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Tourism incentives apply to one and all
Dennis Morrison
Wednesday, July 18, 2007
I was quite surprised recently to read comments by one of our financial analysts to the effect that there are special incentives for foreign investors in the tourism sector.
According to this commentator, these incentives put local hoteliers in a less favourable position. It appears that these comments were made without reference to verifiable information that is available and were really reflecting loose talk in certain circles.
Incentives to the tourism sector are covered under two pieces of legislation: The Hotel Incentives Act and The Resort Cottages Incentives Act. Additionally, since April 2003 the Attractions sub-sector has been provided with incentives by way of a decision of the Cabinet. I am sure that all members of the JHTA and other tourism-related bodies are aware of the various incentives, but there may be some confusion in the wider society.
Under the Hotel Incentives Act, hotels with a total number of no fewer than 10 bedrooms and with facilities for meals for their guests are allowed certain incentives. Specifically, 10-year relief from GCT, income tax and import duty is available to new hotels, and existing hotels, adding a minimum of 10 rooms or 30 per cent of the existing number of rooms. Tax relief is also provided to existing hotels that have done or intend to do substantial structural alteration. These criteria apply to all hotel operators, whether foreign or local.
Information as to the incentives granted to one or other operator is publicly available since it has to be gazetted once the application is approved. In fact, the Ministry of Tourism is responsible for processing applications but it is the chief parliamentary counsel that has to draft the Order which is published. It is hard to contemplate how foreign hotel operators could be given special terms without these being reflected in the public documents.
Similarly, incentives granted under the Resort Cottages Incentive Act must be publicised after applications are processed and the relevant orders are drafted by the chief parliamentary counsel. New resort cottages receive incentives in two categories: Resort Cottage and Group of Resort Cottages. A resort cottage must contain no fewer than two furnished bedrooms, a furnished living room and certain other facilities to qualify for tax relief. A group of resort cottages means two or more cottages and must contain a total of not less than 10 bedrooms. Resort cottages with over seven rooms are allowed relief from GCT, customs duty and income tax for seven years. Properties with less than nine rooms are granted income-tax relief only for 7 years. Unlike some countries, locals and foreigners are entitled to the same tax benefits once they meet the criteria.
Tourism attractions comprising natural or man-made horticultural, cultural, historical, recreational and environmental facilities now receive certain tax relief. These include being able to import specific items free of GCT and customs duty for five years. They can also be granted up to a maximum of five years' exemption from corporate taxes. The Attractions Incentive Programme Committee is involved in the approval process and includes representatives from the private sector association, AJAL, along with those representing the relevant government agencies.
Operators in the Ground Transportation sub-sector are also allowed tax concessions. These are applied to cars and buses and include reduced customs duty and relief from GCT. The approval process involves representatives of their private sector associations and government agencies, thus ensuring transparency and fairness. No special preferences are allowed to either locals or foreigners in either the Attractions or Ground Transportation sub-sectors.
The incentive regime for the local tourism sector is too well known and involves such a high degree of disclosure that charges of bias towards foreign investors can easily be verified. It is a pity that rumour-mongering is being brought into this vital area of Jamaica's development.
Dennis Morrison
Wednesday, July 18, 2007
I was quite surprised recently to read comments by one of our financial analysts to the effect that there are special incentives for foreign investors in the tourism sector.
According to this commentator, these incentives put local hoteliers in a less favourable position. It appears that these comments were made without reference to verifiable information that is available and were really reflecting loose talk in certain circles.
Incentives to the tourism sector are covered under two pieces of legislation: The Hotel Incentives Act and The Resort Cottages Incentives Act. Additionally, since April 2003 the Attractions sub-sector has been provided with incentives by way of a decision of the Cabinet. I am sure that all members of the JHTA and other tourism-related bodies are aware of the various incentives, but there may be some confusion in the wider society.
Under the Hotel Incentives Act, hotels with a total number of no fewer than 10 bedrooms and with facilities for meals for their guests are allowed certain incentives. Specifically, 10-year relief from GCT, income tax and import duty is available to new hotels, and existing hotels, adding a minimum of 10 rooms or 30 per cent of the existing number of rooms. Tax relief is also provided to existing hotels that have done or intend to do substantial structural alteration. These criteria apply to all hotel operators, whether foreign or local.
Information as to the incentives granted to one or other operator is publicly available since it has to be gazetted once the application is approved. In fact, the Ministry of Tourism is responsible for processing applications but it is the chief parliamentary counsel that has to draft the Order which is published. It is hard to contemplate how foreign hotel operators could be given special terms without these being reflected in the public documents.
Similarly, incentives granted under the Resort Cottages Incentive Act must be publicised after applications are processed and the relevant orders are drafted by the chief parliamentary counsel. New resort cottages receive incentives in two categories: Resort Cottage and Group of Resort Cottages. A resort cottage must contain no fewer than two furnished bedrooms, a furnished living room and certain other facilities to qualify for tax relief. A group of resort cottages means two or more cottages and must contain a total of not less than 10 bedrooms. Resort cottages with over seven rooms are allowed relief from GCT, customs duty and income tax for seven years. Properties with less than nine rooms are granted income-tax relief only for 7 years. Unlike some countries, locals and foreigners are entitled to the same tax benefits once they meet the criteria.
Tourism attractions comprising natural or man-made horticultural, cultural, historical, recreational and environmental facilities now receive certain tax relief. These include being able to import specific items free of GCT and customs duty for five years. They can also be granted up to a maximum of five years' exemption from corporate taxes. The Attractions Incentive Programme Committee is involved in the approval process and includes representatives from the private sector association, AJAL, along with those representing the relevant government agencies.
Operators in the Ground Transportation sub-sector are also allowed tax concessions. These are applied to cars and buses and include reduced customs duty and relief from GCT. The approval process involves representatives of their private sector associations and government agencies, thus ensuring transparency and fairness. No special preferences are allowed to either locals or foreigners in either the Attractions or Ground Transportation sub-sectors.
The incentive regime for the local tourism sector is too well known and involves such a high degree of disclosure that charges of bias towards foreign investors can easily be verified. It is a pity that rumour-mongering is being brought into this vital area of Jamaica's development.