Policies Towards Foreign Direct Investment

Grenada employs a liberal approach to FDI.  The strategic agenda of the government states that investment is directly related to the socio-economic growth and development of the country.  As a result, the government of Grenada identified additional foreign investment opportunities related to the country’s resource endowment of “sand, sun, sea and rich fertile soil.”  The government of Grenada identified the following 5 priority sectors for investment:

1. Tourism and hospitality services
2. Education and health services
3. Information and communication technology
4. Agribusiness
5. Energy development

The GIDC is the country’s investment promotion agency.  It is comprised of three strategic business units responsible for carrying out its core responsibilities.  They are:

1. Investment Promotion Agency: responsible for investment promotion facilitation;
2. Business Development Centre: provides business support services to micro-, small and medium-sized enterprises; and,
3. Facilities: manages the three business parks owned by the GIDC.

The GIDC is a “one-stop shop” offering:

• Investment and trade information
• Investment incentives
• Investment facilitation and aftercare
• Entrepreneurial/business skills training
• Small business support services
• Industrial facilities
• Policy advice

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no economic and industrial strategies that discriminate against foreign investors.  Non-Grenadian investors may be required to obtain an Alien Landholding License and pay a property transfer tax, which levies a 10 percent fee on the purchase of shares in a Grenadian registered company or real estate asset.  In addition, the sale of shares or real estate to non-nationals attracts a property transfer tax of 15 percent payable by the seller.  Foreign investors employed in Grenada are required to obtain a work permit, renewable annually.  U.S. investors must pay a fee of $1,111 (3,000 Eastern Caribbean dollars) for work permits.  The renewal fee varies based on the investor’s country of citizenship.

There are no limits on foreign ownership or control.  Foreign investors may not invest in or operate investment enterprises that are prejudicial to national security or detrimental to the environment, public health, or national culture, or which contravene the laws of Grenada.  Grenada has accepted but not yet implemented regional obligations on anti-competition concerns.  U.S. investors are not disadvantaged or singled out by any of the ownership or control mechanisms, sector restrictions, or investment screening mechanisms in Grenada relative to other foreign investors.

Grenada maintains an investment screening and approval process for inbound foreign investment for national security concerns.

Other Investment Policy Reviews

Grenada passed its most recent Investment Promotion Act in 2014.  The legislation promotes, encourages, and protects investment in Grenada by providing investors with a stable framework of fundamental and enforceable rights.  It seeks to guarantee and ensure security and fairness in strict accordance with the rule of law and best international standards and practices.  The 2014 Act complies with WTO regulations, the Economic Partnership Agreement (EPA) between the EU and the Caribbean Community (CARICOM), and the Agreement between the Caribbean Forum (CARIFORUM) and the EU.

In 2016, parliament approved a new incentives regime, ensuring all tax exemptions are codified in the relevant legislation.  It also restricted discretionary exemptions and required that the beneficiaries of exemptions file appropriate tax returns and comply with tax requirements.

The incentive regime created a streamlined, simple, and non-discretionary system/process for the granting of incentives.  The Customs and Inland Revenue Departments administer exemptions through a clearly defined rule-based system.

Incentives will be granted to projects within the priority sectors for investment.  They are tourism; manufacturing; agriculture and agribusiness; information technology services; telecommunication providers and business process outsourcing operations; education and training; health and wellness; creative industries; energy; and research and development.  Other sectors also include student accommodation; heavy equipment operators; investment projects above particular investment thresholds; and projects within specific geographical locations.

The incentive regime seeks to provide investment incentives on a performance basis (i.e. the more one invests, the more incentives one can receive).  Therefore, based on the level of investment, different levels of incentives will be granted in a transparent, open, predictable, and non-discriminatory manner.

In the past three years, the government did not undergo any third-party investment policy reviews through multilateral organizations such as the Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO), and the United Nations Conference on Trade and Development.

Business Facilitation

Political and economic stability, human resource capacity, supportive government policies, trade and investment opportunities, quality of life, and good infrastructure provide a positive environment for FDI in Grenada.

An investor must register a business name and identify whether it is a partnership or limited liability company.  A registered business can be wholly owned or a joint venture.  The official website of the GIDC includes an investor’s guide that details the procedures for starting and operating a business in Grenada.  The guide has a business procedure flow chart and gives step-by-step instructions for various tasks from registering a business and owning properties to obtaining permits and licenses.  Detailed information on business registration and timelines can be found at: http://grenadaidc.com/investor-centre/investors-guide/starting-up-a-business/#.WKxXdfnQe70 

The GIDC provides business facilitation mechanisms and ensures the equitable treatment of women and underrepresented minorities in the economy.

Outward Investment

The government of Grenada does not promote or incentivize outward investment.  However, under the Revised Treaty of Chagaramus, there are Rights of Establishment in any CARICOM member state.  There is also a chapter on service agreements under the EPA.  Under certain circumstances, provisions in these agreements may offer incentives to the potential investor.  Grenada does not restrict domestic investors from investing abroad.

Bilateral Investment Agreements established between Grenada and several countries are designed to encourage and protect international investments and to ensure that investors receive fair, equitable, and nondiscriminatory treatment.  Bilateral Investment Treaties exist between Grenada and the United States as well as Grenada and the UK.

