WORLD TRADE  
ORGANIZATION  G/SCM/N/146/GRD 
10 July 2006 
 (06-3328) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Extension Under SCM Article 27.4 of the Transition Period for the  
Elimination of Export Subsidies Pursuant to the Procedures  
in Document G/SCM/39  
 
Updating Notification  
 
GRENADA 
 
  The following communication, dated 7 July 2006,  is being circulated at the request of the 
Delegation of Grenada. 
_______________ 
  
 We hereby submit to the Committee on Subsid ies and Countervailing Measures, Grenada’s 
updated Notification on Current Incentive Programmes under Articles 25  and 27 of the SCM 
Agreement and Article XVI:1 of GATT . 
 
 Please be informed, that not all elements of  the notified programmes, including subsidies 
provided thereunder, necessarily involve export subsidies.   Grenada wishes to reiterate that, in keeping w ith Article 25.7 of the Agreement on Subsidies, 
this notification does not prejudice the legal st atus of the notified programmes under the GATT 1994 
or the said Agreement, their effects under the Ag reement or the nature of the programmes or 
measures; furthermore, notification of a programme  or measure does not prejudice its actionable or 
non-actionable nature.  G/SCM/N/146/GRD 
Page 2  
 
  Programmes 
 
                   P a g e
 
 
I. FISCAL INCENTIVES ACT NO. 41 OF 1974 ...................................................................2 
 
II. QUALIFIED ENTERPRISES ACT NO. 18 OF 1978 ........................................................4  III. STATUTORY RULES AND ORDERS NO. 37 OF 1999...................................................6   
 
 I. FISCAL INCENTIVES ACT NO. 41 OF 1974 
1. Description of the programme 
 The Fiscal incentives Act is an Act to attract, mobilize and direct capital for new investment. 
 
2. Period covered by the notification 
 2005 – statistical information 
 As of 1 June 2006 – programme status 
 
3. Policy objective and/ or purpose of the subsidy 
 To attract private investors who will contribut e to the desired expansion of national output, 
thereby promoting economic growth and development.  
4. Background and authority for the subsidy (including identification of the legislation 
under which it is granted) 
Background
 
  The promotion of private investment is an integr al part of the development plan of Grenada as 
we continue to diversify production and reduce our reliance on Agricultural production. Economic 
expansion generates demand for foreign excha nge.  Given our narrow resource base Grenada 
continues to need resource inflows and one of the b est ways to achieve this is through direct foreign 
investment. 
  The Fiscal Incentives Act was passed to give e ffect to an agreement on the harmonization of 
fiscal incentives to industry among CARICOM countries.  
Authority
 
  Fiscal Incentives Act No. 41 of 1974. Chapte r 107 of the 1990 Revised Laws of Grenada. 
  The Grenada Industrial Development Corporati on (GIDC) is responsible for administrating 
this incentive programme. 
 
 Since Grenada's initial notification in Decemb er 2001, no modification was made to the Fiscal 
Incentive Act No. 41/1974 according to paragraph 4 of document G/SCM/39. 
  G/SCM/N/146/GRD 
 Page 3 
 
 
  5. Form of Subsidy 
 The Fiscal Incentives Act provides relie f from taxes in the following ways: 
 
• Waiver from Customs duty on plant, equipment, machinery, spare parts, raw materials or 
components thereof, for between ten (10) to fifteen (15) years, dependant on which group of 
enterprise.  This is also subject to the satisf action of the Comptroller of Customs and excise, 
that the above list is required for: 
 
 (a) Constructing, altering, r econstructing or extending the approved enterprise, that is, an 
enterprise declared by Order of the Minister responsible for industry; or 
 
 (b) Equipping an enterprise for the purpose of manufacturing and approved product, that 
is, a product declared by Order of the Minister responsible for industry. 
 
• Complete or partial exemption from the payment of income tax on the profits arising from the 
sale of an approved product from the production day for a period not exceeding the time given to the Enterprise, that is 10 – 15 years. 
 
 Where shareholders or their nominees are not r esident in Grenada, they shall be exempted 
from income tax on dividends, in respect of the amount of tax that exceeds the tax liability of the shareholder in his country of residence. 
 
• Where the export profits of enterprises referred to  in the Act, amount to ten (10) per cent or 
more of the entire profits of the enterprise,  from the export of an approved product, relief 
shall be granted from income tax on the export prof its.  This relief is granted by way of tax 
credits. 
 
