Minister of Public Administration and Digital Transformation Allyson West.

Special Economic Zone (SEZ) investors will be offered a range of tax reliefs geared at boosting economic diversification says Public Administration Minister Allyson West.

She was speaking during the debate of the Trinidad and Tobago Special Economic Zones Bill 2021 in the Senate on Tuesday which seeks to set up an SEZ Authority to monitor SEZ activities. West explained that the new legislation will allow T&T to operate a system that provides tax reliefs to approved enterprises in a globally acceptable manner.

“This will allow us to pursue and accommodate foreign direct investment in the context of the new world order, in compliance with the new global tax rules. It will facilitate our diversification thrust,” she said.

Among the tax reliefs being offered are exemption from property tax, exemption from import duties on approved goods, spare parts, raw materials, building materials, Stamp duty exemption on land lease purchases, reduced tax rates supplemented by allowances/credits, reinvestment relief and VAT relief on goods supplied to the Zones as well as services provided by non-residents.

She explained that the SEZs will be open to residents and non-residents noting that the reduced tax rates are to be supplemented by rules to discourage Capital flight from other countries.

Meanwhile, Trade Minister Paula Gopee-Scoon also underscored the need for the legislation saying it represented a transformational shift in how economic spaces will now be governed and developed in T&T. She noted that Free zones have played an insufficient role in diversifying the economy because of an ineffective policy and a weak legal framework.

In the last global review by the FHTP in April 2021, Gopee-Scoon said Trinidad and Tobago and Tobago’s Free Zone Regime was classified as “harmful.”

“This was primarily due to issues related to ring-fencing; and the absence of an effective exchange of information framework. In October 2017, when Trinidad and Tobago joined the BEPS Inclusive Framework, the Government proactively pursued the following actions to bring our economic zones regime in compliance with international standards,” she added.

With effect from 1 January 2019, Gopee-Scoon said no new entrants were permitted into the Free Zone regime and between 2019/2021 the new legislation was forged.

She noted that the SEZ Authority must review and assess the performance of all Zones and report to the Minister on the performance of all such Zones; formulate standards and prescribe codes of practice to be observed by operators, SEZ Enterprises or Single Zone Enterprises and facilitate an enabling environment in areas designated as SEZ.”

“It is also meant to attract foreign direct investment and stimulate domestic investment, promote economic development in local communities and advance further diversification of the economy,” Gopee-Scoon added.

But Opposition Senator Jearlean John said it appeared as if the Bill had nothing to do with the government’s focused interest, any sense of urgency, or objectives, to diversify the economy.

“This Bill is simply to tick a box based on the requirements of International Treaties to which we are signatories, and our current status of noncompliance,” she said.

She also questioned why the Minister has to be a part of the decision making in hiring a CEO for the Authority.

“It appears that every country on earth understands the benefits to be derived from Special Economic Zone except the government of T&T,” John said. She added: “One can suggest that the urgency to bring this stringent reporting regime had to do with the loss of regulatory oversight by advanced economies and loss of tax revenue.”

The Senator noted that some countries have done exceptionally well in terms of promoting and diversifying exports and creating jobs through zones.