PwC has warned that several details of the Government’s proposed tax changes remain unresolved, including how Trinidad and Tobago intends to collect VAT on digital services supplied by foreign companies without creating additional costs or compliance burdens for businesses.
In its analysis of the 2026-2027 National Budget, PwC said the proposed standard-rating of digital and remote services supplied by non-resident providers, effective March 1, 2027, would require clear rules on which transactions are covered, how customers’ locations are determined and how the tax would apply to business-to-business transactions.
The measure is projected to generate $18 million in revenue.
The proposed changes also include a simplified electronic registration system to capture foreign providers of streaming services, software and digital platforms, with the aim of creating a more level playing field between overseas suppliers and domestic businesses.
However, PwC said the effectiveness of the measure would depend on how the legislation addresses registration thresholds, the liability of online marketplaces and the interaction between VAT and withholding tax.
“Efficient collection should not result in two taxes on one payment or make Trinidad and Tobago unnecessarily difficult for global platforms to serve,” the firm said.
PwC also questioned how far the simplified registration framework would extend beyond digital services, including whether it would capture non-resident providers who physically perform services in Trinidad and Tobago or supply goods while meeting the relevant registration threshold.
The analysis forms part of a broader assessment of the budget’s proposed tax reforms, which PwC said would require further clarity to ensure businesses can comply without facing unnecessary uncertainty.
Among the other areas flagged was the proposed increase in withholding tax on distributions to non-residents to 10 per cent generally and five per cent for parent companies.
The budget also proposes changes to Section 50(1)(b) of the Income Tax Act to target remotely supplied management, technical and prescribed services.
PwC said clear rules on the source of income and effective relief from double taxation would be necessary to avoid discouraging legitimate access to foreign expertise and capital.
The firm also pointed to the absence of a comprehensive transfer pricing framework, despite the issue featuring in previous budgets.
It said the success of reform should be measured by whether the regime works in practice, rather than by the technical ambition of the legislation alone.
Another proposed change would amend Section 10 of the Income Tax Act to disallow expenses incurred in earning exempt income.
PwC said businesses with mixed activities could face uncertainty over how to allocate shared expenses, making clear guidance on acceptable allocation methods important.
The analysis also raised concerns about the administration of VAT, including the proposed $100 VAT clearance fee and penalties for outstanding returns.
PwC said stronger enforcement of tax obligations should be matched by timely administrative action, particularly when businesses are due refunds.
“If taxpayers are expected to file and pay promptly, they should also receive legitimate refunds promptly,” the firm said.
It warned that delayed refunds effectively turn businesses into involuntary lenders to the State, tying up working capital that could otherwise support investment.
