Grenada has announced in its 2015 Budget that the territory will overhaul the legislation governing tax administration and close tax loopholes.
The Budget commits to deliver a more customer friendly, transparent, and efficient tax service. The changes, included in the Tax Administration Act, involve the restructuring of existing tax administration infrastructure.
Grenada aims to limit tax loopholes through measures to:
- Limit deductions for motor vehicle operating expenses and travel expenses to restrict them to business use;
- Pool and ring-fence unincorporated business income and rental property income so that losses in each of these categories cannot be set off against other types of income such as personal income tax;
- Require that deductions for interest and other overhead expenses incurred to earn foreign-source income should be deducted only against foreign-source income; and
- Introduce accelerated depreciation allowances as the main income tax incentive for investment.
The changes will be introduced with effect from the 2015 tax year.
The Government said the Budget looks to build on strong revenue receipts this year, which have grown by 15.8 percent, on account of increased economic activity in the territory’s tourism, agriculture, and education sectors. Property tax revenues were up 22.3 percent and excise duty receipts increased 21.9 percent.