n this two-part blog series we continue to look at the Finance Act No 15 of 2017 which is designed to implement the 2018 National Budget of Trinidad and Tobago. We examine what has been implemented and what has been deferred or simply left out without explanation. Those with businesses should be careful to ensure that they correctly calculate their quarterly returns, while those thinking about buying a new or foreign used car should consider changes made to the taxation of vehicles for private and commercial purposes.
On track, off track, or off the planet – let us know what you think of the course charted.
A Firstline Securities Limited Blog by: Mike
Introduction
The Finance Act No. 15 of 2017 made a number of changes to the tax regime in respect of motor vehicles and ancillary items related to motor vehicles. These are important factors to consider if you are contemplating changing your vehicle.
Changes To Legislation In Respect Of New And Used Vehicles
New and Foreign Used Motor Vehicles Using CNG
Changes have been made to the taxation of both private and commercial vehicles using CNG. An exemption from motor vehicles tax on vehicles using CNG now applies to:
- New motor vehicles imported for private of commercial use, with an engine size not exceeding 1599cc which is manufactured to use compressed natural gas.
- Used motor vehicles imported for private or commercial use, with an engine size not exceeding 1599cc which is manufactured to use compressed natural gas and is not older than 4 years from the date of manufacture.
- New motor vehicles imported for commercial use with an engine size exceeding 1599cc which are manufactured to use compressed natural gas.
- Used motor vehicles imported for commercial use, with an engine size that exceeds 1599cc which are manufactured to use natural gas and is not older than 4 years from the date of manufacture.
Blog readers should note that the exemptions in respect of motor vehicles using CNG that are imported for commercial use, unless it is subsequently extended, will expire on the 31st December 2020.
New and Foreign Used Electric and Hybrid Vehicles
Changes have been made to the taxation of both private and commercial vehicles using electric or hybrid power systems. An exemption from motor vehicles tax on vehicles using electric or hybrid power systems now applies to:
- New electric vehicles imported for private or commercial use with an engine size not exceeding 159 kilowatts.
- Used electric vehicles imported for private or commercial use with an engine size not exceeding 159 kilowatts and is not older than 4 years from the date of manufacture.
- New electric vehicles imported for commercial use with an engine size greater than 159 kilowatts but not exceeding 179 kilowatts.
- Used electric vehicles imported for commercial use with an engine size greater than 159 kilowatts and not exceeding 179 kilowatts and is not older than 4 years from the date of manufacture.
- New hybrid vehicles which are imported for private or commercial use with an engine size not exceeding 1599cc.
- New hybrid vehicles which are imported for commercial use with an engine size that exceeds 1599cc but not 1999cc.
- Used hybrid vehicles which are imported for private or commercial use with an engine size that exceeds 1599cc and is not older than 4 years from the date of manufacture.
- Used hybrid vehicles imported for commercial use with an engine size greater than 1599c but not 1999cc and is not older than 4 years from the date of manufacture.
Readers should note that for the purposes of the legislation the following vehicle definitions apply in respect of electric and hybrid vehicles:
- Electric vehicle: a vehicle which is propelled by an electric motor powered by a rechargeable battery pack or other energy storage device.
- Hybrid vehicle: a vehicle which is capable of being propelled by a combination of an internal combustion engine and an on-board rechargeable energy system or other energy storage device.
Value Added Tax and New and Used vehicles
The Value Added Tax Act has been amended to restrict the zero rating of electric, hybrid, and CNG vehicles to the importation of:
- New electric vehicles for private or commercial use with engine sizes not exceeding 159 kilowatts.
- New electric vehicles for commercial use with engine sizes greater than 159 kilowatts but less than 179 kilowatts.
- Used electric vehicles for private or commercial use with engine sizes not exceeding 159 kilowatts and not older than 4 years from the date of manufacture.
- Used electric vehicles for commercial purposes with engine sizes exceeding 159 kilowatts but less than 179 kilowatts and not older than 4 years from the date of manufacture.
- New vehicles manufactured to use CNG with engine sizes exceeding 1599cc imported for commercial use.
- Used vehicles manufactured to use CNG with engine sizes exceeding 1599cc and not older than 4 years from the date of manufacture imported for commercial purposes.
- New hybrid vehicles imported for private or commercial use with an engine size not exceeding 1999cc.
- Used hybrid vehicles imported for private or commercial use with an engine size not exceeding 1999cc and not older than 4 years from the date of manufacture.
Some of these classifications are time dated and expire on the 31st December 2020 unless subsequently extended.
Customs Duty and New and Used vehicles
The Customs Act has been amended to exempt from import duty the following types of vehicles:
- New electric vehicles imported for private or commercial use with engine sizes not exceeding 159 kilowatts.
- Used electric vehicles imported for private or commercial use with engine sizes not exceeding 159 kilowatts.
- New electric vehicles imported for commercial use with an engine size greater than 159 kilowatts but less than 179 kilowatts.
- Used electric vehicles imported for commercial use with an engine size with an engine size greater than 159 kilowatts but less than 179 kilowatts and not older than 4 years from the date of manufacture.
- New hybrid vehicles imported for private or commercial use with an engine size not exceeding 1599cc.
- Used hybrid vehicles imported for private or commercial use with an engine size not exceeding 1599cc and not older than 4 years from the date of manufacture.
- New hybrid vehicles imported for commercial use with an engine size not exceeding 1599cc but not exceeding 1999cc.
- Used hybrid vehicles imported for commercial use with an engine size greater than 1599cc but less than 1999cc and not older than 4 years from the date of manufacture.
The Environmental Tyre Tax
If you buy a new vehicle or already own one at some point you will probably need to change the tyres.
With effect from the 1st January 2018 (the legislation does not clearly identify a start date for this new tax, so it is assumed to apply from the start of the Income Tax Year 2018) an environmental tyre tax is payable on the importation of tyres that fall under certain tariff headings under the Customs Act. The tax is payable by the importer of new and foreign used tyres under the respective tariff regimes at the rate of TT$20 per tyre. It is possible that this cost will be passed on to the end user of the tyre in the form of higher prices.
Closing thoughts – time to consider your investing strategies
Firstline Securities Limited offers comprehensive coverage of local and international markets with a bias for the energy sector. Firstline offers many unique opportunities to put surplus cash to work either as your asset manager or investment advisor. Please contact us for more details at info@firstlinesecurities.com or at 868.628.1175, we can discuss your investment needs in detail and craft a portfolio that makes sense for you. We look forward to hearing from you.
