Grenada To Raise Taxes In 2014
Grenada has outlined a raft of new tax measures in its 2014 Budget, which was presented to the House of Representatives on December 10, 2013.
According to the budget statement, Grenada's ratio of tax revenue to gross domestic product (GDP) is the lowest in the Eastern Caribbean Currency Union (ECCU). The budget, therefore, attempts to "address revenue leakage" through adjustments to tax policy, stronger tax administration, and a reduction of tax concessions.
From January 2014, the income tax threshold will be reduced to USD36,000 per annum from USD60,000 per annum. Inpiduals who earn less than USD3,000 per month will be exempt from income tax, while those who earn between USD3,001 and USD5,000 per month will pay income tax at the rate of 15 percent. Persons who earn more than USD5,000 per month will pay tax at 15 percent on the portion of their income which is between USD3,001 and USD5,000, and will pay 30 percent tax on any income above the USD5,000 threshold.
Adjusting the income tax regime is expected to yield an additional USD14m next year, and bring in an additional 4,000 taxpayers. Personal Income Tax is therefore projected to provide USD45.2m in 2014.
The budget also includes increases to Grenada's property taxes, which are among the lowest in the Caribbean. Starting in January 2014 the land tax will be increased from 0.1 percent to 0.2 percent, and the building tax will be lifted from 0.15 percent to 0.3 percent. A tax of 0.2 percent will be levied on agricultural land which remains idle.
There will be no tax increases for commercial and industrial property, as the government wishes to spur job creation.
The VAT rate on sand, cement, roofing materials, steel, lumber and construction blocks will be restored to 15 percent in January 2014, after the government reduced the rate to five percent this year, a measure which was supposed to last through 2013 and 2014.
Other tax measures in the budget include: a tourist tax of USD5 per visitor per night, which is intended to raise revenue for tourism marketing; a reduction in the manufacturers rebate from 10 percent to five percent; and a withholding tax of 15 percent on lottery winnings.