Tax concessions are available under the Hotels Aid Act (HAA) to a person who has received approval to build a hotel or expand an existing one. Applications for the concession must be made in the specified manner to the Ministry of Tourism before work begins on the project.

Applicants must submit their proposal and details of the project to the Minister of Tourism. The following, which is stated in Section 3(2) of the HAA, must be included in the application:

• the location and description of the site.
• the number and description of bedrooms and beds and of the toilet facilities.
• in the case of an existing hotel, the number and description of proposed new bedrooms, beds and toilet facilities proposed to be established.
• a description of each public room both proposed and, in the case of an extension to an existing hotel, detailed description of any other amenities existing or proposed.
• a detailed sketch plan showing the site and lay-out of the proposed hotel or extension and the amenities.
• an estimate of the cost of the project.
• where it is proposed to carry out the project in stages, a description, and an estimate of the cost, of each individual stage and details of the proposed timetable.
• details of the proposed method of financing the project.

This applies to all types of investment allowance available under the HAA.

Final approval in writing must be obtained from the Minister to enable the applicant to claim the allowance in the Income tax return.

INCOME TAX EXEMPTION

Investment allowance method

In addition to normal depreciation allowances, an investment allowance of 55% of approved capital expenditure (excluding the cost of the land) is available. The relief is given in the form of a deduction against the tax payable on the profits of the approved hotel or extension.

Where a hotel owner is unable to utilise the investment allowance within a period of five years from the date on which the building was completed, the unutilised portion may be used to off set tax arising on profits derived from any other hotel operated by the hotel owner.

A further concession is available beginning after the year in which the hotel commenced trading; the period in which losses can be carried forward is extended from eight (8) years to thirteen (13) years, subject to certain conditions.

Subject to conditions in the HAA, the income of a company shall be exempt from tax on developer profits derived up until 31 December, 2008 and profits derived from the operation of the hotel for a period of:

• Ten ( 10) years - if the hotel has a minimum capital investment of not less than FJ$10,000,000 but less than FJ$40,000,000 (known as Half SLIP).
• Twenty (20) years – if the hotel has a minimum capital investment of not less than FJ $40,000,000 (known as Full SLIP).

A hotel owner is either entitled to 55% investment allowance or SLIP, but not both for the same project.

Is there an application form?

Please download the form from the Ministry of Tourism Website