6. To whom and how the subsidy is provided 
 Fiscal incentives are granted to private investors to facilitate the development of industries, in 
particular manufacturing, agro- processing, agriculture, as pertain to this notification. 
  An application is made to the Minister res ponsible for industry, by or on behalf of the 
enterprise, stating:  
• The locality or proposed locality of the factory; 
• The construction day; 
• The production day; 
• The approved product already being manufactur ed or intended to be manufactured;  and 
• All information relevant to de termine the local value added. 
  If the Minister is satisfied that it is in the pub lic interest to grant such  enterprise incentives, he 
may by Order published in the Gazette declare the en terprise to be an approved enterprise with effect 
from the date specified in the Order.  
 The relief from taxes, or “tax holiday period” , is granted on import duties, income tax and 
export profits, depending on the group in which the enterprise is categorized.   There are five groups of enterprises and the tax holiday applicable is as follows:  G/SCM/N/146/GRD 
Page 4  
 
  • Group I Enterprise, one in which the local value added is at least fifty per centum (50%) of 
the amount realized from the sale of an approved product; up to 15 years relief; 
• Group II Enterprise, one in which the local value added is between 25% and 50%, up to 
12 years; 
• Group III Enterprise, one in which the local value added is between  10% and 25%, up to 
10 years; 
• Enclave Enterprise, one in which production is exclusively for export; up to 15 years; and 
• Highly capital intensive industry, one in which the capital investment is not less than 
US$25 million, up to 15 years. 
 
 Export profits is determined by the formula E x P
 where “E” represents proceeds from export 
              S sales, “P” represents profits made by the enterp rise and “S” represents the proceeds of all sales. 
 
 Tax relief on export profits is as follows:  
 
Amount of export profits expressed as 
a Percentage of the entire profits. Maximum  percentage of tax relief  
10% or more but less than 21% 25% 
21% or more but less than 41% 35% 
41% or more but less than 61% 45% 
61% or more 50% 
 
7. Subsidy per unit, or in cases where this is not possible, the total amount or the annual 
amount budgeted for that subsidy 
 Due to the nature and coverage of the progra mme, there are no statistical data available on the 
amount of subsidy per unit.  There is no annual amounts budgeted for this programme.  
 
8. Duration of subsidy and/or any other time limits attached to it, including date of 
inception/commencement 
 As indicated in 6. above. 
 
9. Statistical data permitting an assessment of the trade effects of the subsidy is 
Year Estimated Imports 
(US$ ’000) Total Estimated 
Exports 
(US$ ‘000) 
2005 318524.67 27168.00 
 
 
II. QUALIFIED ENTERPRISE ACT NO. 18 OF 1978 
1. Title of the subsidy programme, if relevant, or brief description or identification of the 
subsidy 
 An Act to provide for the conferment of tax benefits on certain enterprises if the Minister 
responsible for industry considers it to be in the public interest to do so.   G/SCM/N/146/GRD 
 Page 5 
 
 
  2. Period covered by the notification 
 As of 1 June 2006 – programme status. 
 
3. Policy objective and/or purpose of the subsidy   
 To provide tax benefits  and exemptions to industries which can contribute to the promotion of 
economic growth and development of Grenada. 
 
4. Background and authority for the subsidy (including identification of the legislation 
under which it is granted)  
Background  
 
 This Act was introduced to provide tax stabili zation to industries, which the Fiscal Incentives 
Act does not provide.  An order under this Act is  in addition to, and does not derogate from any 
benefit or advantage or similar concession enjoyed or to be enjoyed by an enterprise under any other 
written law. 
 
 This Act was implemented to ensure that wher e there is a tax increase, industries enjoying 
concessions for a particular period under the Fiscal In centives Act, will not be affected, as they rate of 
taxes and duties will remain at the same as on the day an Order under this Act comes into effect. 
  Since Grenada's initial notification in Dece mber 2001, no modification was made to the 
Qualified Enterprises Act No. 18/1978 accordi ng to paragraph 4 of document G/SCM/39. 
 Authority
 
  Qualified Enterprises Act No. 18 of 1978, Chapte r 270 of the 1990 Revised Laws of Grenada. 
 
