Understanding Grenada Tax Rates for Investors and Businesses

Who Pays Taxes in Grenada?

Understanding the Grenada taxes starts with identifying who must pay taxes.  Individuals and companies earning income within Grenada, or those owning property or registering assets there, generally have tax responsibilities. 

Grenada is not considered a tax haven, though it remains attractive for high net worth individuals since there is no wealth, inheritance or capital gains tax. 

Grenada citizenship by investment program allows foreigners to acquire citizenship of the country via investment in real estate or through monetary contribution. After becoming a citizen of Grenada through investment, a person enjoys the same scope of rights and duties, including tax duties, as naturalized citizens.

Tax Residency vs. Non-Residency

Tax residency is an important consideration when assessing tax obligations in Grenada. It is important to distinguish between personal income and other forms of income.

The rules for tax residency are defined by the Income Tax Act of 1994 .

The requirements for tax residency of individuals are different from requirements for companies, trusts and other corporate entities.

Tax Residency for Individuals

As a general rule an individual needs to reside not less than 183 days in one calendar year in Grenada, in order to be considered as a tax resident. This is called a physical presence test.

Another test tax authorities can run is a domicile test. Basically when a person permanently resides on the island of Grenada, he or she is automatically considered a domicile.

Tax Residency for Companies

A company for the purpose of taxation in Grenada is considered any body corporate, excluding partnership.

A company is considered a tax resident in Grenada if they are incorporated under the laws of Grenada or controlled/managed in Grenada. If a legal entity is controlled in Grenada it means that the director or board of directors sits in Grenada.

Assessable Income

The income tax is due to be paid by residents and non-residents from all the income obtained directly or indirectly from Grenada.

Dividends are not subject to personal income tax in Grenada, but additional withholding tax applies towards non-residents (see below). 

Grenada Tax Rates for Individuals

Grenada offers a tax-friendly environment for foreign investors and high net worth individuals willing to reside or run their business on the island.

Grenada tax rates depend significantly on the tax residence of individuals, as well as the amount of the income they earn and source of such an income.

Personal Income Tax Rates

Individuals are subject to personal income tax on the income deriving from Grenada. The tax rate varies depending on the amount of tax base:

• up to EC$ 24,000 – 10 %;
• EC$ 24,000 and more – 28 %

Income includes the following sources:

• salary and wages obtained in the course of employment in Grenada;
• salary and wages obtained in the course of employment outside in Grenada by a tax resident in Grenada;
• rental income and royalties;
• interests and premiums; or
• other types of income.

The following income is exempted, however, from personal income tax: pensions, maternity and child allowances, sickness benefits. Dividends are not subject to personal income tax.

Withholding Tax 

A 15% withholding tax applies when any person performing business activity in Grenada pays to a non-resident individual either of the following:

• income from a partnership’s business activity;
• employment income from a partnership;
• any interest, discounts, commissions, fees, management charge, rent, lease premium, license charge, royalties or other payments.

It is essential to emphasize that no withholding tax should apply towards payments of dividends, royalties or interest to Grenada tax residents. 

Corporate Tax in Grenada for Legal Entities 

Corporate Tax Rate

All legal entities are subject to corporate tax of 28 % on income originated or deriving from Grenada. Non-resident companies pay tax only on income generated in Grenada. The corporate tax rate is the same for both resident and non-resident companies. 

Hotels in Grenada may enjoy exemption from taxation of all their income, provided it is being decided by the Inland Revenue Division of Grenada in a special order.

Value Added Tax (VAT) 

The application of VAT in Grenada is regulated by the Value Added Tax as of 2009 . This is a consolidated legal act which replaced separate consumption taxes acts for motor vehicles, airlines tickets etc. The VAT is marked up to all services and goods provided in Grenada. The general VAT tax is 15%, although there are a few exceptions.

Certain products for consumer consumption like milk, cane sugar, flour, diesel or products aimed to achieve certain social purposes enjoy 0 % VAT rate.

Mobile telecommunications services have VAT of 20 %, while hotels and or hotel accommodations are being taxed under the reduced VAT rate of 10 %. It should be noted, however, that sale or lease of residential premises are exempted from VAT.

Social Contributions

Every employer is required to pay social contributions in the amount of 5 % of an employee’s wage. The payment and calculation of social contributions is regulated by the National Insurance Act as of 1983 . Social contributions should be paid for citizens and non-citizens of Grenada, provided they are:

• in between 16 and 60 years of age;
• engaged in employment in Grenada.

The National Insurance Act provides exemption when social contribution is not paid:

• employees of diplomatic or consular missions;
• any employee who is engaged in a non-paid internship.

Excise Tax

The excise tax applies on importation or production of certain products and regulated by the Excise Act as of 2010.

