./.WORLD TRADE
ORGANIZATIONG/SCM/N/74/GRD
11 January 2002
(02-0143)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Requests Pursuant to Article 27.4 of the
Agreement on Subsidies and Countervailing Measures
Requests Pursuant to the Procedure in Document G/SCM//39
GRENADA
The following communication has been received from the Permanent Mission of Grenada on
7 January 2002.
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The Ministry of Foreign Affairs and International Trade of Grenada hereby notifies the
Committee on Subsidies and Countervailing Measures of our current incentive programmes and
requests an extension of the transition period under Article 27.4 of the Agreement on Subsidies and
Countervailing Measures (SCM) in accordance with procedures contained in document G/SCM/39.
Fiscal Incentive Programmes
The Fiscal Incentives Act No. 41 of 1974 and the Hotel Aids Act of 1954 regulate fiscal
incentives.
The Fiscal Incentives Act No. 41 of 1974  allows for the granting of a tax holiday of up to
15 years, for the manufacture of approved products by approved enterprises, as follows:  Group I
enterprises, in which local value added is 50 per cent or more of sales:  up to 15 years;  Group II
enterprises, in which local value added is between 25 and 50 per cent of sales:  up to 12 years;
Group III enterprises, in which local value added is between 10 and 25 per cent of sales:  up to
10 years;  Enclave enterprises, in which production is exclusively for export outside of CARICOM:up to 15 years;  and highly capital-intensive enterprises, in which there is a capital investment of not
less than US$25 million:  up to 15 years.
Based on the above classification, approved enterprises may obtain complete or partial
exemption from the payment of income tax on profit s for a period not exceeding the maximum for the
group under which they have been classified.
The Act also grants import duty and Genera l Consumption Tax (GCT) exemptions for the
importation of machinery, equipment, spare parts, building materials, raw and packaging materials,
and others as appropriate, to be used in eligible enterprises.  Services are granted relief from the
Common External Tariff and the GCT for imports of equipment.G/SCM/N/74/GRD
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The Fiscal Incentives Act also provides relief from income tax on the export profits accruing
from the exportation of an approved product manufactured by an enterprise.  This relief is provided
only after the tax holiday period has lapsed, and does not apply to enterprises engaged in traditionally
export-oriented.
Manufacturing enterprises that do not qualify for the benefits of the Fiscal Incentives Act may
benefit from import duty concessions under SRO 37/99 (List of Conditional Duty Exemption -
CARICOM Common External Tariff), which allows approved enterprises, organizations or persons to
be exempted from duty or to be charged a rate lower than that laid down by the Customs Tariff
Regulations.  To benefit, enterprises must have a local value added of 40 per cent and over, or create
employment for ten or more people, or generate export earnings.
The Hotel Aids Act of 1954  allows for full exemption from taxes on profits for ten years for
hotels, apartments, and guest houses, as well as exemption from customs duties and taxes on articles
of hotel equipment to equip and upgrade hotel property, service vehicles, material for construction,
repair, renovation or extension to hotel properties.  The Qualified Enterprises Act, Cap. 276 provides
for tax benefits and exemptions for certain enterpri ses.  The authorities noted that the Act is rarely
used, and that currently only three enterprises benefit from it.
Need for extension
In the past few years, Grenada has managed to diversify production and reduce its reliance on
the banana industry.  The Grenadian economy has moved further away from agricultural production
and towards service activities, in particular, construction, transport, and communications, together
with financial and business services have grown in importance.
Tourism continues to grow and is an important contributor to the overall economic
diversification strategy.  This sector is an important source of foreign exchange to the economy and
also an important employer.  Growth in tourism has helped cushion the effects of the decline in
commodity exports, particularly bananas and cocoa.
In light of the current economic downturn, as we continue to diversify our economy and
encourage the establishment of new businesses, the Government of Grenada wishes to seek an
extension under SCM Article 27.4 pursuant to the procedures set forth in document G/SCM/39.  Such
extension is necessary in light of our economic, financial and development needs.
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