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Grenada’s Tax Regime: Gain Financial Freedom Through Second Citizenship

18.03.2021

Grenada is a bustling commonwealth nation in the West Indies of the Caribbean. The naturally wonderful island, dubbed spice island for its abundance of natural spices, is considered one of the major pillars of the CARICOM and Organization of Eastern Caribbean States (OECS). The country has a growing economy that has seen its basis shift from agriculture to tourism in the past couple of decades, and as Grenada’s economic landscape continues to grow the government is always on the lookout to bring in more businesses and international investors.

Bringing in the elite has not been a challenge at all, however, as Grenada has two main attractions for the world’s greatest investors; citizenship by investment program that awards investors and their families with a Grenada passport and citizenship certificate in exchange for an investment aimed at bolstering the economy, and a favorable tax regime.

Grenada is rightly labeled as a tax haven, its lenient tax structure attracting both individuals and corporations alike to its sandy shores. To see how you can benefit from the amazing opportunity that is Grenada, we will be taking you through the basics of the Grenada citizenship by investment program as well as Grenada’s taxation regime.

Grenada taxes | Migronis

Grenada Citizenship by Investment Program

Grenada’s citizenship by investment program offers wealthy individuals the chance to become Grenadian citizens within 3-6 months of applying. Investors can achieve this through investing in one of two options listed by the Grenadian government:

  • Contributing to the government’s National Transformation Fund (amounts start at USD 150,000 for a single applicant)
  • Purchasing government-approved real estate in the form of property or shares in five-star resorts on the island (starting at USD 350,000)

If you would like to know how much getting a Grenada passport will cost, you can always use our free citizenship calculator here.

The citizenship by investment program has proven extremely popular for a multitude of reasons, some of which are:

  • The Grenada passport offers visa-free travel to 144 destinations worldwide and include the UK, Schengen Area, China, Russia, and more;
  • An investor can add their spouse, dependent children below the age of 30, dependent siblings above 18 years of age, and dependent parents & grandparents above the age of 65 all to one application;
  • The process is extremely quick and an individual can obtain their second citizenship within 3-6 months;
  • Grenadian citizens are eligible for the USA E2 treaty business visa;
  • Grenada not only grants freedom of travel but financial freedom as well; as its tax regime gives investors the room they need to thrive.

If you would like to know more about the Grenada citizenship by investment program in greater detail you can always check our guide or book a free consultation with our Grenada citizenship expert.

Grenada tax haven | Migronis

Benefits of Grenada as a Tax Haven

Grenada is considered a favorable destination for the elite due to its stature as a tax haven. The Grenadian government understands that stifling tax regimes can lead to the best the nation has to offer to leave in search of greener pastures, and it aims to not only maintain its elite but attract others from all around the globe. This has led the Grenadian government to forgo many taxes that would be normal practice in other parts of the globe.

Grenada currently has no inheritance tax, wealth tax, or capital gains tax. Foreign income is also not taxable while the tax on Grenadian-generated income is considered extremely favorable when compared to other countries.

The main benefit of Grenada as a tax haven is that an individual can obtain Grenadian citizenship through investment without actually living in Grenada, thus not being a tax resident. This way they can enjoy the perks of the Grenada tax rates while residing in their original country.

Who is a tax resident

A tax resident is someone who has resided in the country long enough to be eligible to pay taxes. In the case of Grenada, the Caribbean nation considers anyone who resides on the island for 183 days or more a year as a tax resident. The Grenada income tax act details the residential requirement for tax residents to maintain its clarity.

Both tax residents and non-tax residents (those who reside less than 183 days a year in Grenada) are subject to Grenada income tax on income derived within Grenada. The main difference is, however, the rate; as tax residents are taxed at a 30% rate while non-tax residents are taxed at a 15% rate on local income. Neither are taxed on foreign income or capital gains.

When it comes to corporations a company is considered a tax resident corporation when it is incorporated, established, or centrally managed and controlled within Grenada.

Grenada tax residents | Migronis

How tax residency is confirmed

Quite simply, the government of Grenada confirms a person’s status as a tax resident through two main criteria:

  1. Residing more than 183 as a legal resident in Grenada
  2. Having taxable income generated within Grenada

If both of the criteria are met then tax residency is confirmed and an individual is considered a tax resident.

As for corporations tax residency is confirmed once the following criteria are met:

  • a company is locally registered in the government-corporate registrar. OR
  • if it is proven to be locally managed and/or controlled, for example, if the majority shareholders and strategic decision-makers are residing in Grenada and conducting day to day business from within the Caribbean nation
  • The company derives taxable income

What are the tax rates for local types of income?

Income generated within Grenada is taxable for both tax residents and non-residents alike. The only difference lies within the rates.

Tax residents pay a personal income tax that starts at 10% for the first XCD 24,000 they make, and that rate goes up to 30% for any money they make after that. Non-residents, however, are subject to a 15% tax rate and locally derived income within Grenada.

Corporations are taxed on a Grenada corporate tax rate of 30% for all locally derived income. This rate applies to net profit before tax and is adjusted for nondeductible expenses as well as allowable deductions.

Grenada taxes | Migronis

What are the rates for foreign income?

Grenada has no tax rates on foreign income for individuals, unlike, say, the United States that taxes all foreign income of an individual. Grenadian citizens are free to derive income tax-free from outside of Grenada as they please. Only locally derived income is taxable.

Corporations on the other hand do pay a tax rate for foreign income. As corporations export either products or services, it is considered as part of the country’s economic landscape, and hence a 30% tax rate applies on net profit before tax.

