Legislation for Foreign Investment Statutes in Countries in the Americas
Comparative Study
1. Legal bases for foreign investment
Objective: Indicate if there is a Foreign Investment Statute and describe it. In the paragraphs below, indicate the legal rank of the norms contained in the Statute, i.e., regulations for expropriation fall under which rank?
1.1 Constitutional
1.2 Legal
Foreign Investment Act No. 16 of 1990.
1.3 Administrative
2. Concept and subject of foreign investment
Objective: It is essential that both the investor and the nature of the investment be identified, so as to determine to which activity and to whom the regulations will be applied. This is also essential at the international level, especially in case of dispute and arbitration.
2.1 Is foreign investment in your country legally defined or conceptualized?
Foreign Investment is defined as any investment by a foreign investor.
A foreign investor is defined as:
a) as individual who is neither a citizen of a CARICOM member country or a resident of Trinidad and Tobago.
b) any firm, partnership or unincorporated body of which at least one half of its membership consists of persons to whom paragraphs a), b) or c) applies
c) any firm, partnership or incorporated body incorporated in a CARICOM member country or, if so incorporated is under the control of a person to whom paragraphs a) or b) applies or is deemed to be under the control of a foreign investor.
2.2 Are there registered records or mechanisms to clearly identify both the foreign investor and the nature of the investment?
Foreign Investors must supply certain basic information to the Minister of Finance prior to incorporating or acquiring shares in a Trinidad and Tobago company (Sections 4 and 5 of the Act).
2.3 Is it possible for a natural person to resort to the foreign investment legislation?
A foreign investor is defined as:
a) an individual
b) a firm, partnership or unincorporated body
c) a company or corporation
2.4 Is it possible for a citizen or resident to resort to the foreign investment regime?
No. A foreign investor if an individual who is neither a citizen of a CARICOM country nor a resident of Trinidad and Tobago Nationals of Trinidad and Tobago cannot resort to the Foreign Investment Act.
2.5 Can a recipient company funded with both domestic and foreign capital resort to foreign investment regulations? Is this subject to restrictions?
A company with both domestic and foreign capital will be considered a foreign company if there is majority ownership or control.
2.6 Is there a time limit for a foreign investor to be considered as such?
There is no time limit.
2.7 Are restrictions imposed on the executive body or other staff of an enterprise. Are there nationality quotas? Under what conditions can the executives or other staff hired abroad send their earnings to their country of residence?
Foreigners are subject to work permit regulations which are relatively liberal.
There are no nationality quotas.
There are no restrictions on the repatriation of profits, dividends or income.
3. Scope of foreign investment activities
Objective: Define the legal scope of foreign investment in your country, as well as their conditions and limitations.
3.1 Describe the regulating principles of economic activity in your country.
Trinidad and Tobago subscribes to a free enterprise system and consequently there are no restrictions on entry or exit.
The Constitution recognizes and declares the following fundamental human rights and freedoms, inter alia:
a) The right of the individual to life, liberty, security of the person and enjoyment of property and the right not to be deprived thereof, except by due process of law.
b) The right of the individual to equality before the law and the protection of the law.
a) Describe how economic freedom is guaranteed.
The Constitution provides for inter alia:
a) The right of the individual to enjoyment of property and the right not to be deprived except through due process of law
b) The right of the individual to equality before the law and the protection of the law.
b) Is the principle of economic nondiscrimination guaranteed? Describe how.
Yes.
The individual has the right to equality of treatment before any public authority.
There are no restrictions for the participation of foreigners in any economic activity.
c) Public and private enterprises (local and foreign): do they compete on equal terms, or does the State have higher benefits?
There is no distinction between public and private enterprise.
3.2 Indicate the scope of foreign investment, i.e., does it include movable and immovable property, assets, concessions, claims to money, intellectual property, industrial property, leasing, technology, etc.
The scope of foreign investment is extremely extensive.
There are no restrictions on what can be considered foreign investment.
3.3 Reserved sectors
a) Indicate the sectors or economic activities reserved exclusively for the state in your country. Explain the regulations pertinent to these areas.
Petroleum distribution.
Water production and distribution.
Postal services.
These sectors are governed by legislation which creates and controls the monopolies.
b) Indicate the sectors or economic activities in which only foreign investment is excluded, restricted or limited in your country. Explain in what consists said exclusion, restriction or limitation.
No sectors are close exclusively to foreign investment in Trinidad and Tobago.
In the case of land, purchases exceeding one acre (0.4 hectares) for residential purposes and five acres (2.0 hectares) for commercial purposes require a license.
A license is also required for shareholding exceeding 30% of the total shareholding of a public company.
c) Does the Principle of International Reciprocity exist in the legislation of your country?
International reciprocity is restricted to CARICOM countries.
d) Is foreign investment subject to performance requirements?
