Employers in Grenada are required to contribute to the National Insurance Scheme (NIS) on behalf of their employees. The employer contribution rate to the NIS is 6% of the employee's gross insurable earnings. Insurable earnings are capped at a maximum of XCD 5,000 per month.

Withholding and Payments

Employers are responsible for deducting the employee's share of NIS contributions (5% of insurable earnings) from their salary. They must then remit both their own and the employee contributions to the NIS. NIS contributions are due monthly.

Other Employer Obligations

Employers must register with the NIS and obtain a registration number. Additionally, employers must maintain accurate payroll records for tax and compliance purposes.

In Grenada, the Pay-As-You-Earn (PAYE) system is in operation, where income tax is directly deducted from your salary by your employer throughout the year and remitted to the Inland Revenue Division. The country uses a progressive income tax system, meaning higher income earners pay a higher percentage in tax. The tax brackets and rates are subject to adjustments.

National Insurance Scheme (NIS) Contributions

Employees contribute 5% of their gross insurable earnings to the NIS. Earnings are capped at a maximum of XCD 5,000 per month. Your employer is responsible for deducting your NIS contributions directly from your salary.

Other Potential Deductions

If your employer offers a pension plan, contributions may be deducted directly from your pre-tax salary. Donations to certain approved charities may be tax-deductible under specific conditions.

Tax Returns

Individuals are generally required to file an annual income tax return to calculate their final income tax liability. Even if all taxes have been paid through the PAYE system, filing allows for claiming deductions or reporting additional income.

Grenada operates a Value-Added Tax system with a standard VAT rate of 15% applied to most supplies of goods and services within the country.

VAT Exemptions

Certain services are exempt from VAT in Grenada. These include:

• Financial services
• Insurance services
• Medical and healthcare services
• Educational services (when provided by approved institutions)
• Rental of residential property (under specific conditions)

VAT Registration and Liability

• Registration Threshold: Businesses with a taxable turnover exceeding the VAT registration threshold (currently XCD 60,000 per year) are generally required to register for VAT.
• VAT Liability: VAT-registered businesses must charge VAT on the services they provide, collect it from their customers, and file regular VAT returns with the Inland Revenue Division (IRD).

Place of Supply Rules

The place of supply rules determine where a service is deemed to be supplied for VAT purposes, which is important for establishing whether to charge Grenadian VAT.

• General Rule: In general, the place of supply for services is where the supplier belongs (i.e., has their business establishment).
• Specific Exceptions: Certain exceptions exist for services related to immovable property, electronic services, and others. Consult the Inland Revenue Division for the most updated rules.

Invoicing Requirements

• VAT Invoices: Businesses must issue proper VAT invoices to their customers that include information such as the VAT rate applied, the VAT amount charged, and the business's VAT registration number.
• Record-Keeping: Detailed records of transactions and invoices must be maintained for auditing purposes.

The Fiscal Incentives Act is the primary legislation governing tax incentives for qualifying businesses in Grenada. Incentives offered under this act include:

Corporate Tax Holidays

Income tax holidays (exemptions) of up to 15 years may be granted to businesses in priority sectors.

Import Duty and VAT Exemptions

Businesses may be eligible for exemptions from import duties on equipment, machinery, and raw materials used in their operations.

Customs Service Charge Exemptions

Exemptions from the Customs Service Charge might be available.

Sector-Specific Incentives

Tourism

Incentives exist for the tourism sector, including tax breaks and concessions for hotel development and refurbishment.

Manufacturing

Manufacturing enterprises may qualify for tax holidays and import duty exemptions.

Agriculture and Agro-processing

The agriculture sector may benefit from tax breaks, import duty concessions, and other incentives.

Other Incentives

Export Allowances

Tax deductions may be available related to income derived from exports.

Training Allowances

Tax incentives may be offered for businesses investing in employee training and development.

Obtaining Incentives

Businesses interested in applying for tax incentives typically need to submit an application to the Grenada Investment Development Corporation (GIDC). The GIDC will review the application and determine if the business qualifies for incentives.