Concessions For The Hotel Sector: 2015/2016 National Budget

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Hotel Budget Concessions
  • Amendments to the VAT Act to include the exemption of VAT on meals to hotel/resort employees provided free of charge. This matter was strongly put forward by the private sector as necessary for ensuring quality service.
  • Amendments to the VAT Act to zero rate complimentary rooms provided by hotels and resorts for select approved marketing activities.
  • Amendments to the VAT Act to include exemptions on capital goods for mixed-use Resort Developments, where part of the development will occur after the commencement of operations. This means that for a hotel which is being constructed in phases, a VAT exemption will be enjoyed on those phases not yet completed, even when the completed phases are in operation. This will apply to approved developments.
  • Amendments to the Income Tax Act to accommodate exemptions on withholding tax, on rental income of villa owners, for a period of ten (10) years. The villa must be held for at least three (3) years before change of ownership. This will apply to approved developments.
  • Amendment to the Income Tax Act for an exemption from the payment of income tax, on the rental income on villas, for a period of ten (10) years. The villa must be held for at least three (3) years before change of ownership. This will apply to approved developments.
  • Introduction of a Residential Levy of $2,000 per annum, on all villa owners. This levy applies only to villas in approved developments.
  • New legislation will be introduced in Parliament to allow for the sale of timeshare, condominium and fractional ownership.
  • Amendment to the Alien Landholding Licence Act # 17 of 1995 to reflect the following fee structure for approved developments:
    • In place of the licence fee of 10 per cent of the market value of the subject of the licence, a flat fee of $5,000.00 will be applied, in addition to an application fee of $1,000.
    • Approved developments are defined as proposals that meet the requirements outlined in the Hotels Aid Act, with a minimum investment of $3.0 million.  Such projects should commence construction within one (1) year following the approval by the Physical Planning Division. Failure to begin within the stipulated time, without a reasonable excuse, will result in a penalty of $20,000.
  • Amendment to Section 8 of the Stamp Act Chapter 68:01. A definition of the term “Related Parties” is to be included in the Act to provide for a transfer between an individual, to a company where the individual owns at least 25 per cent of the shares of that company, and transfer from a first company, to a second company, where the first company owns at least 25% of the shares of the second company.
  • Further, there will be a reduction in fees to encourage transfers between related parties as well as in new qualifying approved projects. The changes in fees are as follows:
    • Stamp duty reduced to 2.5% from 4%
    • Vendors fee reduced to 0 from 2.5%
    • Judicial fee reduced to 1% from 2.5%
    • No change to the Assurance Fund of 1%

The above shall apply to new qualifying projects except the vendor’s fee which shall remain at 2.5 per cent.

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