Table of Contents
Overview of Grenada Tax Laws
Grenada is an island consisting of Grenada itself and six smaller islands at the southern end of the Grenadines and is located in the Southern Caribbean. Grenada is located northwest of Trinidad and Tobago, northeast of Venezuela, and southwest of St Vincent and the Grenadines. Grenada is often referred to as the Island of Spice mainly based on its production and exportation of nutmeg.
TAX LAWS IN GRENADA
Grenada taxes on the source principle. Accordingly, both resident and non-resident persons taxed on amounts accrued directly or indirectly from all sources in Grenada.
Personal Income Tax is charged at a rate of 10% on the first EC $24,000 of chargeable income and 28% on any amount in excess of the first EC $24,000
There is deduction of a personal allowance claim of EC $36,000 for an individual who is a resident of Grenada.
Businesses that are not registered with the Supreme Court as a company are also charged Personal Income Tax.
- Losses can be carried forward for 6 years (applies from the tax period 2015) and can only be used to offset chargeable profits in each subsequent year.
- Business income which was taxed under the Annual Stamp Tax Act at a rate of 0.5% is exempted.
An individual is considered resident where the individual is physically present in Grenada for at least 183 days in that year of assessment.
Every employee earning in excess of EC $36,000 per annum is required to submit an Annual Income Tax return within ninety days after the end of the fiscal year. Any outstanding amount should be paid upon filing the return.
Pay As You Earn (PAYE)
Employers acts as agents of the Inland Revenue Department (IRD) and is required to deduct tax from its employees’ gross monthly emoluments. Employers should remit the tax deducted to the IRD by the 7th day of the month following the period for which the deduction was made.
Any tax deducted and not paid by the deadline bears interest at the rate of 1.5% per month or part thereof until the payment is made.
National Insurance Contributions
The National Insurance Scheme (NIS) extends Social Insurance Coverage on a compulsory basis, to all persons between the ages of sixteen (16) and sixty (60) years who are engaged in insurable employment.
Both the Employer and Employee pay Contributions into the Scheme at the following rates:
• Employee 5% of gross earnings
• Employer 6% of gross earnings
Employers are required to pay 1% of gross earnings for employees under the age of 16 and over the age of 60.
The maximum insurable earnings on which contributions are payable is EC $5,000 per month or EC $1,160 per week. The maximum 5% deductions for any given period is EC $250.
Self-employed persons contribute 11% of gross earnings. Self-employed persons over the age of 60 are required to pay 1% of gross earnings for employment injury benefit. The maximum earnings on which contributions are payable is EC $5,000 per month.
The NIS deducted should be paid to the NIS within 14 days from the end of the month following the month in which the deduction was made. Failure to do so will result in a surcharge of 10% and an additional 1% interest for every month or part of a month that the contribution payment remains outstanding.
Scope: Resident and Non-Resident Taxation
Resident and Non-resident companies carrying on business in Grenada are subject to tax on profits accruing directly or indirectly from all sources in Grenada.
Generally, companies engaged in business activities in Grenada are subject to corporation tax at a rate of 28% on profits after deducting expenses wholly and exclusively incurred in the production of the income and specific allowances/deductions which the legislation allow.
Payments of Tax
Advanced monthly instalments of taxes are due and payable to the IRD based on the previous year’s tax liability. Any balance outstanding is due by upon filing the return.
Companies are required to file a corporation tax return on or before 90 days after the end of the company’s fiscal year end.
Late filing will result in a penalty the greater of 5% of the amount of tax owing, plus a further 1% of the amount of tax owing for each month or part of a month during which the failure to file continues; or $500.00 plus a further $100.00 for each month or part of a month during which the failure to file continues. The amount of the late fee should not exceed ECD 10,000.00.
Treatment of losses
Losses can be carried forward for 6 years (applies from the tax period 2015) and can only be used to offset chargeable profits in each subsequent year.
ANNUAL STAMP TAX (AST)
A company is subject to AST on gross receipts for the previous year.