Taxes on corporations and individuals

While Grenada is a tax haven it does have some slight taxes set in place to maintain government cash flow. Here are the main types of taxes that are applicable and must be paid on local income (income generated within Grenada):

  • Corporation tax: corporations are taxed on a 30% net profit before tax adjustable for nondeductible expenses and allowable deductions;
  • Dividends, royalties, interests paid to non-residents are set at 15%;
  • Technical service fees paid to non-residents are taxed at 15%;
  • A 15% branch remittance tax is applied;
  • Personal income tax for income generated within Grenada is set at 10% for the first XCD 24,000 and 30% on any income after that;
  • Property tax: property tax rate in Grenada is assessed on the market value of the property and whether it is new or old and ranges from 0% to 0.5% depending on the nature of the use of the property;
  • Property transfer tax is set at 5% for residents ad 15% for non-residents;
  • Value-added tax (VAT): the standard Vat tax rate in Grenada is 15% but is reduced for 10% within the tourism sector and is set at 20% in the telecommunication sector.

There are, however, many tax rates that would usually be active in other nations that have a 0% rate in Grenada, the main ones are:

  • Capital gains – 0%
  • Dividends paid to residents – 0%
  • Surtax – 0%
  • Capital duty – 0%
  • Payroll – 0%
  • Inheritance tax – 0%
  • Net worth (or net wealth) – 0%
  • Grenada departure tax – 0%

There are other areas where some people may confuse duties with taxes; for example, there is no Grenada electronics tax but instead customs.

The lack of taxation Grenada applies on some of the most lucrative transactions means that Grenada truly maintains its place as one of the most financially viable tax havens throughout the globe, and is directly related to financial freedom ensuring investors can keep their financial rights reserved. It is no wonder, then, that many investors choose to base their finances with the Caribbean country to gain more financial freedom and the ability to utilize their wealth to the maximum.

Grenada taxes | Migronis

Controlled foreign corporation (CFC) and other tax rules

Controlled foreign corporation rules are rules set in an income tax structure and are meant to limit artificial deferral of tax through utilizing offshore entities. If this rule applies, then non-residents of companies would be taxed annually.

Grenada currently has no controlled foreign corporation rules in place, and hence, income derived by a foreign entity owned by a tax resident may not be subject to any taxation. This is one of the main reasons international investors obtain Grenada citizenship by investment; as it gives them more flexibility to grow and prosper their businesses.

Grenada also has no transfer pricing rules, thin capitalization rules, or any disclosure requirement for controlled foreign corporations. Making it even easier to conduct bolstering business around the globe.

Are there tax programs?

While there are no defined tax programs in Grenada; its status as a member state of CARICOM, OECS, and a commonwealth country means that if you derive income from another commonwealth state or a country that has a taxation treaty with Grenada in place you may be eligible to be granted foreign tax credits within Grenada. This is especially useful for investors who have multiple investments around the globe or businesses that target many markets at once.

What tax documents can be obtained in Grenada?

The Grenada Inland Revenue Division is the government authority in charge of taxation within the Caribbean nation, and it provides its visitors with multiple documents and services that can make life easier for them.

Some of the tax documents that the Grenada Inland Revenue Division can provide you with are:

  • Corporate taxation returns
  • Income tax returns
  • Tax payment receipts
  • Personal tax registration certificate
  • Business tax registration certificate

Some of the main services provided by the Grenada Inland Revenue Division are:

  • Online payment of taxes
  • Online filing of taxes
  • Property valuation
  • Online business tax registration
  • Online individual tax registration
  • Request for information

The Inland Revenue Division of Grenada has made the matter of paying or filing taxes simple, elegant, and straightforward. Offering both its tax residents and non-residents a one-stop-shop bustling with security and professionalism for all their taxation needs.

Taxes in Grenada | Migronis

Typical practices of personal finance and investment in Grenada

Grenada has a booming investment landscape that allows for great investment opportunities all around. High net worth individuals usually adopt the services of wealth advisors to help them navigate the lucrative landscape and provide them with the highest ROI for their investments.

Investing in tourism has been a huge trend in Grenada; something which has been greatly supplemented by the Grenada citizenship by investment program as the real estate investment option gives investors the chance to invest in five-star resorts on the island in a bid to get their citizenship. This has created a great influx of cash into the tourism sector and has helped erect world-class projects within the beautiful Caribbean nation, only adding to the touristic allure of the island.

Grenada has opened its doors to investors from all around the globe through its citizenship by investment program. Its status as one of the world’s most stunning tax havens and the simplicity of obtaining its citizenship through investing in either real estate or contributing to the National Transformation Fund has made it a popular destination for international investors who are looking for financial and travel freedom. If you would like to join their ranks in the Grenada tax haven you can contact us today to book a free consultation with our Grenada citizenship expert.

Frequently Asked Questions & Answers

Is Grenada a tax haven?

Yes. Grenada has a very lenient and favorable tax system that suits international investors and provides them with a very low tax threshold for locally derived income and a zero tax rate for globally derived income.

Which Caribbean island is tax free?

While no country is completely tax-free, many have favorable tax regimes that transform them into tax havens. Grenada is one of the main Caribbean countries to employ such a regime, and other countries in the Caribbean have similar structures such as St. Kitts and Nevis and Dominica.

How do I pay my property taxes in Grenada?

You can pay your property tax through the Grenada Inland Revenu Division’s portal or their office located in St. George’s.

What is the income tax rate in Grenada?

The personal income tax rate in Grenada for locally derived income is based on the residency status of an individual: - Tax residents pay a 10% local income tax rate for the first XCD 24,000 and that rate goes up to 30% on any income after that - Non-residents pay a 15% tax rate on locally derived income

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