Budget 2027: Why Credit Unions Need to Take a Closer Look at Their Software Costs

For credit unions in Trinidad and Tobago, Budget 2027 has introduced another potential pressure on operating expenses: VAT on digital services supplied by foreign companies.

The Government has proposed introducing VAT on qualifying services supplied by non-resident providers from 1 March 2027. While the implementation details are still to be confirmed, the measure deserves the attention of credit unions, particularly those with growing investments in cloud services, software subscriptions and other digital platforms.

The concern is not simply that another tax is being introduced. It is how that tax could affect institutions that cannot ordinarily recover VAT associated with their exempt financial services.

Why this matters to credit unions

Credit unions increasingly rely on digital platforms to operate efficiently. From Microsoft 365 and Google Workspace to cybersecurity tools, cloud hosting, accounting systems and specialised financial applications, technology subscriptions have become a significant recurring expense.

Many of these services are supplied by overseas providers.

Under Trinidad and Tobago's VAT framework, financial services provided by credit unions are generally exempt. This means that VAT incurred in providing those exempt services is generally not recoverable as input tax.

Consequently, where the proposed VAT applies to a credit union's digital subscriptions, the additional tax could become a direct operating cost rather than a recoverable expense.

It is important to note that the Government has not yet clarified exactly how the proposed measure will be administered or which specific services will be affected. Credit unions should therefore avoid assuming that every overseas software subscription will automatically attract the additional charge.

Nevertheless, it would be prudent to assess the potential financial exposure now.

What could the additional cost look like?

Consider a credit union spending TT$15,000 per month on overseas software subscriptions and digital services.

If those services become subject to VAT at 12.5%, and the VAT is fully unrecoverable, the additional expense would be:

• Monthly additional cost: TT$1,875

• Annual additional cost: TT$22,500

That is TT$22,500 in additional annual expenditure without purchasing any new software or receiving any additional service.

For larger institutions with more extensive technology environments, the financial implications could be considerably greater.

Of course, these figures are illustrative. The actual impact will depend on the final rules, the services covered and each institution's circumstances.

The bigger issue: Are credit unions getting value from their technology spending?

The proposed VAT measure provides a timely reason to examine a broader issue.

Many organisations accumulate software subscriptions over time without conducting a structured review of what they own, what they use and what they actually need.

Licences remain assigned to former employees. Different departments purchase overlapping applications. Subscriptions renew automatically, sometimes without anyone evaluating whether the service is still necessary or whether a more suitable arrangement exists.

The result is an expanding technology budget without a corresponding improvement in productivity or operational efficiency.

Before considering the potential impact of additional taxes, credit unions should be asking some straightforward questions:

• Do we have a complete inventory of our software subscriptions and renewal dates?

• Are we paying for licences that are not being used?

• Are different departments subscribing to applications that perform similar functions?

• Are our licensing arrangements appropriate for the number of users and services we actually require?

• Are our technology vendors being managed as part of a coordinated strategy, or independently of one another?

These are not necessarily complicated problems, but they require someone to take ownership of the overall picture.

Technology management is more than purchasing software

Good technology management is not simply about negotiating better prices.

It requires understanding how an institution operates, what its employees need, which systems support its services and where unnecessary complexity has developed.

For smaller and mid-sized credit unions, that responsibility is often spread across management, external vendors and staff who already have other priorities.

Larger credit unions may have their own IT departments, but internal teams can still benefit from additional expertise in software licensing, vendor coordination, cloud services and technology planning.

In both cases, the objective should be the same: ensuring that technology expenditure is deliberate, justified and delivering value.

A practical starting point

At ROSE IT, we work with organisations to bring their technology services under one roof, providing both fully managed and co-managed IT support.

For credit unions, this includes helping to review software subscriptions, assess licensing arrangements, coordinate vendors, plan renewals and identify opportunities to improve how technology resources are used.

The proposed Budget 2027 measure is not something that can be avoided simply by changing IT providers. However, an institution that understands and actively manages its technology expenditure will be better positioned to respond to any additional costs.

The starting point is a clear picture of what you are paying for today.

Let's take a closer look

ROSE IT is offering credit unions a complimentary initial Technology Cost Review to discuss their current software subscriptions, licensing arrangements and IT support environment.

Whether you have an internal IT team, rely on an external provider or use a combination of both, we can help identify practical opportunities for improvement.

Request your complimentary Technology Cost Review

ROSE IT Services Limited — All your IT services under one roof.

Note: This article discusses proposals announced in Trinidad and Tobago's Budget 2027. The final scope, implementation arrangements and application of VAT to specific services remain subject to clarification. Credit unions should consult their tax advisers on the implications for their individual circumstances.