RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q3/GRD/5
30 April 2002
(02-2445)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Requests Pursuant to Article 27.4 of the Agreement
on Subsidies and Countervailing Measures
Responses by GRENADA to Questions Posed by
CANADA1, the EUROPEAN COMMUNITIES2,
JAPAN3 and the UNITED STATES4
The following communication, dated 26 April 2002, has been received from the Permanent
Mission of Grenada.
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CANADA
Q. How many recipient companies/industrial parks, etc. operate under the Programme I
Fiscal Incentives Act No. 41?
Reply
Presently 23 recipient companies operate under our Fiscal Incentives Act No. 41.
EUROPEAN COMMUNITIES
Q1. Please indicate when the pr ogrammes came into operation.
Reply
The programme came into operation in 1975.
Q2. Please indicate whether the programmes provide for other forms of subsidies than
exemption of import duties and internal taxes (e.g. grants, provision of goods or services).
                                                     
1 G/SCM/Q3/GRD/4
2 G/SCM/Q3/GRD/2
3 G/SCM/Q3/GRD/3
4 G/SCM/Q3/GRD/1G/SCM/Q3/GRD/5
Page 2
Reply
The Programmes do not provide for other forms of subsidies than exemption of import duties
and internal taxes.
Q3. Do the programmes provide for a condition to use domestic goods?  If yes, please
describe the relevant provision.
Reply
There are no conditions in the Programmes for the use of domestic goods.
Q4. The programme "Fiscal Incentives Act No. 41 of 1974 appears to contain a condition for
"local value addition".  Does this constitute a requirement to use domestic over imported
goods?  Please explain.
Reply
The conditions in the Fiscal Incentives Programme for “local value added” do not constitute a
requirement to use domestic over imported goods.  As stated in the Act, the “local value added” is the
amount by which the sales of an approved product exceeds:
(i) The aggregate amount of the value of imported raw materials (whether regional or
extra-regional);
(ii) Wages or/and salaries;
(iii) Interest, management charges and other income payments; and
(iv) Depreciation on the imports of plant, machinery and equipment.
This requirement is based on the process not the raw material used.
Q5. Please indicate the rate of import duty or internal tax exemption as of
1 September 2001.
Reply
As of 1 September, 2001 the rate of exemption on internal taxes is 100 per cent.  With regard
to exemption on import duties the rate of exemption on plant, equipment, machinery, spare parts, raw
materials or components thereof, with the exception of vehicles is also 100 per cent.  The exemption
granted on the importation of vehicles is 50 per cent.
Q6. Please describe changes to the programmes since 1 September 2001, if any.  In
particular, indicate any changes to the rate of exemption or the coverage of the programmes e.g.
in terms of products, location etc.
Reply
Since the 1st September, 2001, there have been no changes in the Programmes.
Q7. Please indicate for each programme how many companies have benefited from the
respective programme as of 1 September 2001.G/SCM/Q3/GRD/5
Page 3
Reply
As of 1 September, 2001, 12 companies have benefited under the Fiscal incentives
Programme and the Qualified Enterprise Act.
Q8. Please elaborate on when and how Grenada intends to phase out the programmes.
Reply
Following discussions on the requirement to phase out the programmes notified the
Government of Grenada has formed a committee to Asses the programmes.
This committee has met on at least six occasions since and has focused on the Services sector
in which there is more flexibility, minded of our obligations under the GATS, and the areas which we
have scheduled commitments.
JAPAN
Fiscal Incentive Act No. 41 of 1974
This Act seems to include a requirement fo r local value added.  Could Grenada please
explain its conformity with Article 3.1(b) of the ASCM?
Reply
The requirement in the Fiscal Incentives Programme for “local value added” do not constitute
a requirement to use domestic over imported goods.  As stated in the Act, the “local value added” is
the amount by which the sales of an approved product exceeds:
(i) The aggregate amount of the value of imported raw materials (whether regional or
extra-regional);
(ii) Wages or/and salaries;
(iii) Interest, management charges and other income payments; and(iv) Depreciation on the imports of plant, machinery and equipment.
This requirement is based on the process not the raw material used.  It is therefore in conformity with
Article 3.1(b) of the SCM Agreement.
UNITED STATES
Fiscal Incentive Programmes
Hotel Aids Act of 1954
Q1. It is appears that the level of benefits is determined, in part, by the degree to which an
enterprise uses domestic over imported goods.  Pl ease explain in detail.  Does the Government of
Grenada have any plans to eliminat e this element of the programme?
Q2. Please explain how the level of income tax exemption is determined.  Are there specific
legal criteria or is it discretionary?G/SCM/Q3/GRD/5
Page 4
Q3. How does a product become approved for fu rther income tax exemptions after the tax
holiday period lapses?
Q4. Please explain in detail the eligibility criteria for the receipt of benefits under SRO
37/99.  It appears that the eligibility criteria require, to some degree, the use of domestic overimported goods.  Please explain in detail.
Reply
Fiscal Incentives Act No. 411. The level of benefits received by an Enterprise is not determined by the degree to which that
Enterprise uses domestic over imported goods.
The requirement in the Fiscal Incentives Programme for “local value added” does not
constitute a requirement to use domestic over imported goods.  As stated in the Act, the “local value
added” is the amount by which the sales of an approved product exceed:
(i) The aggregate amount of the value of imported raw materials (whether regional or
extra-regional);
(ii) Wages or/and salaries;
(iii) Interest, management charges and other income payments;  and(iv) Depreciation on the imports of plant, machinery and equipment.
This requirement is based on the process not the raw material used.
2. As stated in Section 16  of the Act, the level of income tax exemption is determined by the
amount of export profits.
3. After the tax holiday period has lapsed no further relief is granted to the approved product.
SRO 37/99
4. With regard to manufacturing industries eligibility for benefits under this Programme, an
enterprise must have a local value added of 40 per cent and over, or create employment for ten (10)
for ten or more persons, or generate export earnings.
As stated in response to question one above, there is no requirement for the use of domestic
over imported goods
Hotel Aids Act 1954
Grenada wishes to advise that as stated in our new and full notification, pursuant to
Article 27.4 of the SCM Agreement, the relief granted to services under the Hotel Aids Act of 1954 isnot relevant to this notification, which addresses subsidies granted to manufacturing industries, but for
transparency the following is submitted.
1. The level of benefits received is not determined by the use of domestic over imported goods.
2. Under the Hotel aids Act the exemption from income taxes is contingent on the hotel being
ten rooms or more. There are no clear criteria for the granting or refusal of this relief, it is left to the
discretion of the Minster responsible for Finance.G/SCM/Q3/GRD/5
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3. After the tax holiday has expired there is no extension of the income tax holiday, but on the
import duties of construction materials and equipment there is a carry over of two years exemption,
beyond the relief period.
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