Grenada Taxes: A Guide for Individuals and Legal Entities

With a developing and robust economic infrastructure, understanding Grenada taxes is important for investors and businesses on the island. This guide provides information about personal and corporate taxes in Grenada for individuals and legal entities, including the benefits and how to gain tax residency.

• Grenada tax Benefits
• Who pays taxes in Grenada?
• Grenada personal income taxes
• Corporate taxes in Grenada
• How to get Grenada tax residency

Unlike certified Caribbean tax havens like the Cayman Islands and the British Virgin Islands, Grenada does not have tax haven status, as employees, self-employed individuals, and businesses pay income taxes. With income tax rates of up to 30 percent, it is also not a low tax country for expats or companies.

However, the country’s territorial tax system can make it favorable for individuals living in Grenada who earn foreign income through dividends, capital gains, interest, and business profits. The European Commission removed Grenada from its tax haven blacklist in 2018, meaning while Grenada offers some tax advantages, it maintains cooperation and disclosure with international governing bodies.

• Zero foreign income tax: Global income is not taxed in Grenada, as legislation in the Grenada Tax Act establishes the country’s territorial tax system.
• Gain tax residency easily: The Grenada Citizenship by Investment Program allows foreign nationals to establish tax residency without needing to qualify for a work visa or having familial ties to the country.
• Wealth protection structure: Grenada does not have wealth, inheritance, or capital gains taxes, allowing individuals to protect their assets for future generations.
• Gain tax residency easily: The Grenada Citizenship by Investment Program allows foreign nationals to establish tax residency without applying for a work visa or having familial ties to the country.
• Business friendliness: Banks in Grenada provide offshore banking services, which combines favorably with the option to incorporate International Business Companies (IBCs), and offshore account holders can pay Grenada taxes online.
• Close bilateral relations with the USA: The Grenada E2 Visa treaty with the United States allows Grenadians to live and run businesses in the US without taxation by the Grenada Inland Revenue Division.

Investors who earn their income outside of Grenada are not required to pay taxes there. Only when they purchase a property, register a yacht or a car, start a company, or earn income in Grenada are they obliged to pay Grenada taxes.

Who is required to pay Income Tax?

Corporations, trustees, sole traders, partners within partnerships, and Grenada citizens of foreign nationals with a Grenada Work Visa who earn more than EC 3,000 ($1,110) monthly, or EC 36,000 ($13,320) annually are required to pay taxes in Grenada. Non-Grenadian tax residents who earn income in Grenada are charged a 15 percent tax rate.

Who is a Grenada Tax Resident?

Tax resident

An individual who spends more than 183 days in Grenada is a tax resident. The Grenada immigration criteria for a company to obtain tax residency are if it has been registered in the country or the head office of the company is in Grenada.

Non-tax residents

An individual who spends less than 183 in Grenada or a company not registered in the country is considered as non-tax resident. Non-residents earning an income in Grenada will be required to pay taxes.

Individuals living in Grenada do not have to pay Grenada capital gains tax, inheritance tax, or global income tax. The primary personal income tax in Grenada is the gross income tax.

Income Tax: Individuals, whether employees or self-employed, pay income tax on income. Grenada residents must also pay income taxes on interest, royalties, and rental income when they invest in Grenada real estate.

The Grenada personal income tax rate is charged progressively.

• EC 0 to $36,000: Tax-exempt
• EC $36,001 to $60,000: 15 percent
• EC $60,001: 30 percent

Social contribution: Residents and non-residents must contribute 5.75 percent of the 12.5 percent social security contribution.

Withholding tax: The withholding tax rate is fixed at 15 percent in Grenada. This tax is applicable when income, such as dividends, is paid by a Grenadian resident to a non-resident. In case dividends, royalties, or interests are paid to Grenada tax residents, no withholding tax is charged.

The most common companies and legal entities registered in Grenada are Limited Liability Companies (LLCs) and International Business Companies (IBCs). Grenada corporate income tax is imposed on net income, VAT, social security contributions from salaries, and withholding tax.

