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A proposed VAT on digital services, changes to the tax treatment of certain goods, and a new electricity surcharge for high-consuming households. Ernst and Young Trinidad is highlighting the potential impact of Budget 2027's tax measures on consumers and businesses, warning that some changes could eventually push up costs, even as the Government proposes a 25 per cent cut in alcohol excise duties.
Transcript
00:00The 2027 budget is introducing a number of changes to the tax system that could affect
00:05both consumers and businesses. And Ernst & Young Trinidad is warning that the implications extend
00:11beyond the revenue the government expects to collect. One significant proposal is to bring
00:17digital services supplied by non-resident providers to people in TNT within the VATnet.
00:23E-Wife says, quote, the specific categories of services to be covered have not yet been defined
00:29however, based on similar legislation introduced or proposed to be introduced in the Caribbean region
00:36we expect that it will include items such as digital content, subscriptions, cloud services,
00:42web hosting, online advertising and associated charges, end quote. Overseas suppliers will be
00:48required to register under a simplified system, collect VAT and remit it to the state. E-Wife says
00:54the success of the measure will depend on whether international platforms comply
00:59and suggests a reverse charge mechanism could also be considered for business-to-business
01:04transactions. The review raises another concern over the proposed conversion of selected zero-rated
01:11goods to VAT-exempt status. While the change is intended to reduce VAT refund claims and improve
01:18administration, E-Wife warns that businesses could lose the ability to recover VAT paid on related inputs,
01:24saying, quote, consumers may see no VAT charge but suppliers generally lose the ability to recover
01:30VAT, end quote. The distinction could have consequences for prices. If businesses, it says,
01:37can no longer recover the VAT on their inputs, the unrecovered tax becomes a cost of doing business,
01:43one that could ultimately be passed on to consumers. E-Wife says the overall effect will depend on which items
01:50are
01:50eventually designated as exempt, while businesses making both taxable and exempt supplies could
01:56also face more complicated VAT calculations. On alcohol, the government is proposing a different
02:02approach, a 25% reduction in excise duty rates effective January 1, 2027. Under the proposal,
02:11the excise duty on bear and stout would fall from $10.28 to $7.71 per liter. The rate on
02:20more beverages would
02:21drop from $0.52 to $0.39 per liter. The proposed reduction also covers rum, whiskey, brandy, gin, vodka,
02:29sparkling wine, and other spirits. But the changes do not stop at excise duty. The government is also proposing to
02:36move
02:36customs duties on imported alcoholic beverages from a specific duty system to an ad valorem system,
02:44meaning the duty would be calculated according to the value. Households with high electricity
02:49consumption could also face an additional charge. From January 2027, the government proposes a surcharge
02:56of $0.05 per kilowatt hour on residential consumption exceeding 3,000 kilowatt hours per billing period.
03:04EY estimates that the measure could generate approximately $17.8 million in additional revenue.
03:10It says, quote, consideration could also be given to measures that facilitate household investment
03:16in energy-efficient technology. This could complement the surcharge by providing consumers
03:22with practical options to manage electricity costs and to reduce their reliance on subsidized electricity
03:28while supporting TNT's broader energy transition objectives. End quote.
03:34Ravashita Wari Rupnarein, TV6 News.