NO
e) Can foreign investors take part in the privatization processes of your country?
YES.
4. Rights and protection of foreign investment
Objective: Identify the type of treatment granted foreign investment i.e.: its rights, protection and incentives.
4.1 Treatment granted to the foreign investor and the investment.
a) National treatment or Most-Favored-Nation clause? (Refer to paragraphs 3.1 and 3.3).
Trinidad and Tobago defined national treatment as treatment of foreign investors in a manner which is no less favourable than that accorded its nationals.
4.2 Protection of Property
a) Constitutional or legal grounds that may lead to expropriation of, or limitations to property.
Expropriation is only possible on the grounds of public purpose which is related to internal needs of the country, under due process of law, on a non-discriminatory basis and against prompt, adequate and effective compensation.
b) How is compensation determined? Which value is it based on? How is it settled?
Compensation is generally based on fair market value of the investment or returns expropriated.
It is settled in a form which is effectively realizable and freely transferable.
c) Can the authorities take possession of expropriated assets prior to paying compensation?
Yes, but investors would be entitled to interest at a normal commercial rate.
d) Is property of both corporal and incorporeal assets equally guaranteed?
Trinidad and Tobago legislation covering a variety of intellectual property issues.
These include:
a) Copyright Act
b) Patent Act
c) Trademark Act
4.3 Transfers of investment, remittances of capital and benefits
There are no restrictions on remittances of capital and benefits.
a) Under what conditions may investments in the form of foreign exchange, capital goods, technology, associated credits, etc., be brought into the country? Are there specific regulations for each item?
All investments can be brought into the country freely.
There are no regulations governing their entry.
b) Are there restrictions to the remittances of capital, benefits, debt service, or other remittances derived from foreign investment?
No
c) Are there different kinds of exchange rates? To which does the foreign investor have access?
No. The Trinidad and Tobago currency is freely market determined.
4.4 Taxes and incentives to foreign investment.
a) Explain briefly the taxes that foreign investments are subject to.
Benefits, maximum marginal rate 38%
Profits, 38%
Dividends, 0-20%
Reinvestment, 38%
Remittances, 0-20%
Interest on external credit, 10-20%
Royalties, 0-20%
Services contracted outside the country, variable.
Investment in tangible assets, 15% VAT.
b) Are there special tax rules for foreign investment?
No
c) Has your country signed agreements with other countries in the Americas to avoid double taxation? If yes, list those countries.
Venezuela
Canada
USA
d) Are there other incentives to foreign investment, such as access to domestic credit, investment insurance, industrial parks, customs exemptions, etc.?
Tax exemptions and import duty exemptions are available for manufacturing, agricultural and certain service industries.
Incentives available include:
a) Tax holidays
b) Customs Duty exemptions
c) Industrial Parks
d) Tax Allowances
e) Carry forward of losses
f) Accelerated depreciation
g) Export incentives
5. Dispute settlement
Objective: Because Bilateral Investment Treaties (BITs) will be part of another study, only an overview of the subject is required here.
5.1 Domestic settlements: Can the foreign investor resort to the same procedures as the national investor? Are there special forms of appeal available to foreign investors? Please describe.
Foreign investors are entitled to national treatment in the settlement of disputes.
Foreign investors can use other mechanisms, e.g. ICSID
International Arbitrator/Tribunal under the Arbitration Rules of UNCITRAL
5.2 International settlements: Is your country a member of ICSID or other international arbitration mechanisms on the subject of investment?
Trinidad and Tobago is a signatory to ICSID
5.3 Has your country signed BITs with other countries in the Americas? What is the present status of said agreements, i.e., approved, ratified, in effect?
Canada - ratified and in effect
USA - ratified and in effect
5.4 Where in the juridical hierarchy of your country are international treaties and specifically the Investment Protection Agreements? Analyze your response in relation to the Constitution and domestic laws.
Domestic laws including the Constitution rank higher than international treaties in common law jurisdictions such as Trinidad and Tobago. International treaties can only attain equivalent rank if they are transformed into domestic law.
5.5 Do said agreements have "direct effect", that is to say, can they be invoked by the parties directly before the Courts and then applied to the case in question? If not, under what circumstances can they be invoked and applied?
See answer to question 5.4.
6. National authorities
Objective: To identify the agencies in charge of foreign investment, their organization and functions.
6.1 Is foreign investment handled by specially appointed offices in your country? What is their hierarchical status? How are their actions integrated? What are their main attributions?
Yes
Ministry of Trade & Industry: Inward Investment
TIDCO: Investment Facilitation
Ministry of Finance: Land Licensing, Licensing of Foreign Investor
Trinidad and Tobago Free Zones Company: Free Zone
Ministry of Tourism: Inward Investment