Thu | May 23, 2019

New tax subsidies for hotels

Published:Friday | July 30, 2010 | 12:00 AM
Tourism Minister Edmund Bartlett says the subsidy will help smaller properties. - File
President of the Jamaica Hotel and Tourist Association, Wayne Cummings, says the new plan is
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Jamaica has created a new tax-incentive programme for hospitality companies under which licensed hotel operators can upgrade and refurbish their properties at subsidised cost.

The programme, which adds a new layer of subsidy to the existing tax-holiday scheme, under which corporate taxes are waived for hotels undergoing any type of construction, has got hoteliers salivating at the prospect of the savings on re-investments in fixed assets.

"I think it is a most wonderful thing that we have been lobbying for, for years," said Wayne Cummings, president of the Jamaica Hotel and Tourist Association (JHTA).

The new Tourism Industry Refurbishing Programme (TIRP), to be managed by the tourism ministry, will waive 10 per cent of import duties on a specified list of items earmarked for the refurbishing of properties

And hospitality companies that purchase the specified goods from businesses in Jamaica will qualify for income-tax credit amounting to 15 per cent of the bill.

Edmund Bartlett, minister of tourism, made the announcement of the programme on Wednesday during a press conference at the ministry's office in New Kingston.

Bartlett said the programme would further improve the operations and competitiveness of tourism entities.

"We fully recognise that to be competitive in today's market, the hotel property has to be perpetually 'fresh and crisp'," Bartlett said.

"The TIRP will, therefore, better allow tourism entities to refurbish their properties on a regular basis in keeping with the requirements of competitiveness."

Bartlett told the Financial Gleaner that there are a number of small hotels that do not benefit from the Hotel Incentive Act, because of size, and that there are many larger hotels that have exceeded their 10-year holiday under the programme.

"This is an important incentive for local operators and it will also encourage local manufacturers to produce more, and retain most of the dollar here," he said.

Applications

Bartlett said already the ministry has got five applications valued at US$151 million from operators to access the programme, while the Sandals chain indicating that it, too, would be tapping into TIRP for a planned upgrade of its product valued at US$20 million.

Cummings backed up Bartlett's comment, saying there are many hotels wanting to upgrade but have not followed through because their operators have found it too costly.

The programme is scheduled to last for three years, with a review undertaken after two years to determine whether the arrangement should be extended. The operators of each entity must plan to undertake a refurbishment investment of at least J$500,000 to be eligible for the subsidy.

Participants in the programme will be encouraged to engage in energy-saving devices and green technology during the upgrade.

However, they will still be required to pay the applicable General Consumption Tax, Bureau of Standards Fee, Environmental Levy and Customs User Fee.

The TIRP will be available to hotels, villas, guest houses and apartments, attractions and water sport operators which have been in operation for at least five years.

The offer is only available to tourism entities and does not extend to importers and suppliers. Tourism entities already qualified for subsidy, or waivers under existing programmes, will be barred from TIRP.

dionne.rose@gleanerjm.com