Information for Businesses

As a Business Owner, what are my tax obligations?

All persons who own or operate a business large or small are required to register their business with the Inland Revenue Department by law under Section 65A of Income Tax Act, Section 3A of the Annual Stamp Tax Act and 57 of the General Consumption Tax Act.

When Registering a business with the Inland Revenue Department you are reminded of the following:

· Individual enterprises and partnerships must present a Registration of Business Name Certificate, from the Supreme Court Registry. 

· Partnerships are required to present documents from the Registry showing proof of partnership accompanied by the business Name Certificate.

· For companies, the certificate of incorporation along with the Articles of    Incorporation and the Memorandum of Association are required.

Additionally the Inland Revenue Department registration forms should be duly completed and signed by the owner of the business.

The registration process takes at least two days.

As a business owner you are also reminded of  the consequences for not registering yourbusiness:

· Taxes will be payable to the Inland Revenue Department  for the years the business was in operation up to a maximum of six (6) years.

· Concessions will not be granted by the Grenada Industrial Development Corporation.

· Inconvenience at customs when attempting to clear goods.

Am I liable to pay taxes to the Inland Revenue? 

After registering your business with the Inland Revenue Department, as a business owner you are obligated to pay, Corporate Income Tax/Personal Income Tax , Annual Stamp Tax , Value Added Tax and Excise Tax, where applicable .

If you are a promoter of Public Entertainment, you will be liable to pay Withholding Tax whenever an artiste is brought into the country for the purpose of performing, or for general business persons, whenever a non-resident is employed at your firm.

What is Annual Stamp Tax?

This is a Tax on gross receipts replacing stamp on bills and is charged for annually based on the gross receipts for the previous year. E.g. the Tax for 2009 is based on the gross receipts for 2008.

The percentage rate to be used in calculating the Stamp Tax shall be:

1. 0.25% in respect of business with gross receipts over $30,000. per annum but not exceeding $100,000. per annum.

2. 0.5% in respect of business with gross receipts exceeding $100,000. per annum.

NB: businesses with gross receipts less than $30,000. would be required to pay a minimum tax of $100.00

Income Tax

Income Tax - Act No. 36 of 1994. It  is a tax levied on the financial income of people, corporations, or other legal entities.

Who Pays the tax?

Every Company (excluding those with concessions), sole proprietor, professional and employees earning in excess of $60,000. per annum, are required to pay Income Tax.

On What?????

Income Tax is chargeable on net profit as it relates to companies and all other types of businesses. In the case of sole proprietorships there is a $60,000 on which no tax has to be paid.

You are required to pay  Income Tax on:

(a) Any amount accrued by way of wages, salary, leave pay, fee (including director’ s fee), commission, bonus or gratuity in respect of employment in Grenada.

(b) Any travelling, entertainment or other allowance to the extent to which it does not represent a repayment to the employee of money wholly, exclusively and necessarily expended by him in the performance of the duties of the employment.

(c) The rental value of any quarters or residence provided by reason of the employment.

(d) The value of any other benefit or advantage received or enjoyed by the employee by reason of the employment.

(e) Any pension payable to a former employee of the dependent of a former employee by the trustees of a pension fund in respect of the employment.

(f) Any loan or advances by a controlled company to a shareholder or associate of a shareholder deemed to be employment income.

As a business owner you are also reminded of  the consequences for not registering your business:

· Taxes will be payable to the Inland Revenue Department  for the years the business was in operation up to a maximum of six (6) years.

· Concessions will not be granted by the Grenada Industrial Development Corporation.

· Inconvenience at customs when attempting to clear goods.

When is the Tax Due?

The Tax is due and payable at the end of your financial year, but deducted monthly by the employer in the case of an employee.

Where can I pay?

The tax can be paid to Inland Revenue Department, or anyDistrict Revenue Office.

Rate of Tax

Companies– thirty percent (30%) of net profit Sole Proprietorships, Professionals  and Employees thirty percent (30%) of the excess over $60,000. 

 Returns

All returns are due within ninety days after the end of the accounting period (fiscal year basis). But in the case of a company it must be accompanied by a financial statement.

NB: when submitting tax returns, please ensure that all the relevant schedules are completed and the declaration is duly signed.

 Interest

Interest of 1 1/2% per month or part thereof is charged on the unpaid balance.

Offences

Civil Penalties - You have ninety days after your accounting period in which to file your return. If you fail to furnish a return on time you shall incur a penalty of $100. or 10% of the taxes unpaid, which  ever is greater.

Criminal penalties - The law provides for criminal proceedings to be taken against persons who do not comply with the Laws.

Appeals

The same right for appeals exist for Income Tax as for Annual Stamp Tax. See Appeals under the Annual Stamp tax section page 4 

Value Added Tax

Value Added Tax (VAT) Act. No. 23 of 2009, the tax is computed on the value of imports and the value added  (mark-up) that one business charges another, or the final consumer, when a good or service is provided.

The Act came into effect on 1st February 2010. Businesses with annual taxable supplies of $120,000 and above are required to register for the VAT. Promoters of Public Entertainment, Government entities and Investors are also required to register under the Act irrespective of their annual turnover.

Withholding Tax

Withholding Tax is a separate tax from the Income Tax although the rules are contained within the Income Tax Act. Any person who makes payments to a non-resident is responsible for paying Withholding Tax.

The tax is payable on the following:

· Salaries

· Interest (except from bank deposits)

· Discounts

· Rent

· Lease premium

· License charge

· Royalty

· Management of charge

· Commissions

· Fees

· Royalties on other payments

Some of the rates on the taxes are as follows:

Corporate Income Tax

Payable at the rate of 30% of net profit

Value Added Tax

Mobile Talk & Text– 20%

Most goods  & Services– 15%

Hotel Accommodation & Dive activities– 10%

Some goods & services– 0%

Personal Income Tax

Annual Stamp Tax

Gross receipts between $0—$30,000-nil

Gross receipts between $30,000 and $100,000– 25%

Gross receipts over $100,000.-0.5%

Minimum Tax of  $100 per annum

Zero-rated and Exemptions

There are certain goods and services that are zero-rated or exempted from the Value Added Tax. They are as follows:

· Vegetables, fresh, chilled or frozen

· Agricultural tools

· Printed School books and newspapers.

· Computers

· Health services

NB: This Leaflet has been prepared by the Inland Revenue Department for providing guidance for Business owners and potential business owners.

Any additional information or clarification needed please contact the Inland Revenue Department.