How Does the Grenada Tax System Work?
Explore Grenada's tax framework, which features no capital gains, inheritance, or wealth tax, and applies only to income earned within the country.
Explore Grenada's tax framework, which features no capital gains, inheritance, or wealth tax, and applies only to income earned within the country.
Grenada’s tax system is a territorial system, where income is taxed based on where it is generated. Both residents and non-residents are subject to tax on income earned from sources within Grenada. The country’s fiscal policy focuses primarily on income and consumption-based taxes.
An individual’s tax liability in Grenada is determined by their residency status. A person is a tax resident if they are physically present in the country for at least 183 days in a fiscal year. Resident individuals are taxed on income from Grenadian sources, including employment, business activities, and rental income. Grenada does not levy a capital gains tax, inheritance tax, or wealth tax on individuals.
Personal income tax uses a progressive structure with a personal allowance of EC$36,000, which is exempt from tax. Income from EC$36,001 up to EC$60,000 is taxed at 15%, and any income exceeding EC$60,000 is taxed at 30%. For example, an individual earning EC$70,000 annually would pay a total tax of EC$6,600. Employees are also required to contribute 6% of their insurable earnings to the National Insurance Scheme (NIS).
Property owners in Grenada are subject to an annual property tax, applied separately to land and any buildings on it. For residential properties, the rate is 0.2% on the land value and 0.3% on the building value. For commercial properties, the rates are 0.5% on land and 0.3% on buildings. Agricultural land is taxed at a rate of 0%.
The standard corporate income tax (CIT) rate is 28% on net profits. For resident companies, this tax applies to their worldwide income, while non-resident companies are taxed only on income generated from sources within Grenada.
Value Added Tax (VAT) is a broad-based consumption tax applied to most goods and services. The standard VAT rate is 15%. Certain sectors have different rates; hotel accommodations and diving activities are subject to a reduced rate of 10%, while some essential goods and services are zero-rated. Businesses with an annual turnover of at least EC$300,000 are required to register for and collect VAT.
Payments made to non-residents can be subject to a withholding tax. A rate of 15% is applied to dividends, interest, and royalties paid from a Grenadian source to a non-resident individual or company.
Businesses may also be liable for an Annual Stamp Tax (AST). This levy is calculated based on the company’s gross receipts from the previous year, with the first EC$36,000 being exempt. The AST rate is 0.5% for businesses with gross receipts under EC$300,000 per year and 0.7% for those with gross receipts of EC$300,000 or more.
Grenada offers a Citizenship by Investment (CBI) program, but obtaining citizenship does not automatically make an individual a tax resident. CBI citizens are only liable for taxes in Grenada if they earn income within the country or meet the 183-day residency requirement.
The government provides various tax incentives to encourage investment in sectors like tourism, manufacturing, and agriculture. Under the Investment Promotion Act, approved projects may qualify for benefits like tax holidays, which offer a temporary exemption from corporate income tax, and exemptions from customs duties on imported materials.
Customs duties are levied on goods brought into Grenada and are calculated based on the Cost, Insurance, and Freight (CIF) value of the items. The rates for customs duties vary depending on the type of product being imported.
When real estate is sold in Grenada, a Property Transfer Tax is levied on the seller. The rate of this tax is 5% of the property’s value for Grenadian citizens and 15% for non-citizens.
The administration and enforcement of tax laws in Grenada are managed by the Inland Revenue Division (IRD) of the Ministry of Finance. This body is responsible for assessing and collecting all national taxes.
For individuals, the personal income tax return must be filed by March 31st of the year following the tax year. Corporations are required to file their corporate income tax return and pay any tax due within three months of their fiscal year-end.
Tax payments are made directly to the Inland Revenue Division. Businesses and individuals can make payments through various accepted methods, and companies can file through an online portal.
A separate stamp tax is applied to a variety of legal documents and instruments, such as deeds and leases, for them to be considered valid. This is a transactional cost distinct from the Annual Stamp Tax for businesses.