In a significant move aimed at streamlining taxation and boosting economic efficiency, Trinidad and Tobago’s Finance Minister Davendranath Tancoo announced plans to replace the existing Value Added Tax (VAT) system with a sales tax during the 2025/2026 budget presentation on October 13. The VAT system, in place since 1989, has been criticized for its administrative complexity, backlog of refunds, and negative impact on business confidence. Tancoo emphasized that the proposed sales tax system would be simpler, more efficient, and aligned with models used in countries like the US and Canada. The current VAT rate stands at 12.5%, but the new system aims to eliminate loopholes and improve compliance through better resource allocation and digitization. Additionally, the government announced the removal of VAT on ‘basic’ food items, effective October 17, to address national food affordability. This includes products like pumpkin, watermelon, and coconut water. Industry leaders, including the TT Manufacturers’ Association and the Supermarket Association, have expressed cautious optimism, highlighting potential benefits such as reduced administrative burdens and improved cash flow for businesses. However, concerns remain about the transition process, particularly for small enterprises and farmers, who may face challenges in adapting to the new system. The government has pledged to ensure the transition is revenue-neutral and socially balanced, with protections for low-income households.