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Thursday, March 30 2017 @ 12:44 AM AST

Trinidad & Toago talks to CIAT on US$1.4b annual tax leakage from LNG diversions

Speaking on Transfer Pricing on September 30, 2016, Trinidad and Tobago Finance Minister Colm Imbert said during his budget speech for fiscal 2017: "Illegal pricing arrangements have become a major source of tax evasion all over the world. The problem is rampant in commodity producing economies where vertically integrated companies are able to shift profit centres to jurisdictions where the tax burden is lowest. It has been estimated that since 2011 Trinidad and Tobago has lost at least US$1.4 billion per annum in reduced benefits from diversions of natural gas sales to higher price markets through unbalanced off-taking contracts.

"To reduce this tax leakage, we have engaged the Inter-American Centre of Tax Administrations (CIAT) to work with us on a policy and legislation to govern transfer pricing. Pending comprehensive legislation, we have engaged a transfer pricing consultancy to help us in formulating a commercial structure of arms’ length pricing that will advise the Government’s position in upcoming negotiations with Atlantic LNG."

Forecast by Morgan Stanley Research to be relegated to 7th, after Russia joins the top six, Point Fortin-based Atlantic LNG is still the world's 6th largest LNG exporter, according to the BP Stats Review 2016 re-released last month in T&T.

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