Corporate Tax: The Grenada corporate tax rate is fixed at 28 percent. For resident companies in Grenada, the tax base is the profit from all transactions. For non-resident companies, the tax is only paid on the profit earned from sources in Grenada.

Value Added Tax (VAT): The VAT in Grenada is fixed at 15 percent. But there are some exemptions:

• Mobile operators need to pay 20 percent VAT
• Hotels and diving companies need to pay 10 percent VAT
• Companies involved in activities like supplying staple food or water need to pay 0 percent

Companies generally pay VAT with an annual taxable income of a minimum of EC 300,000 ($111,000).

Social contributions: Businesses must contribute 6.75 percent of the 12.5 percent social security contribution.

Withholding Tax: The withholding tax is fixed at 15 percent on dividends, interest, and royalties to a non-resident company in Grenada.

Transfer Tax: If you sell Grenada real estate, you must pay a transfer tax. Grenadian citizens pay a five percent transfer tax, and foreigners pay a ten percent transfer tax.

Grenadian citizens don’t have to pay additional Caribbean taxes when buying property on the island. An Alien Landholding Licence (ALHL), which amounts to ten percent of the purchase value, is a type of Grenada property tax payment imposed on foreign buyers. Foreign nationals who acquire a Grenada passport through the country’s citizen program avoid the requirement to obtain an ALHL.

Annual property tax: The annual property tax is up to 0.3 percent of the property’s market value for residential real estate and up to 0.5 percent for commercial property. Property taxes are divided into two tax types in Grenada: Land tax and building tax.

Grenada property tax rates

The market value of real estate in Grenada depends on various factors, such as the property’s location, the price of the land in the area, the size and type of property, and its condition.

Under CRS and FATCA, Grenada shares tax information with other countries.

CRS: Developed by the Organization for Economic Cooperation and Development, CRS is a standard for the international exchange of account information between tax authorities. Over 100 countries, such as the UK, Australia, and Canada, use the CRS system to avoid tax evasion and money laundering.

Under CRS, the following information is shared by Grenada

• Name of the taxpayer, TIN, date and place of birth
• Account number
• Account balance
• Data on capital gains
• A name and identification number of the financial institution

FATCA: The Foreign Account Tax Compliance Act was passed in 2010 in the United States to prevent American citizens and residents from avoiding paying taxes.

Under FATCA, Grenada shares information with the US Internal Revenue Service on accounts and assets that exceed $50,000. Please note that the data is only shared of:

• US citizens
• US residents (temporary residents and Green Card holders)
• US tax residents
• US companies
• Organizations with owners in the USA

There are several options for establishing residency in Grenada to legally satisfy the 183 physical presence rule for tax residency.

Work Visa: The Grenada Work Visa allows foreign nationals who qualify for employment contracts to fill gaps in sectors that local talent cannot meet, to get a Grenada residence permit, and tax residency.

CARICOM Skills Certificate: The CARICOM Skills Certificate program is an option for qualified Caribbean passport holders from CARICOM countries to seek employment in Grenada.

Citizenship by investment: Foreign investors can qualify for Grenada citizenship by contributing $200,000 to the Grenada National Transformation Fund (NTF) or investing at least $270,000 in approved real estate.

OECS citizenship: Gaining Caribbean citizenship by investment in another Organization of the Eastern Caribbean States (OECS) member state, such as Dominica or Antigua and Barbuda, facilitates free movement to other member countries, including Grenada.

Grenada’s tax system doesn’t really measure up to most Caribbean tax havens, as Grenada imposes personal and corporate income taxes, with rates of up to 28 percent, whereas pure tax havens like the Cayman Islands and the British Virgin Islands do not impose any income taxes.

That said, compared to other countries offering citizenship by investment, Grenada ranked number one for tax optimization in the Global Residency and Citizenship by Investment Report by the Global Intelligence Unit. Several factors contributed to its high ranking, including no foreign income, wealth, inheritance, or capital gains taxes.