ST. GEORGE’S, Grenada, The Grenada government says it will allow for a tax amnesty for a year as it seeks to recover more than EC$600 million (One EC dollar=US$0.37 cents) in arrears.
Prime Minister Dickon Mit5chell, who is also the Finance Minister, told Parliament that the current stock of tax arrears is in excess of $600 million and “the truth of the matter is some of us have not been paying our fair share to support national development.”
Delivering his maiden national budget of EC$1.3 billion budget, Mitchell said his administration, which came to power following the June 23 general elections, “desires to build a sense of national identity and a culture of meeting our obligations to the state.”
He said to prepare for this transition, the government will implement, effective January 2023, a tax amnesty for the next 12 months that will waive 100 percent of all interest and penalties for all arrears up to December 2021.
“To halt the further accumulation of arrears, all arrears for 2022 onwards will be strictly enforced pursuant to the Tax Administration Act, including the requirement of tax clearance certificates to travel, to access loans from financial institutions, garnishees, et cetera,” Mitchell said, adding that the Inland Revenue Department (IRD) will be allowed to act “without political interference from government contrary to what obtained in the past.”
Mitchell said that in addition to digitization of the tax system, “we are also mindful that a good tax administration system is one that is equitable, efficient, and growth-friendly.
“Therefore, we will take steps to improve the administration and collection of existing taxes and, over time and simplify and reduce the number of taxes,” he said, adding that to transition into the new tax system, the IRD will undertake a mass revaluation of properties in 2023.
“The new property values will be implemented in 2024. It is important to note that the revaluation of properties does not necessarily mean higher property taxes, as the Minister can vary current rates to achieve revenue neutrality.
“The revaluation exercise will allow the government to implement a more progressive property tax system; however, to improve compliance in this area, the IRD will implement a pilot that will allow public officers to pay their property taxes through monthly deductions.”
Mitchell said that this service would also be extended to private sector firms, adding that the initiative will reduce the burden of having to find all the resources at one point in time when the tax deadline comes around.
Mitchell said as it relates to the Citizenship by Investment Programme (CBI), under which foreign investors are provided with Grenadian citizenship in return for making a substantial investment in the socio-economic development of the island, the government will take steps to improve the transparency and operations of the CBI program.
He said currently, there are three sources of receipts from the CBI program, namely, fees associated with investment into an approved CBI project, contributions to the National Transformation Fund (NTF), and other fees, including application and processing fees.
Mitchell said effective January 2023, all CBI revenues will be reported as non-tax revenues, and that government will amend the NTF regulation to set aside at least 10 percent of receipts from contributions into the NTF, specifically for post-disaster financing, to be managed by the St. Kitts-based Eastern Caribbean Central Bank (ECCB).
Mitchell said the government would earmark the remaining 90 percent of NTF receipts for transformative capital projects as identified by a Cabinet-appointed committee.
“It is envisaged that the NTF funds will finance impactful projects of national interest that can make a marked difference in the lives of all Grenadians, such as the construction of our state-of-the-art teaching hospital or our technologically advanced public library.”
Mitchell said that the CBI has been a major revenue earner for the government and continues to play an integral part in the country’s economic and fiscal architecture.
He said investment migration, which includes CBI and Residency by Investment (RBI), is estimated to be a US$20 billion industry.
“The government of Grenada will be moving purposefully and systematically to strengthen and market our CBI program and NTF to ensure that we prudently grow our market share. Very mindful of the headwinds for the Investment Migration Sector, the government is fully committed to working with all stakeholders to adapt and/or develop the necessary standards, regulations, and internal control systems to reduce the risk profile of the sector and mitigate existing risks on an on-going basis.
“In addition, we will continue our partnerships with the relevant entities in the United States and the European Union to strengthen due diligence processes,” Mitchell said, adding that the new measures “will ensure that the program is transparent, safe, and sustainable with tangible benefits to the people of our nation.”
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