 The Grenada Industrial Development Corporati on (GIDC) is responsible for administering 
this incentive programme.   
5. Form of subsidy 
 The Qualified Enterprises Act provides for tax benefits and exemptions on taxes, duties and 
imposts payable by an Approved Enterprise at a ra te or amount not exceeding that subsisting on the 
date of the Order.  
6. To whom and how the subsidy is provided 
 This subsidy is available to all enterprises, but is rarely used.  At present only the three 
enclave enterprises established in Gr enada benefit under this Act. 
  A Qualified Enterprise enjoys such tax benefits  and exemptions as under the Fiscal incentives 
Act No. 41 of 1974, for up to 15 years at the rate subsisting on the date of the Order.   An approved enterprise under the Fiscal incentives Act No. 41 of 1974 may make an 
application to the Minister responsible for Industry, providing information as indicated in 6 of 
Programme I.   If the Minister is satisfied it is in the public interest to, he may by Order under this 
Act, declare the approved enterprise to  also be a Qualified Enterprise. 
 G/SCM/N/146/GRD 
Page 6  
 
  7. Subsidy per unit, or in cases where this is not possible, the total amount or the annual 
amount budgeted for that subsidy 
 Due to the nature and coverage of the progra mme, there are no statistical data available on the 
amount of subsidy per unit. Also no annual  amount is budgeted for this programme. 
 8. Duration of subsidy and/or any other time limits attached to it, including date of 
inception/commencement  
 As indicated in 6. above. 
 
9. Statistical data permitting an assessment of the trade effects of the subsidy 
 There is no such statistical information available. 
  
III. STATUTORY RULES AND ORDERS NO. 37 OF 1999 (LIST OF CONDITIONAL 
DUTY EXEMPTION- CARICOM COMMON EXTERNAL TARIFF) 
1. Title of the subsidy programme, if relevant, or brief description or identification of the 
subsidy 
 The list of Conditional Duty Exemptions sets out the goods which, when imported, may be 
admitted free of import duty or at a rate that is lowe r than set out in the Schedule of rates.      
 
2. Period covered by the notification 
 As of 1 June 2006 – programme status. 
 
3. Policy objective and/or purpose of the subsidy 
 To allow manufacturing enterprises that do not qualify for benefits under the Fiscal Incentives 
Act to possibly benefit from impor t duty concessions under this Act. 
 
4. Background and authority for the subsidy (including identification of the legislation 
under which it is granted) 
Background
 
 
 This legislation was passed in order to in troduce the new Common External Tariff based on 
the Harmonized Commodity Description and Coding sy stem, in accordance with legal obligations 
falling upon Grenada by virtue of our adherence to  membership in the Caribbean Common Market 
(CARICOM).   Since Grenada's initial notification in Dece mber 2001, no modification was made to the 
CARICOM Common External Tariff, Statutory Rules and Orders No. 37/1999 according to 
paragraph 4 of document G/SCM/39.  Authority
 
  CARICOM Common External Tariff, Statutory Rules and Order No.37 of 1999. 
  G/SCM/N/146/GRD 
 Page 7 
 
 
   The relevant Ministries together with the Comptroller of Customs are responsible for 
administering this legislation.  
5. Form of Subsidy 
 The List of Conditional Duty Exemptions allows  enterprises, organizations or persons to be 
exempted from duty or be charged a lower rate , than that laid down by the Customs Tariff 
Regulations.   The classification structure of the Schedule of  Rates is based on the Harmonized Commodity 
Description and Coding system.  The rates of duty in  the schedule are applicable to imports from third 
countries into the Member States of the Cari bbean Common Market as well as goods traded among 
the Member states.   On some inputs the rate applied by Grenad a, as a Least Developed Country within the 
Caribbean Common Market, may be from 0% to 5%. 
 
6. To whom and how the subsidy is provided 
 In order to benefit, an enterprise must have a local value added of 40% and over, or create 
employment for ten or more pers ons, or generate export earnings. 
  Dependant on the nature of the enterprise and the products to be imported an application must 
be made to that competent authority.  If the enterprise is involved in or intends to establish an 
agricultural industry, the application must be submitt ed to the Minister responsible for agriculture, or 
any person designated with authority to approve ex emptions under the Order.  If the Minister or 
competent authority is satisfied that the enterprise ha s met any of the above stated criteria and that it is 
in the public interest so to do, th ey may approve the exemption requested. 
 
 The Comptroller of Customs once satisfied that the product imported is solely for the use approved of, grants the exemption.  
7. Subsidy per unit, or in cases where this is not possible, the total amount or the annual 
amount budgeted for that subsidy 
 Due to the nature and coverage of the progra mme, there are no statistical data available on the 
amount of subsidy per unit or annua l amounts budgeted for this programme. 
 
8. Duration of subsidy and/or any other time limits attached to it, including date of 
inception/commencement 
 This exemption from customs duty is only app licable for the product(s) applied for and does 
not extend for any duration or involve any time limits; it’s a one off situation.  
9. Statistical data permitting an assessment of the trade effects on the subsidy 
 There is no such statistical information available. 
 
__________