MEMORANDUM ON THE REGISTRATION OF LOCAL AGENTS OF FOREIGN GOVERNEMENTS OR FOREIGN ENTERPRISES ACT 1980
1. By this Act:-
(a) Everybody who is an “Agent” of a “Foreign Government” or “Foreign Enterprise” must ensure that his Agreement in respect of his Agency is in writing and subject to the laws of Trinidad and Tobago and he must not enter into a contract providing for such an Agency otherwise than in accordance with this provision on penalty or a fine on summary conviction of $20,000.00 or five years imprisonment.
(b) In respect of a Contract of Agency established after the commencement of the Act (namely the 8th December 1980) the Agent must within sixty (60) days of execution of the Contract:-
(i) lodge a copy of the Contract with the Board of Inland Revenue together with a Declaration that no other Contract exists between the parties relating to the subject matter of the Contract being lodged; and
(ii) register with the Registrar General and lodge with the Board of Inland Revenue his name and address in Trinidad and Tobago and the name and address of the foreign Government or foreign enterprise of which he is Agent; and on failure to do so or if a false declaration is knowingly given he may suffer a penalty as above.
(c) In respect of a Contract of Agency existing at the date of the commencement of the Act such Contract must be brought in all respects within the provisions of the Act within twenty-eight (28) days of such commencement (i.e. on or before Tuesday 6th January 1981) on pain of penalties as above.
(d) Subsequently if there is a change of name or address of the Agent but not of the foreign enterprise or the foreign Government (see Note 3(1) below) he shall within thirty (30) days of the change notify the Registrar General and the Board of Inland Revenue and where there is a change in the terms of his contract he shall within thirty (30) days of the change notify the Registrar General and the Board of Inland Revenue and where there is a change in the terms of his Contract he shall within thirty (30) days notify the Board of Inland Revenue; on pain of fine on summary conviction of $10,000.00 or imprisonment for three (3) years.
2. The crucial words in inverted commas in paragraph 1 above are specifically defined in the Act. By Section 2:-
“Agent” means a resident individual, company or firm, carrying on business on behalf of a foreign Government or a foreign enterprise under a contract and includes a consultant. (See Note 3(2) below as to the expression “carrying on business”). It seems clear that the definition automatically embraces a “Consultant” even though a Consultant as defined would not appear to be necessarily a person carrying on business on behalf of a non-resident at all.
“Consultant” means a resident individual, company or firm rendering financial, legal or other professional or specialist advisory services to a foreign Government or a foreign enterprise either directly or through the Agent of that foreign Government or foreign enterprise.” This language seems very wide indeed and the services referred to would appear to be only limited by the wo4rds “professional” or “specialist advisory”.
“Foreign Enterprise” means a non-resident individual company or firm carrying on business whether in Trinidad or Tobago or elsewhere;
“Foreign Government” means a Government other than the Government of Trinidad and Tobago;
“Resident” and “Non-Resident” have the meanings respectively ascribed to them in the Exchange Control Act. It would therefore appear that a foreign company which is carrying on business in Trinidad through a branch which is resident here under the Exchange Control Act would not be a foreign enterprise within this Act but could of course be an “Agent”.
(1) The actual language of Section 6(1) reads “where there is a change of name or address of an Agent of the foreign Government or foreign enterprise for which he acts he shall within thirty (30) days of the change notify the Registrar General …”. Although this language reads strangely there was a change from the language in the Bill intended apparently to restrict the relevant change of address to that of the Agent only. Certainly as the language stands there could be no ground for argument that it extends also to the address of the Foreign Government or Enterprise.
