Fiscal Incentives

The Fiscal Incentives (Miscellaneous Provisions) Act, 2013 came into operation on January 1, 2014, and by way of this Act, the Hotel Incentives Act and Resort Cottages Incentives Act were repealed as at December 31, 2013.

Under the Fiscal Incentives (Miscellaneous Provisions) Act (FIA), the following licensed tourism entities can benefit: Attractions, Hotels, Guest Houses, Villas and Apartments (new or existing), Car rental companies, Contract carriage operators and domestic tour companies. The FIA makes provisions for:

Incentives for the Accommodation Sub-sector: 

1. Productive Input Reliefs (PIR) - This provides for an exemption from customs duty in respect of certain dutiable inputs on a prescribed list of goods imported. (Note: This relief applies on an ongoing basis so that licensed entities can update, refresh and upgrade their product offerings).
2. The PIR also offers exemption from additional stamp duty in respect of high-end meat cuts imported for use in the operation of a licensed accommodation.

3. Capital Allowance - Capital expenditure (on specified assets) incurred on or after January 1, 2014, will be written off in accordance with the new capital allowance regime.

   Note: Newly constructed buildings/structures used as a hotel may qualify for a 20% initial capital allowance for income tax purposes as well as annual allowances varying from 4%-12.5% per annum depending on primary materials used in the construction of the facility.

4. Employment Tax Credit (ETC) - This is an income tax credit which is allowed to an eligible person e.g., an employer engaged in the rental of approved accommodation. ETC benefits employers who preserve and maintain their employees’ statutory obligations e.g., NHT, NIS, etc. ETC seeks to reduce:

   • Labour costs

   • Increase after-tax profit

5. Lower rate of Corporate Income Tax rate of 25%.

   Lower effective rate of income tax.

6. Lower rate of General Consumption Tax (GCT) of 10%.

Incentives for the Attractions Sub-sector: 

1. Productive Input Reliefs – This provides for an exemption from customs duty in respect of certain dutiable inputs on a prescribed list of goods imported. Expansion of the inputs allowed as per the Productive Inputs Relief (PIR) to include animal feed for the attractions sub-sector.

Goods for use in a Tourism Attraction:

1. Machinery and equipment (including parts and accessories thereof) that are used

   directly in the operation of a tourism attraction.

2. Materials, fixtures and fittings that are used directly for the installation and operation

   of machinery or equipment specified in (a), including essential support structures associated with that machinery and equipment.

3. Live animals that are used directly in the operation of a tourism attraction, subject to approval by the Veterinary Division of the Ministry of Agriculture.
4. Other goods (not being building materials, motor vehicles or consumables) that are used directly in the operation of a tourism attraction.
5. Emergency, lifesaving, first aid and safety equipment and devices that are used directly in the operation of a tourist attraction.

6. Motorized equipment and motor vehicles not licensed by the island traffic authority

   to drive on public roads.

(Note: This relief applies on an ongoing basis so that attractions can update, refresh and upgrade their product offerings).

2. Capital Allowance - As of January 1, 2014, buildings or structures used as attractions may qualify for a 20% Initial Capital Allowance for income tax purposes as well as annual allowances varying from 4% -12.5% per annum depending on primary materials used in the construction of the facility.
3. Employment Tax Credit in respect of payroll taxes (excluding PAYE)

Incentives for the Tourism Ground Transportation Sub-sector: 

1. Car Rental Sector – This sector is to be allowed to import, free of Common External Tarriff (CET), eight hundred motor vehicles per year. The concession is provided on motor vehicles, as per the Road Traffic Act, with cc rate not exceeding 2,500 and a maximum allowed CIF of US$45,000.
2. Contract Carriage Operators – This sector is to be allowed to import free of CET, a maximum of fifty (50) motor vehicles with seating capacity in excess of eight persons. The qualified vehicles will be limited to those with a maximum cc rate of 2,500 and CIF value not exceeding US$45,000.
3. Tour Operators – This sector is allowed to import free of CET, town car- like vehicles and limousines up to a maximum of forty (40) for the sector per year. The vehicles allowed under this concession have no cc rate restrictions and maximum CIF value of US$50,0000. Full CET will be applicable on the value in excess of US$50,0000.