Grenada is a member of CARICOM, established by the Treaty of Chagaramus in 1973 to promote economic integration and development among its 15 member states.  The Revised Treaty of Chagaramus later established the CARICOM Single Market and Economy (CSME) to provide for the free movement of goods, services, capital, and labor within member states.

Grenada is also a member of CARIFORUM and party to the EPA between the EU and CARICOM member states.  This agreement aims to alleviate poverty, foster regional integration, promote economic cooperation, and propel CARIFORUM states’ entry into the world economy by creating an attractive investment climate and ensuring trade viability on the world market.

Grenada is also a member of the Caribbean-Canada Trade Agreement (CARIBCAN), an agreement between the Canadian government and the Commonwealth Caribbean nations to promote trade, investment, and industrial cooperation.  Treaties with investment provisions also exist through the CARICOM-Costa Rica free trade agreement (FTA), CARICOM-Cuba Cooperation Agreement, CARICOM-Dominican Republic FTA and CARICOM-Venezuela FTA.  Grenada, under the umbrella of CARICOM, is reviewing trade agreements with Cuba and the Dominican Republic to negotiate new market access and opportunities.

There is also an agreement with the Caribbean Basin Initiative (CBI), an initiative created by the United States with the Caribbean and Central America to provide several trade and tariff benefits, among others.

In 2018, Grenada signed a bilateral Open Skies Agreement with the United States.  This agreement replaces the 1946 Bermuda I Agreement, and ensures a more current, responsive, and beneficial arrangement that is reflective of modern civil aviation trends.

Bilateral Taxation Treaties: Grenada passed legislation that will implement the Foreign Account Tax Compliance Act Inter-Governmental Agreement (FATCA) with the United States.  FATCA requires that information on U.S. citizens with accounts at local financial and credit institutions holding in excess of $18,500 (50,000 Eastern Caribbean dollars) be shared with the U.S. Internal Revenue Service (IRS).  The legislation provides for the Competent Authority to be the Comptroller of Inland Revenue, who will communicate directly with the IRS.  The Comptroller will mandate his/her staff to gather information from financial institutions to be divulged to the IRS.  According to the legislation, “failure to comply with such a request is a summary offence punishable by a fine not exceeding $100,000 [Eastern Caribbean dollars].”

The legislation also provides for the protection of privacy, stating that the Competent Authority must protect confidential account information.  Other than FATCA, the United States does not have a tax treaty with Grenada.

Capital Markets and Portfolio Investment

Grenada possesses a robust legislative and policy framework that facilitates free flow of financial resources.  Its currency, the Eastern Caribbean dollar, has a fixed exchange rate established by the regional Eastern Caribbean Central Bank (ECCB).  Foreign employees of investment enterprises and their families may repatriate their earnings after paying personal income tax and all other taxes due.  The government of Grenada encourages foreign investors to seek investment capital from financial institutions chartered outside Grenada due to the short domestic supply of capital.  Foreign investors are more likely to tap local financial markets for working capital.

The private sector has access to the limited number of credit instruments.  Grenadian stocks are traded on the Eastern Caribbean Securities Exchange, whose limited liquidity may pose difficulties in conducting transactions.

Money and Banking System

The financial services sector in Grenada is regulated by two entities: The ECCB and the Grenada Authority for Regulation of the Financial Industry (GARFIN).  The ECCB regulates the banking system.  GARFIN oversees non-banking financial institutions through a regulatory system that encourages and facilitates portfolio investment.  The estimated total assets of the largest banks are $1.03 billion.  Information on the percentage of non-performing assets is not available.  Grenada has not experienced cross-shareholding or hostile takeovers.

Foreign banks or branches can establish operations in Grenada subject to prudential measures and regulations governed by the ECCB.  For the requirements and procedures, foreign banks can refer to the following website: https://www.eccb-centralbank.org/p/grenada-1 

There is correspondent banking available with all licensed commercial banks.  No correspondent banking relationships have been lost in the past three years, nor are there any correspondent banking relationships currently in jeopardy.  There are no restrictions on a foreigner’s ability to establish a bank account.

In addition to the banking sector, there are alternative financial services provided through credit unions.  GARFIN regulates credit unions.

Foreign Exchange and Remittances

Foreign Exchange

Grenada’s currency is the Eastern Caribbean dollar, issued by the ECCB located in Saint Kitts and Nevis.  The exchange rate is also determined by the ECCB.  The Eastern Caribbean dollar is pegged to the U.S. dollar at 2.7, adding to the stability of trade and investment in Grenada.

There are no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with investment.  Funds associated with any form of investment can be freely converted into several currencies including U.S. dollar, pound sterling, Canadian dollar, and Euros.  However, banks reserve the right to delay transactions if deemed suspicious or outside the typical level of activity on the account.

Remittance Policies

There are no difficulties or delays regarding remittances and no proposed policy changes that would either tighten or relax access to foreign exchange for investment remittances.

Transfers of currency are protected by Article VII of the International Monetary Fund Articles of Agreement.  Grenada is also a member of the Caribbean Financial Action Task Force.

Sovereign Wealth Funds

Grenada does not have a sovereign wealth fund.

Table 3: Sources and Destination of FDI
Data not available.

Table 4: Sources of Portfolio Investment
Data not available.