Grenada VAT Reform Targets Foreign Digital Services

As part of its efforts to modernize its VAT system to properly capture the digital economy, the Grenadian Attorney General published the 2026 VAT Amendment Bill. One of the most notable changes relates to Grenada's goal of ensuring that digital services consumed within Grenada are taxed in the same way as traditional goods and services, even when those services are provided by companies with no physical presence in the country. 

Key VAT Amendments

Under the proposed VAT amendments, a wide range of common digital services, such as those provided through streaming platforms, online advertising, cloud services, software and SaaS, digital products, and automated online education, provided by non-resident providers fall under the scope of VAT. 

The new VAT rules primarily target B2C transactions. Therefore, foreign digital service suppliers providing digital services directly to local consumers and users will have to account for VAT. In contrast, for B2B transactions, the responsibility shifts to local VAT-registered taxable persons, who must account for VAT through the reverse-charge mechanism. By adopting this approach, Grenada seeks to ensure that double taxation is avoided and to align itself with international VAT standards and practices.

One of the central features of the new VAT system is the introduction of the deemed supplier rules for electronic marketplaces. In practice, this means that online platforms as intermediaries will be treated as the actual supplier of the digital service for VAT purposes, with some exceptions. The deemed supplier rule applies when the platform plays a decisive role in the transaction, such as handling payments, setting the contractual terms, or enabling the delivery of the service. 

While it is clear from the proposed amendments that foreign digital service providers have to register for VAT in Grenada, there are some uncertainties as to when this obligation is triggered. The current system includes a general threshold of XCD 120,000. However, proposed amendments do not specify any reference to the threshold. Regardless, the new rules allow a simplified registration regime, which is expected to be detailed in future regulations.

Conclusion

The proposed amendments will take effect on a date set by the Minister, and a six-month transition period is anticipated for non-resident suppliers and marketplace operators. Nonetheless, both digital service suppliers and platform operators should take preparatory steps to adapt to the new rules, monitor for further guidance, and await clearer implementation requirements.

Source: KPMG