What Global Companies Need to Know About Trinidad and Tobago’s Payroll
At the southern end of the Caribbean, just off the coast of Venezuela, lie two islands with a collective population of just 1.4 million people, that are punching well above their weight economically.
Large reserves of oil and natural gas have made Trinidad and Tobago a high-income economy, to the point that it’s the fifth-richest country by GDP in the Americas (when purchasing power parity is taken into consideration). The emphasis on petrochemicals means that its economy is split almost 50/50 between industry and services, so the economic impact of COVID-19 on its tourism trade didn’t destabilize its finances as a whole.
Combine Trinidad and Tobago’s economic strength with relatively low wage rates, and it’s easy to see why it’s such a popular choice for international businesses to trade in. In this guide, we’ll look at all the basics of business in Trinidad and Tobago from a payroll perspective.
The authorities in Trinidad and Tobago are proactive in making it easy for international businesses to get up and running. The whole process can be conducted online in a matter of days, using the TTConnect and TTBizLink platforms to access all the required registration and government services. Furthermore, there is no minimum share capital requirement for setting up a business, and the costs of the processes are low.
Businesses start by reserving their name and getting approval, then incorporating the company (if a limited-liability company). You can then go on to apply for various different registrations on TTBizLink, including industrial permits and licenses, export certificates, import duty concessions and (if applicable) fiscal incentives. It’s also the place where you can apply for work permits, which are mandatory for all foreign workers and are generally approved for all senior management and technical staff.
Once all this is completed, you can open a business bank account, which is required in Trinidad and Tobago for certain types of transactions to take place.
It’s also worth noting that Trinidad and Tobago runs an unusual financial year, which starts on 1 October and finishes on 30 September.
Contracts in Trinidad and Tobago can be oral or written, but all new employees must be registered with the National Insurance Board within their first week of employment. It’s also good practice for new employees to register with the Board of Inland Revenue at the same time.
Probation periods are generally between three and six months, varying across different job types. These periods should be specified when employment agreements are made.
Employees generally work 40 hours per week, spread across eight hours per day Monday to Friday. All work over and above eight hours each day counts as overtime, which is paid at 150% of the normal rate for the first four hours, and 200% for any time beyond that. All work on holidays counts as overtime, with the same rates applicable.
Compensation, Bonuses and Severance
The current national minimum wage rate in Trinidad and Tobago is 17.50 Trinidadian dollars per hour (approximately £2.20; $2.60; €2.60). This rate has been in place since December 2019, and you should keep abreast of any potential changes in this rate in the future. Bonuses are generally performance-based and are awarded at the discretion of the employer, and 13th-month bonuses are not customary.
Notice periods are a minimum of 45 days, and all notice should be served in writing. Severance pay entitlement for employees with at least one year of service is two weeks per year served, rising to three weeks per year served for employees with at least five years’ service.
Tax and Social Security
Income tax arrangements in Trinidad and Tobago are relatively simple. Residents are exempt from tax on their first TT$84,000 per year (approx. £10,700; $12,300, €12,300). Aside from this exemption, tax rates are 25% on the first TT$1 million earned per year (approx. £127,000; $147,000, €147,000), and 30% on all earnings over and above that.
The main social security contribution is National Insurance, which is paid at a total rate of TT$414.30 per week (approx. £52; $60, €160) for all those employees who earn more than TT$13,600 per month (approx. £1700; $2000, €2000). Two-thirds of this is paid by the employer and one-third by the employee. All employees who earn more than TT$470 per month (approx. £60; $70, €70) must also pay TT$8.25 per week (approx. £1; $1.20, €1.20) in health surcharge.
For both contributions, lower rates apply for employees whose earnings don’t meet these thresholds.
Corporation tax in Trinidad and Tobago is generally 30%, but higher rates apply to petrochemical companies. The VAT rate is 12.5%
Holidays and Leave
There are 16 days of public holiday in Trinidad and Tobago each year. Should a holiday fall on a Saturday or Sunday, then the public holiday is served on the next available working day.
Paid leave entitlement is variable, depending on what’s agreed in employment contracts; this is an area where collective bargaining can have considerable influence. The most common arrangement is for employees to be given two weeks paid leave per year, assuming they have worked 220 days.
Maternity leave entitlement is 14 weeks for mothers with at least one year of service. Employers should contribute one month of full pay and two months of half pay, with National Insurance covering the rest of the employee’s normal salary. There is no entitlement to paternity leave or parental leave.
Paid sick leave entitlement is generally two weeks per year, but collective bargaining can also vary this.
Trinidad and Tobago is one of the Caribbean’s most exciting prospects for incoming foreign businesses. But it’s not without its challenges, especially as collective bargaining can have considerable influence on employment arrangements in some industries. It’s very much a country where local and cultural expertise can make a big difference, and so we recommend taking the advice of an expert who can ensure you get your move into Trinidad and Tobago right.
This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.