It applies towards alcohol beverages, cigarettes and motor vehicles. Same as other Caribbean countries, Grenada has high excise rates for importation of motor vehicles, for instance:

• new cars – 14 %
• used cars (1-4 years) – 50 %
• used cars (5 years and more) – 40 % 

Annual Stamp Tax 

This is a tax which is paid by all businesses registered in the Inland Revenue Division on their gross income obtained through the calendar year under the following rates:

• 0.25 % for income between EC$ 30,000 and EC$ 100,000; or
• 0.5 % for income more than EC$ 100,000.

Withholding Tax

The income paid to non-resident companies is also subject to 15 % withholding tax. This is income which is generated from any business activity, which takes place in Grenada. 

Property Taxes in Grenada

Grenada has several property taxes that can affect property owners as well as income generated from letting out such a property.

The property taxes include transfer tax, alien landholding license, annual property tax as well as income tax applicable towards rent payments . It does not matter if a person is a tax resident or a citizen of Grenada, since this tax applies to everyone.

Aliens Landholding License

This is a one-off tax in the amount of 10 % from the property’s value, which is paid by all foreign individuals and entities aiming to acquire title ownership over the land in Grenada.

The process of application for the license is regulated by the Aliens (Land Holding Regulation) Act as of 1968 .

Investors who acquire real estate as a part of citizenship by investment program are exempted from obtaining such a license.

A foreign person who acquires land under the will should apply for the said license within the one year after getting the title. Failure to obtain such a license will result in a mandatory sale of land.

An entity is considered foreign if either of the following conditions apply:

• any of company’s directors is a non-citizen of Grenada;
• 1/3 of all company’s shares belong to non-citizen; or
• 1/3 of all voting rights in the company’s meeting belong to non-citizen.

Transfer Tax

The transfer tax is regulated by the Property Transfer Tax Act of 1998 .

The transfer of property includes donation, gift, sale, exchange, purchase or any other form of disposal of ownership. The tax rates differ depending on if a party is a citizen or a foreigner, as well as a type of property to be transferred:

Local Seller : land – 5 % from the market’s value; building – 0 %

Local Buyer : 0 % for both land and building

Foreign Seller : land – 15 % from the market’s value; building – 10 % from the market’s value

Foreign Buyer : land – 10 % from the market’s value; building – 10 % from the market’s value

If the property in question is a part of approved tourism development, in that case different property tax rates should apply:

First Transfer

Any Seller – 5 % from the property’s market value

Foreign Buyer – 5 % from the property’s market value

Subsequent Transfers

Any Seller – 2.5 % from the property’s market value

Foreign Buyer – 2.5 % from the property’s market value

Failure to pay the said tax will result in fine or imprisonment up to three months.

Annual Property Tax

Owners of real estate in Grenada must pay an annual property tax. Tenants who occupy the property may also pay this tax if such an arrangement agreed in a respective Lease Agreement. The application of annual property tax is regulated by the Property Tax Act of 1997 .

The tax rate varies between 0 % and 0.5 % from the property’s market value. The exact tax rate depends on the property’s type (land or building), their size, location, recent improvements etc. The island revenue division is expected to review the applicable annual property tax rates in November every year for the upcoming year.

Agricultural

Building: 0 % Land: 0 %

Commercial

Building: 0.3 % Land: 0.5 %

Residential

Building: 0.3 % Land: 0.2 %

For instance, agricultural land and buildings enjoy a 0 % tax rate on condition that such land in the preceding year has been utilized effectively for the purpose of the agricultural sector. 

Owners of residential buildings are exempted from paying an annual property tax for the first EC$ 100,000 of the property’s value, provided such a real estate used as a primary residential dwelling.

Grenada’s Tax Treaties 

Grenada is a part to various international tax treaties dealing with exchange of financial information with third countries, including:

• Grenada-UK Tax Treaty to Avoid Double Taxation;
• Agreement for Avoidance of Double Taxation in CARICOM.

These treaties are designed to protect income deriving in one country against double taxation in several countries. 

Exchange of Tax Information 

Along with other Caribbean countries Grenada participates in regional and international exchange of tax information.

CRS: Common Reporting Standard

The CRS, developed by the Organisation for Economic Co-operation and Development, helps global tax authorities share account information. Over 100 countries, including the UK and Canada use this system to avoid things like tax evasion.

Grenada has implemented the CRS Reporting Standard starting from September 2017. The following information is shared:

• name, address, TIN, date of birth;
• account number;
• account balance.

FATCA: Foreign Account Tax Compliance Act

Grenada has committed to share financial information with the US’s government under 1 IGA Model Agreement. This agreement implies a reciprocal approach towards exchange of financial information between the two countries. 

According to the selected model, all the required financial information will be submitted by a selected financial institution to the Inland Revenue Division, which in its turn will share obtained information with the US’ government.   

E-Tax and Online Services 

Grenada remains a pioneer in digitalization of government services. Starting from January 2024 the brand new G Tax system has been launched allowing individuals and corporate entities to meet their tax obligations online, including filing tax reports. 

The G Tax is administered by the Inland Revenue Department of the Ministry of Finance. It is expected that in the next few years the digital tax payment process should replace all the tax paperwork in Grenada.