GrenadaTax Obligations Detailed

In Grenada, employers face several tax obligations, including corporate income tax, PAYE, VAT, and National Insurance Scheme (NIS) contributions.

Corporate Income Tax

• Resident Companies: 28% on worldwide net income.
• Non-Resident Companies: 28% on Grenada-sourced income only.

Pay As You Earn (PAYE)

• Employers withhold income tax from employee salaries based on a progressive scale:
  • EC$0 to EC$36,000: Exempt
  • EC$36,001 to EC$60,000: 15%
  • Over EC$60,000: 30%
• Tax is due within seven days of the end of the month during which the tax was deducted, paid to the Inland Revenue Division.
• Annual income tax returns are required for employees earning over EC$60,000 annually, due within 90 days of the fiscal year-end.

Value Added Tax (VAT)

• Standard rate: 15%
• Reduced rates: 10% for hotels and diving activities, 0% for specific goods (e.g., staple food, water).
• Mandatory registration for businesses with annual taxable turnover exceeding EC$300,000, voluntary registration available for others.

National Insurance Scheme (NIS)

• Employer Contributions: 6.75% of employee's gross insurable earnings, up to a maximum of EC$5,000 monthly. 1% of gross insurable earnings for employees below the age of 16.
• Employee Contributions: 5% of gross insurable earnings, capped at EC$5,000 per month.

Other Employer Obligations

• Withholding Tax: 15% on dividends, interest, and royalties paid to non-resident companies. No withholding tax on these payments to Grenada tax residents.

Additional Information

• Tax penalties apply for late filing and non-compliance. Interest of 1.5% per month is charged on unpaid tax balances. A penalty of EC$100 or 10% of unpaid taxes applies for late filing of annual returns.
• Further details and specific regulations are available through the Grenada Inland Revenue Division (IRD) and Ministry of Finance. This information is current as of February 5, 2025, and might be subject to change. Consulting a tax professional is recommended.

In Grenada, employees earning above a certain threshold are subject to income tax, deducted at source, with rates varying based on income levels. National Insurance Scheme (NIS) contributions are also deducted.

Income Tax

• Taxable Income Threshold: Income tax applies to annual earnings exceeding EC$36,000.
• Tax Rates: The tax rate is 10% on the first EC$24,000 of taxable income and 28% on any income above EC$24,000.
• Example: An employee earning EC$48,000 annually has a taxable income of EC$12,000 (EC$48,000 - EC$36,000). The tax due is EC$1,200, calculated as (EC$12,000 x 0.10 = EC$1,200).
• Deductions and Allowances: Certain allowances and deductions may apply, including a personal allowance, spouse allowance, child allowance, and deductions for specific expenses. These include medical expenses, mortgage interest, life insurance premiums, pension contributions, and donations to approved charities.
• Payment and Filing: Tax is deducted monthly by employers and remitted to the Inland Revenue Division within seven days of the following month. Annual tax returns are required for those earning over EC$60,000 within 90 days of the end of the fiscal year.

National Insurance Scheme (NIS) Contributions

• Employee Contribution Rate: 5% of gross salary.
• Contribution Ceiling: Contributions are capped at a monthly salary of EC$5,200.
• Employer Responsibility: Employers deduct employee contributions and remit them to the NIS, along with their own contributions.

Other Considerations

• Territorial Taxation: Grenada follows a territorial tax system, meaning only income earned within Grenada is taxed. Foreign-sourced income is exempt.
• Tax Benefits for Citizens: Grenada offers several tax advantages to its citizens, including no taxes on worldwide income, capital gains, inheritance, or wealth.

Please note that this information is current as of February 5, 2025, and is subject to change.

In Grenada, the Value Added Tax (VAT) is a consumption tax applied to most goods and services.

