by Linda Straker
- Harmful tax practices legislation receive first approval to be repealed
- In 2017 Grenada selected to be screened against tax transparency, harmful tax practices and base erosion profit shifting
Four pieces of legislation in Grenada described by the European Union as “harmful tax practices” received the first phrase approval of being repealed on the law books, when members of the Lower House of Parliament approval for them to be abolished from the list of active legislation.
“The International Companies Act in its present construct gives incentives to foreign entities that are not domiciled in Grenada, and Mr Speaker it has been deemed to be unfair and lacks transparency by the EU intergovernmental code of conduct group on taxation,” said Legal Affairs Minister Kindra Maturine–Stewart when she presented the bill for debate and approval during Wednesday’s sitting.
She explained that in early 2017, Grenada was among a group of 90 countries that the EU group selected to be screened against tax transparency, harmful tax practices, and base erosion profit shifting. “As a result, Mr Speaker, it has become necessary to amend, examine and abolish where necessary, existing tax measures or regimes that constitute harmful tax practices,” said Maturine–Stewart who also informed the House that the EU new guidelines prohibit new measures that will provide for international companies to benefit but not be domiciled in the state.
The 4 pieces of legislation are the International Companies legislation, the International Insurance Legislation, the International Trusts legislation, and the Offshore banking legislation. All of these legislations were approved during the mid-1990s when Grenada embarked on making offshore banking one of the sectors to grow and develop the economy.
Maturine–Stewart said the laws provided for the international companies to receive favourable incentives, and the playing field was not one that was even concerning resident companies and non-resident companies.
“For instance, Mr Speaker, an international business company does not have to pay corporate income tax, whereas Mr Speaker a local company is subjected to 30% corporate income tax,” she said while pointing out that such an incentive for international companies is not usual because that is a benefit that is offered in all offshore jurisdictions. These international businesses are also prohibited from carrying on business with locals although they are registered locally.
Maturine–Stewart said that at present only 84 companies are registered as international businesses in Grenada, and it’s not expected to hurt the country economically. “Unlike St Vincent where there are over 6,000 international business registered,” she said.
The Senate or Upper House of Parliament will also have to give its approval to the 4 pieces of legislation before they are gazetted and assented by the Governor-General to be effectively repealed. The repeal legislation will go into effect as of 31 December 2021, and during the transitionary phase all companies that were established under the 4 pieces of legislation will have to be wound up or be dissolved.
International trust corporations will be allowed to continue after December 2021.
NOW Grenada is not responsible for the opinions, statements or media content presented by contributors. In case of abuse, click here to report.
