Although the general economy of Grenada is free market, a number of staple items are price controlled by the government, resulting in only predetermined markups being allowed. These include grocery items such as butter (7.5%), rice (7.5%) and chicken (12.5%) and a host of general items such cement (33.3%), drugs (5.0%) and nails (20.0%) (IMF, 1999). In addition, fuels such as gasoline, kerosene, diesel and liquid petroleum gas (all at 0.95% markup) experience similar government controlled price stabilization (IMF, 1999). From 2008 to 2013, the government of Grenada has become increasingly involved in the setting of gasoline prices, setting specific prices for fuel and essentially nationalizing the industry. As of June 2013 the cost for an imperial gallon of gasoline was $15.95 Eastern Caribbean Dollars ($5.81 USD) (GIDC, 2013). The impetus for such government intervention into pricing appears to be rooted in previous socialist/communist leanings (late 1970’s and early 1980’s) coupled with a fear of monopolistic control and exploitation by a small number of individuals/corporations (Steele, 2003).
Since the 1983 US led invasion, the economics of Grenada have been primarily a free market, structured on private investment in the tourism and vacation home market (GIDC, 2013). Limited agriculture production has been in the decline since the 1950’s and suffered near complete devastation from the back to back effects of hurricanes Ivan (2004) and Emily (2005) (GIDC, 2013). A number of call center service companies have attempted to establish additional service offerings in Grenada but the primary economic diver continues to be tourism (GIDC, 2013). The long term establishment of St. Georges University (founded 1976), a private international medical school, results in increased rents, traffic and business in the southwestern corner of the island and plays a vital role in the islands overall economy (Ministry of Finance and Planning, 2010).
The nation of Grenada has a number of long standing business and international trade agreements. Individual bilateral agreements between the US and the UK are well established and primarily act to protect US and UK investors (GIDC, 2013). Additionally, Grenada is a member of CARICOM (1973), a multi nation (14) free trade zone covering the Caribbean where goods are sold and traded (GIDC, 2013). CARICOM also has extension agreements with other equatorial governments including Cuba, Colombia, Venezuela and Costa Rica with varying levels of tariff reduction (GIDC, 2013).
The ethical business standing of Grenada has experienced a number of tumultuous events, however, these appear isolated to a handful of individuals (some of which were not Grenadian citizens) and thus not representative of the trustworthiness of the Grenadian people. Perhaps the best known scandal was a 2002 ponzi scheme where investors were bilked out of over $170,000,000 USD by a conman from Oregon named Gilbert Ziegler (Jaquiss, 2002). The scandal, which reportedly involved a number of government officials resulted from the regulation (or lack thereof) of off-shore banks (popular during the 1990’s) and tarnished the islands reputation for a number of years, requiring a 2004 review by World Bank of the Grenadian investment climate (FIAS, 2004). In 2012 a number of Grenadian government agencies, including the Royal Grenada Police Force, have taken efforts to reduce internal corruption which has been described as rife by outside observers (CNN, 2012).
Taxes in Grenada take on a number of forms including federal taxes, income taxes and import tariffs. Federal corporate taxes in Granada are generally charged at a rate of 30% on an annual basis (Hills, 2012). There are a number of capital investment allowances (machinery, computers, vehicles and plant equipment) provided by the Grenadian Ministry of Finance which range from 10% to 25% depending on the type of equipment and depreciation time tables (Hills, 2012). Grenada does not have a capital gains tax, however the transfer of property does incur a 5% property tax which is increased to 25% for foreign investment (10% to the local company or individual and 15% for the alien purchaser) (Hills, 2012). Prior to 2010, Grenada did not have a sales tax, however, since then a value added tax (VAT) of 15% has been put in place for all goods and services with the exception of hotels which are charged at a lower 10% rate. Additionally, telephony in Grenada is charged at a 20% VAT rate and the VAT is balanced between the costs of VAT paid vs owed, resulting in net calculations which can produced creditable months (Hills, 2012).
Personal income in Grenada is taxed only for individuals making more than $30K ECD ($10.71K USD) and then at a rate of 0.25% to the first $100K ECD ($35.70K USD) at which point the rate increases to 0.5%. Import tariffs to Grenada tend to be very high, ranging from 5 to 40% of the cost of the goods (Hills, 2012). This price is passed directly to the consumer and very few exemptions are given with the Grenada Customs & Excise Division acting as a semiautonomous tax clearing house (FIAS, 2004).
In an effort to encourage the development of tourism and manufacturing in Grenada the government offers full tax holidays for up to ten years in the case of the former and 15 years for the later. These holidays include no corporate profit tax and in a number of cases import tax exemptions or reductions (Hills, 2012).
Intellectual property in Grenada is governed by a series of laws including a number which predate the government’s formation in 1974 (World Intellectual Property Organzation, 2013). As a member of the United Kingdom, most trademarks protections are covered under the 1939 Registration of United Kingdom Trade Marks Act (Cap. 284) (World Intellectual Property Organzation, 2013). Additionally, Grenada is party to the United Kingdom Designs Protection Act and Patents Act (1928 and 1898 respectively) (World Intellectual Property Organzation, 2013). More recently, the government of Grenada has acted to reduce ill-gotten finances, similar to Ponzi schemes it experienced in the late 90’s, with the establishment of the Telecommunications act of 2000 and the Electronic Transaction Act of 2008 (World Intellectual Property Organzation, 2013).