Effective 2018 the tax rates are as follows:
- 0.5% in respect of business with gross receipts under EC $300,000 per annum
- 0.7% in respect of businesses with gross receipts in the amount of EC $300,000 and above
Calculating past years
- 0.75% in respect of businesses with gross receipts in the amount of EC $300,000 and above per annum.
- 0.5% in respect of businesses with gross receipts under EC $300,000 per annum.
Prior to tax period 2016
- 0.25% in respect of businesses with gross receipts over EC $30,000 per annum but not exceeding EC $100,000 per annum;
- 0.5% in respect of businesses with gross receipts exceeding EC $100,000 per annum.
Payment of tax
AST is payable in nine monthly installments, starting from April to December of the year the tax is payable. Late payments will incur interest at the rate of 1.5% per month or part thereof until the date of payment.
Key points to note:
• The first EC $36,000 is exempt from AST.
• Minimum AST payable is EC $100.
• Returns should be filed by 31st March of the year of assessment.
VALUE ADDED TAX (VAT)
VAT is charged on the entry of goods imported into Grenada, and on the sale of goods and supply of services within Grenada by a registered business.
Rate of VAT
• The standard rate of VAT is 15%.
• 20% for telecommunications sector (as it relates to data-internet and text messages).
• 10% for tourism sector.
Payment of VAT
VAT payments and returns should be made/filed with the IRD 20 days after the end of the tax period to which it relates.
Key points to note:
• Registration threshold is EC $300,000.
• Zero rated items as listed in the VAT Act.
• Exempt services are included in the VAT Act.
• In practice where the filing or payment deadline falls on a weekend the deadline is extended to the next business day.
Property Tax is a charge on real property and is assessed on the market value of the property. The rate applied is based on the use of the property. Additionally, a property is subject to one rate for the building and another rate for the land.
Rate of Tax
The rates of tax ranges from 0% to 0.5%.
This tax is payable by the property owner, as well as occupiers of buildings on extended family land. Tenants of property are also entitled to pay the tax where this is included in the lease agreement.
An exemption of EC $100,000 is allowed on property occupied by its owner (for at least 9 months of each year) and only one property can be given the exemption for each taxpayer.
Payment of Tax
The tax is due in August. If the tax is paid by 30 June of the same year, the tax payer is entitled to a 5% rebate. The tax payer can opt to make two installments of 50% each by 31st March and 30th June.
Any tax not paid by 29th August will attract a penalty of 20% (note: a late penalty of 10% applies for hotel accommodations). Interest will also be charged at 1.5% per month on any outstanding taxes.
This is a tax charged on the transfer of real property.
Rate of Tax
The rates of tax are as follows:
• Vendor – 5% of market value
Non residents (based on % of consideration or market value)
• Vendor – 15%
• Purchaser – 10%
Non residents are required to apply for a property holding license in order to purchase property in Grenada.
Where a property is transferred by way of a deed of gift, tax is payable on property valued over EC $150,000.00. If the transfer does not occur through a deed of gift, the tax shall only be payable on the value exceeding EC $20,000.00.
WITHHOLDING TAX (WHT)
WHT at the rate of 15% applies to payments made to non residents. WHT is payable on salaries, interest (except from bank deposits), dividends, discounts, rent, lease premiums, license charge, royalty, management charge, commissions and fees.
Key points to note:
• WHT is payable within seven (7) days after the date of payment or credit to the payer.
• Lower rates may be applicable under double taxation treaties to which Grenada is a party.
DOUBLE TAXATION TREATIES
Grenada is party to two double tax treaties:
(II) United Kingdom,
(II) United States of America.
The information on this page is provided as at December 1st , 2021, and is provided for information purposes only.
It is not intended to be relied upon for specific tax and/or business advice and as such, readers are encouraged to consult with professional advisors on specific matters prior to making any decision.
Should you require tax advice, please contact us and we shall be happy to make a referral to a local tax practitioner.