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(CMC) – The Grenada parliament Wednesday began the process of repealing four pieces of legislation that the European Union has described as “harmful tax practices”.
“The International Companies Act in its present construct gives incentives to foreign entities that are not domicile in Grenada and Mr Speaker it has been deem to be unfair and lacks transparency by the EU intergovernmental code of conduct group on taxation,” said Legal Affairs Minister Kindra Maturine-Stewart as she piloted the motion to repeal the legislation.
She told legislators that in 2017 Grenada was among a group of 90 countries that the EU 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 constitutes 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 domiciled in the state.
Apart from the International Companies Act, the government is also moving to repeal the International Insurance Act, the International Trusts Bill and the Offshore Banking Act.
The Keith Mitchell government said that these pieces of legislation 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 received favourable incentives and the playing field was not one that was even with respect to 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 per cent 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 jurisdiction. These international businesses are also prohibited for carrying on business with local 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 new measures will be debated in the Senate and the authorities say they hope that the repeal legislation would go into effect by the end of the year.