio Investment
Data not available.

Investment Climate Statements
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