VAT Rates and Exemptions

• Standard Rate: 15% applies to most goods and services.
• Reduced Rate: 10% applies to hotel accommodations and diving activities.
• Zero Rate: 0% applies to certain essential goods and services like some food items, water, and medicines.
• Exempt Supplies: Financial services, public postal services, public medical services, public welfare, public education, and public broadcasting are exempt. Additionally, exports, intra-community and international air and sea transport are zero-rated.

VAT Registration

• Mandatory Registration: Businesses with annual taxable turnover exceeding EC$300,000.
• Voluntary Registration: Businesses below the threshold can register voluntarily.
• Public Entertainment Promoters: Required to register regardless of turnover.

VAT Filing and Payment

• Filing Frequency: Monthly. Returns are due by the 20th of the following month.
• Payment Deadline: By the 20th of the month following the taxable period.

Penalties for Non-Compliance

• Late filing penalties and interest charges apply for overdue returns and payments. Specific details about penalty computations are available from Grenada tax authorities.

Other Grenada Taxes

• Corporate Income Tax: 30%
• Personal Income Tax: Progressive rates from 10% to 28%. Income earned outside of Grenada by residents is exempt.
• Annual Stamp Tax
• Excise Tax
• Withholding Tax (for certain payments like public entertainment artist fees and non-resident employment)
• Property Tax

Additional details on tax regulations, specific exemptions, and other tax-related information for Grenada are accessible on official websites of the Ministry of Finance and the Inland Revenue Division. As tax laws are constantly reviewed and updated, it is advised to stay informed of the latest legislative changes.

Grenada offers a range of tax incentives designed to attract investment and stimulate economic growth.

Personal Income Tax

• Foreign-Sourced Income Exemption: Income earned outside of Grenada is exempt from personal income tax for residents. This is a significant benefit for expatriates, digital nomads, and international investors.
• Progressive Tax Rates: Domestically earned income is taxed at progressive rates, ranging from 10% to 28%.
• No Capital Gains, Inheritance, or Wealth Taxes: Grenada does not levy taxes on capital gains, inheritances, or personal wealth. This simplifies wealth management and estate planning for residents.

Corporate Tax Incentives

• Tax Holidays: Businesses in specific sectors, such as tourism, agriculture, and manufacturing, can qualify for tax holidays of up to 15 years, exempting them from income tax during the holiday period.
• Investment Allowances: Qualifying businesses can deduct up to 100% of their capital expenditures. Unused allowances may be carried forward for up to 15 years.

Value-Added Tax (VAT)

• Grenada has a standard VAT rate of 15%.
• A reduced VAT rate of 10% applies to hotels and diving activities.
• Certain essential goods, like basic food items and water, are exempt from VAT (0% rate).

Other Tax Provisions

• National Insurance Scheme (NIS): Employers contribute 4% of their employees' salaries to the NIS, which funds social security benefits.
• Withholding Tax: A 15% withholding tax is applied to dividends, interest, and royalties paid to non-resident companies.
• Customs Duty Exemptions and VAT Suspensions: Certain approved projects may be eligible for exemptions from customs duties and suspensions of VAT on imported machinery, equipment, and materials.
• Tax Credits: Tax credits are available for specific activities such as training and research and development.

Hurricane Beryl Relief Incentives (2025)

• Property Tax Waiver: Properties damaged or destroyed by Hurricane Beryl in 2024 may qualify for a property tax waiver for the 2025 tax year. Requirements vary based on location (Carriacou and Petite Martinique vs. Grenada).
• VAT Waiver on Building Materials: A 100% waiver on VAT is granted for building materials purchased locally for reconstruction of homes and businesses directly affected by Hurricane Beryl.

General Information

Grenada's tax system is based on territoriality; only income earned within the country is taxed. The combination of tax incentives, exemptions, and a territorial tax system creates a favorable environment for both individuals and businesses, particularly those with international or foreign-sourced income. As of February 5, 2025, this information is current but subject to change. Consulting a tax advisor is recommended for personalized advice.