MINISTRY OF FINANCE AND ENERGY

GRENADA

All you need to know about Personal Income Tax

All you need to know about Personal Income Tax

    All you need to know about Personal Income Tax !     What is Income...

How To Apply For E-User Registration To Use The Tax E-Filing System Online

How To Apply For E-User Registration To Use The Tax E-Filing System Online

      HOW TO APPLY FOR E-USER REGISTRATION TO USE THE TAX E-FILING SYSTEM...

Taxes and the Entertainment Industry

Taxes and the Entertainment Industry

    Taxes and the Entertainment Industry   What is Public...

Property Tax

Property Tax

    Property Tax   What is property Tax?   Property Tax is the charge...

Information for Businesses

Information for Businesses

  Information for Businesses As a Business Owner, what are my tax obligations? All...

VAT and the Consumer

VAT and the Consumer

    VAT and the Consumer Introduction As part of the program of the Government to...

PENALTIES AND OFFENCES under the VAT Law

PENALTIES AND OFFENCES under the VAT Law

  PENALTIES AND OFFENCES under the VAT Law     Introduction Many tax...

VAT Information

VAT Information

  VAT Information Introduction Documentation for VAT is critical for the timely and...

What is Value Added Tax?

What is Value Added Tax?

  What is Value Added Tax?   Introduction  The Value Added Tax, or VAT as it...

  • All you need to know about Personal Income Tax

    All you need to know about Personal Income Tax

  • How To Apply For E-User Registration To Use The Tax E-Filing System Online

    How To Apply For E-User Registration To Use The Tax E-Filing System Online

  • Taxes and the Entertainment Industry

    Taxes and the Entertainment Industry

  • Property Tax

    Property Tax

  • Information for Businesses

    Information for Businesses

  • VAT and the Consumer

    VAT and the Consumer

  • PENALTIES AND OFFENCES under the VAT Law

    PENALTIES AND OFFENCES under the VAT Law

  • VAT Information

    VAT Information

  • What is Value Added Tax?

    What is Value Added Tax?

 

 

VAT and the Consumer

Introduction

As part of the program of the Government to simplify and rationalize the tax system in Grenada, the Value Added Tax (VAT) was introduced in Grenada on  February 1st 2010.

The VAT replaced the General Consumption Tax, Airline Ticket Tax and Motor Vehicle Purchase Tax.

The essential purpose of introducing the tax was to have a tax system that is fairer, more  effective and efficient, and easier to administer. The VAT has fulfilled these objectives in Grenada and more than 120 countries worldwide   including: St . Vincent, Dominica,   Barbados and Trinidad & Tobago.

This brochure is intended to provide consumers with the highlights of how the VAT system  operates in Grenada.

 

What is VAT?

VAT is the acronym for Value Added Tax which is levied on all forms of consumer spending—both goods and services

The tax is computed on the value of imports and the Value Added (or mark-up) that one business charges   another, or the final consumer, when a good or   service is provided.

 

What is the rate of VAT?

VAT is charged at the rate of 15% on most goods and services other than hotel accommodation and dive   operations which are charged at 10%. Some goods and services are also charged at the rate of 0%.

 

How  VAT affects you?

· Price of some goods  increased, decreased or remain the same Prices of services, which are not exempt  increased.

· Relief Measures:-

             Partial Zero Rate on the following:

                                                        · Electricity

 

Who charges and collects the VAT?

Businesses with annual taxable supplies in excess of $120,000 that are registered for  VAT.  

 

List of Zero-Rated Supplies

· Wheat Flour

· Brown, white rice & broken rice imported in bulk for repackaging

· Milk (Fresh milk, condensed, powder, evaporated)

· Cane sugar

· Infant preparation (milk-based)

· Pipe-borne water supplied by NAWASA for residential purposes

· Fuel (gasoline, diesel, cooking gas, kerosene)

· Postage stamps

· A supply of textbooks as prescribed by the regulations

· A supply of electricity by GRENLEC provided for residential purposes, for the first 99kilowatt hours.

 

It is important to note that not all  businesses areregistered for VAT. Those businesses that are registered for VAT mustdisplay their VAT Registration Certificate in a  conspicuous place in their premises.  If you are in doubt as to whether you should be paying VAT, you should verify that the vendor is registered for VAT and is displaying his/her VAT certificate at the place of  business. If this cannot be proven, you should refrain from paying the VAT and report the incident to the Inland RevenueDivision.

NB: you must receive a sales receipt or VAT invoice, which would display the price of the goods and the VAT paid  separately.

 

Is VAT added at check-out or is it included in the price on the shelf?

 

The VAT Act requires that prices quoted or advertised must always be VAT-inclusive. This means that the prices you see on the shelves or on the products or prices quoted for services is the price you are required to pay.

 

The impact of VAT on prices

 

One of the many concerns which came out of the consultations held with the general public on the VAT is the issue of price control. Some consumers feel the need for  Government to control the prices of goods and services in order to ensure that they are not taken advantage of.

However, Grenada operates in a free-market economy and, in such economies, Government would not dictate to business owners what their prices should be, except in the case of price-control goods. Goods which are not subject to price controlled regulations the prices charged are dependant on a number of factors, one of which is the mark-up which includes the cost of any labour to further manufacture the goods and other overhead expenses to run the  business.

The onus is therefore on you as a consumer to be informed regarding matters such as these. Having done this, you will then be in a stronger position to make informed decisions on where to purchase the necessary goods and services you may require.

 With the implementation of VAT, a system was introduced whereby VAT registered businesses are allowed to claim a refund for the VAT they have paid in operating their businesses. This deduction system eliminates the cascading effect that the taxes replaced by VAT had on prices.

 

Accounting for VAT received

Government relies on registered businesses to collect the VAT from its customers and remit it to Inland Revenue Division. This is referred to as a “self-assessment system”. The VAT Actempowers the Comptroller of Inland Revenue   Division to carry out audits of taxpayer records to ensure full compliance.

 

What is good about VAT?

· Provides opportunity to pay less taxes by managing your consumption pattern

· Is fair—everyone pays

· Has a  standard rate across the board

· Enhances Government’s ability to provide

      improved public services (health, infrastructure etc.)

                                            

This leaflet is designed as part of our new series of leaflets, written in plain language, to explain various aspects of the tax system.

Each leaflet covers just one topic. Other leaflets you may find useful include:

IR102 Should I be registered for VAT?

IR103 How to register for VAT

IR104 Keeping records for VAT

IR105 VAT invoices

IR 107 Accounting for VAT

 

   

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