(2) The expression “carrying on business on behalf of” in the definition of “Agent” leaves considerable room for doubt. This language would not normally be appropriate for somebody retained to do a particular act, e.g. to clear certain goods or collect a debt but would imply that there is to be some continuity in the transaction of business as in the case of a Commission Agent obtaining orders for a foreign company and accepting such orders on behalf of the foreign company. But there would still be doubt if such Commission Agent merely canvassed for orders. In such circumstances he could scarcely be said to be “carrying on business” on behalf of such principal. Certainly a distributor who has a franchise on behalf of a foreign manufacturer but imports all the goods in question on his own account could not be said to be carrying on business on behalf of such manufacturer. However, in such circumstances such distributor might in fact have authority to do various acts such as advertising on behalf of his “Principal” and it might be argued that because of this the Act applied to him.
4. Having regard to the somewhat draconian penalties of this Act we feel that most clients will wish to comply with the apparent intention of the law and will not be minded to litigate doubtful points. To such clients our advice on the practical basis is as follows:-
(a) Obviously if you have a written contract in force on 8th December 1980 in respect of an “Agency” and which is clearly subject to Trinidad and Tobago law you should take steps to register it and we enclose simple forms of letter to the Board of Inland Revenue and the Registrar General respectively for this purpose (see forms 1 and 2 attached).
(b) If you are “Agents” but have no written contract or if your contract is not or may not be subject to Trinidad and Tobago law then you must take immediate steps to procure such a contract in writing. Attached are very simple forms containing the minimum language needed to satisfy the Act for simple “Agents” (Form 3) and “Consultants” (Form 4). If the circumstances of your particular Agency require more elaboration particular advice may be required.
(c) A problem arises in respect of the time limit of twenty-eight (28) days given for compliance with the Act particularly having regard to the vagaries of the postal system during the Christmas season. It may not be possible in practice to get your agreement once prepared back to you signed within the time limit which expires on January 6th. In this respect we can only suggest:-
(i) you prepare the contract and send it in duplicate signed by yourselves and dated needed only the signature of your principal;
(ii) you request your principal to inform you by phone or telex of the execution of the Contract and the manner of execution (i.e. by whom it is signed on principal’s behalf). On receipt of such information you would complete a copy and comply with the lodging and filing requirements of the Act.
(iii) if your principal fails to inform you of the execution in time to meet the deadline you simply file a copy showing the name of the principal on the assumption that it has in fact been signed. We must advise however that unless at such time the principal had in fact signed the Contract there would be no “written contract” to file and you would not be in compliance with the law. However, we believe you would be seem demonstrably to have done your best which hopefully would save you from the more extreme penalties provided;
(iv) but in the case of existing complicated “commission agency” agreements under which orders are made here on behalf of foreign principals it seems very unlikely that it will be possible for the “Agents” to renegotiate such documents by 6th January 1981, or possibly at all. It takes two to make an agreement which the Act seems to ignore. They could have cancelled the agreement before 8th December, but that would be a breach and expose them to damages.
We can only suggest that the Chamber of Commerce puts this position to the Attorney General and asks how its members are expected to comply with the law.
(d) We should perhaps mention the question of stamp duty. A contract in writing such as this would normally attract a 25¢ adhesive stamp. It might be argued of some such contracts that they attract a $5.00 stamp as being a “letter or power of attorney mandate or other instrument in the nature thereof”. As a practical matter it is not an offence not to stamp such an Agreement. If you are ever required to produce it in Court it would then have to be stamped and an appropriate penalty might have to be paid increasing over the years. This Act does not require you to file a stamped copy of the Agreement. You may therefore either stamp the Agreement or arrange for the original to be retained abroad (requesting your principal to send you a photocopy) or disregard the question of stamping and take the risk that the contract in question would never be required to be produced by you in Court, which of course would be the usual position in the case of contracts of this kind.
5. Although clients may feel inclined to persuade their principals to sign formal contracts to comply with the Act and hence avoid the risk of prosecution, we must advise that there could be tax risks for the foreign enterprise in such a course. Such an agreement would imply that the principal was carrying on business in Trinidad through the Agent. And such an agreement might also provide evidence of a “permanent establishment” here for the purposes of various Double Taxation Treaties.
|Extracted From: Trinidad and Tobago Law.com||