The tax credits given to other companies making an investment in TT are not transferable or tradeable.
So said Finance Minister Colm Imbert, as he sought to clarify comments made by Patriotic Energies on Friday, after its proposal to finance the purchase of the Point-a-Pierre refinery and the Paria Fuel Trading Company was shut down by government for a third time.
In a statement on Saturday, Imbert said “It appears that there is a complete misunderstanding of the true nature of transferable tax credits as compared to tax concessions or incentives to industry. Patriotic has said that the tax credits are nothing new and are given to multinational companies making foreign direct investment in TT.”
“What is being missed is that the tax credits given to other companies making an investment in TT are not transferable or tradeable.”
He explained, “It is only non-transferable tax credits that are given to other companies making investments, and these non-transferable tax credits can only be used to offset tax on income from their own operations.” These credits cannot be used by other unrelated companies and therefore do not represent any financial outlay on the part of Government.”
Imbert said a transferable tax credit is not linked in any way to the activities, income or operations of the company involved and is in effect a form of cash or revenue foregone.
A transferable tax credit, he said, can thus be sold on the open market for cash and is a legal and binding obligation of the Government, which in this case would have no relationship or connection to the restart or operation of the refinery.
Imbert added that “the fundamental conditionality in the financing proposal from Credit Suisse was that the Government was required to issue to Credit Suisse, through Patriotic, US$750 million in fully transferable and tradeable tax credits in exchange for the US$500 million that would be paid to Trinidad Petroleum Holdings (TPHL) for the refinery and Paria.”
Government was required to give Credit Suisse US$750 million in fully transferable money market instruments via this proposal and “Patriotic would then get the refinery and Paria for free, having put up no money, collateral or security and could mortgage the refinery and Paria as they saw fit.”
Imbert said this is inconsistent with the general criteria and conditions associated with the procurement process for the disposal of the refinery and certainly not in the public interest.”