Parliamentarians in Grenada today repealed and amended various pieces of legislation as part of efforts to ensure that the country maintains compliance with standards enforced by the European Union and the Organisation for Economic Cooperation and Development (OECD).
Grenada like other islands in the Eastern Caribbean Currency Union and the world have been seeking to conform to the new standards to avoid being blacklisted.
Global standards instituted by the OECD seek to promote integrity in the global tax system by reducing tax evasion, tax avoidance, money laundering and terrorist financing.
An assessment of Grenada by the EU Code of Conduct Group for Business Taxation found that six of the country’s tax regimes are considered harmful in that they offer incentives such as income tax exemptions to companies that are not domiciled in Grenada.
In other words, they are seen as offering preferential tax treatment to non-residents which is considered a discriminatory practice.
Although the laws in question are not popularly practiced, to address the findings and ensure compliance with international practices, Government therefore moved to repeal the International Companies Act, the International Insurance Act and the Offshore Banking Act.
Respectively, these acts provide for the incorporation of international companies, distinguishable from companies incorporated under the Companies Act; the licensing of international insurance companies which are distinguishable from those licensed under the Insurance Act and banks licensed outside of the Banking Act.
All companies affected by these repeals are permitted to continue operations until December 31, 2021.
Additionally, at Wednesday’s sitting of Parliament, the International Trusts Bill was also amended to prohibit the creation of any new trusts after December 31, this year while preserving pre-existing ones.
While parliamentarians supported the repeal and amendment of the various pieces of legislation out of necessity to maintain international compliance, they highlighted the unfairness of the assessments and affirmed that the tax practices are only deemed harmful because they facilitate the north to south flow of capital which goes contrary to what has traditionally taken place..
