VAT for small shops in Trinidad and Tobago: rate, threshold and returns

Value Added Tax is a tax on the sale of goods and prescribed services. The Inland Revenue Division explains that it applies to both goods and services in Trinidad and Tobago and is included in the final price the customer pays. A VAT-registered business collects it on taxable sales, subtracts the VAT it paid on its own business purchases, and pays the difference to the IRD.

The standard rate is 12.5%, stated on the IRD's VAT page. That is lower than Jamaica's 15% and Guyana's 14%, which matters if you are comparing guides: the arithmetic below only works with this rate. The tax is a pass-through. It is the customer's money in transit, not shop income.

The IRD's registration page says anyone making commercial supplies of TT$600,000 or more in the preceding twelve months, or who can show from a sales forecast that supplies will exceed TT$600,000 in a twelve-month period, must apply for VAT registration. The figure applies from 1 January 2023, per the IRD. PwC's Worldwide Tax Summaries, last reviewed in June 2026, gives the same threshold.

Some older forms and pages elsewhere may still show a previous, lower figure. If you see two numbers, use the IRD's current registration page, and ask the IRD to confirm.

TT$600,000 a year is an average of TT$50,000 a month. That is not a lot for a busy parlour, which means many shops reach it sooner than their owners expect. Because the test looks at what you will sell as well as what you did sell, you cannot wait until the year ends if your sales are clearly heading over the line. Whether zero-rated food sales count toward that total is a question to put to the IRD directly, and the safe assumption is that they might.

According to PwC, basic food items and agricultural supplies are zero-rated in Trinidad and Tobago, along with exports and some other categories. Certain services, including financial services, residential rentals and educational services, are exempt.

Zero-rated and exempt sound alike but work differently:

• Zero-rated. The sale is taxable at 0%. You add no VAT to the price, but you can still claim back VAT you paid on purchases linked to it. For a shop, suppliers charge you no VAT on zero-rated goods in the first place, so there is usually little to claim on those lines.
• Exempt. The sale carries no VAT and you cannot claim back VAT on the costs behind it.
• Standard-rated. VAT at 12.5% is added, and you claim back the VAT on your purchases.

In a typical shop, this means a mix: staples such as the basic foods the schedule covers carry 0%, while many drinks, snacks, toiletries and household goods carry 12.5%. Exactly which products count as basic food, and which forms of them, is set out in the VAT Act's schedules. Do not guess for borderline products, such as flavoured, processed or ready-to-eat versions. Check the schedule or ask the IRD, because a wrong guess either overcharges customers or leaves you short at return time.

Going the other way, a TT$90 shelf price contains TT$10 of VAT: 90 divided by 1.125 is 80, and 90 minus 80 is 10. Notice that VAT is one ninth of a VAT-inclusive price, 11.1%, not 12.5%. If you take 12.5% off a TT$90 price you get TT$11.25 of VAT, which is TT$1.25 too much. Over a few hundred sales that error becomes real money. Because VAT is included in the price customers see, your shelf price for a standard-rated item should be the VAT-inclusive figure.

Your margin is worked out on the price before VAT, since the VAT is not yours. A TT$90 item that cost you TT$60 before VAT has gross profit of TT$20 on TT$80, which is a 25% margin, not the 33% you would see on the full TT$90. Gross profit explained covers the method.

The IRD says the VAT Act requires businesses that must register to register with the VAT Administration Centre, collect tax at 12.5% on goods and prescribed services, remit the net VAT collected, and file a VAT return. What you submit depends on how you trade. The IRD's page lists forms such as IA-001 for sole proprietors, with identification and acceptable evidence of income, and AOI-002 for companies, with identification for each director and evidence that income is above the threshold.

A secondary guide by Owoode, which summarises IRD guidance, adds that registration is done online through the IRD's e-Tax service with a ttconnect ID. It also describes a two-month tax period, with the return and payment both due within 25 days of the period ending, nil returns required, and records kept in English and in TT dollars for six years or three years from filing, whichever is later. We could not confirm those details on an IRD page, so confirm the filing schedule the IRD gives you when you register.

Once registered, you also issue a tax invoice when a customer asks for one, and display your registration certificate. The words and details a valid tax invoice must show are set out in the VAT Act, and an accountant can give you a template.

Here is a registered parlour's figures for one two-month period. All amounts exclude VAT.

The shop collected TT$15,000 on its standard-rated sales and paid TT$10,000 to suppliers on the stock behind them, so it pays the TT$5,000 difference. The TT$90,000 of zero-rated sales adds nothing to the tax due, but it still belongs on the return. If the VAT paid on purchases exceeds the VAT collected, a refund may be claimed.

The practical lesson: a shop whose sales are mostly zero-rated food may owe little or nothing in any one period, or be due a refund, and still have to register, keep records and file on time. Put the VAT part of each day's takings aside so the payment never surprises you.

• A daily summary of sales split into standard-rated, zero-rated and exempt.
• Every supplier invoice, kept in order, showing the VAT charged.
• Credit notes for returns and supplier credits.
• Copies of every return and proof of every payment.
• A note of stock taken for personal use, which usually needs to be accounted for.
• A calendar entry for each filing and payment date the IRD gave you.

If you are not yet over TT$600,000, keep the same records anyway. They show when you are approaching the line, and they make registration straightforward on the day it arrives.

In Shopkeepa you set your currency to TTD and your shop's sales tax as VAT at 12.5%, then mark each product as taxable or not. That records the tax treatment of every product in one place, which makes your daily split of standard-rated and zero-rated sales easier to pull together. It does not calculate or file your VAT return.

Shopkeepa is in development and open to early access shops. See the Trinidad and Tobago page and the VAT calculator.