Grenada – VAT Regime for Non-Resident Digital Service Providers 

Attorney General of Grenada presented a Bill to amend the VAT Act, to introduce the regulatory tax framework applicable to digital services supplied by non-resident digital services providers, including also digital platform marketplaces in the tax bracket. 

Timeline 

The implementation date hasn’t been set in stone; however, the strong presumption indicates that in the following months, the Bill should be passed by the parliamentary chambers. From the moment the Bill becomes a Law, it is expected that it will be given 6 months of transitory time to accountable taxable persons to align with the requirements of the new tax regime. 

Scope of the Grenada Digital VAT Regime 

The country will follow the deemed supplier perspective. Where an e-marketplace operator controls the main parts of the transaction, such as setting terms & conditions, payment processing, and delivery of the service, it becomes accountable for VAT, instead of the third-party supplier. 

The bill indicated that non-resident digital providers should be accountable for VAT collection on B2C transactions, while the properly booked B2B transactions remain under the reverse-charge mechanism. VAT-registered domestic persons shall be responsible for proper reporting under reverse-charge. 

B2C Simplified Reporting 

The Bill proposes the development of a simplified registration and reporting mechanism that should permit foreign responsible persons easier adaptation to local rules and regulations. This should ease tax monitoring by revenue authorities and simplify the detection of non-compliance. 

In general, in the jurisdictions where there is a simplified registration and reporting system in place, non-compliance is easier to notice and penalize. 

Advice

Non-resident digital service providers and e-marketplaces that facilitate third-party online contracts and act on behalf of underlying suppliers for substantial elements of the transaction should carefully follow updates in the next months, because there is no guarantee that there will be any threshold benefit.