Grenada: Country and Foreign Investment
Foreign Investment Incentives
Grenada welcomes all investments into the economy which it believes would have the positive effects of increasing domestic income, employment, foreign exchange earnings or savings, and transferring appropriate technology and know-how to the local economy.
Some of the best prospects for new investments have been identified in tourism, information services, banking and insurance, and transportation.
The Government will not grant permission to non-nationals to invest in various activities including the retail and distribution trade, taxi and self-drive services, resturants and catering, night clubs and services such as hair-dressing, laundry and dry cleaning, movie houses, travel agencies, real estate agencies, and certain types of domestic manufacturing.
Where an operation to be established through foreign investment will be based mainly on the processing or assembly of foreign materials or components which are produced and paid for outside of Grenada, the Government will more easily approve 100% non-resident ownership but still welcomes and encourages opportunities for equity participation by residents.
Generally, there are no restrictions on remittances of capital, earnings on, and liquidation proceeds from direct non-resident investment in Grenada. Profits or dividends arising in connection with a non-resident investment duly registered with the Ministry of Finance will be approved for remittance.
The Government of Grenada has offered a wide range of incentives to potential investors. These include:
Under the Hotels Aid Act CAP 139 of 1935:
- Duty free importation of article of hotel equipment and building material meant exclusively for the construction and operation of the hotel.
- Drawback of custom duties on articles of hotel equipment and building materials purchased in Grenada for the hotel.
- Complete or partial exemption from payment of tax on income arising from the operation of the hotel.
Under the Fiscal Incentives Act No.41 of 1974 (for manufacturing operations):
- Waiver of duties and taxes on the importation of plant, machinery, equipment, spare parts, raw materials and vehicles;
- Tax holidays periods as follows: up to 15 years, where the local value added is at least 50%, or for an 'Enclave Enterprise' producing exclusively for export to countries outside the CARICOM region; up to 12 years, where the local value added is not less than 25%; up to 10 years, where the local value added is not less than 10%.
Note: The Tax Holiday guarantees the waiver of payment of any tax on income, and duties on material, equipment, spare parts and components to be used in manufacturing during the period specified.
In its 2006 budget, the Grenada government announced that:
"As part of the measures to improve the investment climate, Government will also undertake the following tax reform measures:
i. Effective January 1st, 2006, Government will not grant any new tax holidays or renew existing ones. Instead, Incentives will be provided in the form of tax write-offs for investments, and after June 1st, 2006, through accelerated depreciation with loss carry forward. To this end the Income Tax Act will be amended by April 2006.
ii. By May 31st, 2006, Government will repeal the Investment Code Incentives Act, and the Qualified Enterprise Act, which in fact will become unnecessary, once the new incentives regime for Income Tax is in place."
These changes were delayed by the consequences of the hurricanes in 2004 and 2005, and the new Investment Act came into force in 2010.
Following the changes, concessions are available under the Investment Act, Income Tax Act and Common External Tariff. Businesses involved in a broad range of services and manufacturing activities, as well as tourism and agriculture, can qualify for the incentives, which include:
- Accelerated depreciation - 50% on plant & machinery and 10% on building.
- Investment allowance - 100% write off on total investment. Carry forward of losses for 5 years.
- 100% relief from customs duties and taxes on plant, equipment & raw materials.
- Deductible expenditure incurred for marketing, training, research and development.