Tax benefits provided for hotel construction which existed four decades ago has been scrapped under the 2016 budget.
The Short Life Investment package which provided tax holidays to hoteliers meant millions of dollars in loss of revenue for the government.
The Short Life Investment Package, or SLIP, grants the hotel industry certain tax holidays of ten years for investments of $7 million or more.
Finance Minister Aiyaz Sayed-Khaiyum says this may well have been a valuable programme when Fiji was trying to build its tourism industry but it has outlived its usefulness.
“Now normally you give those types of concessions to a sector that is developing – you look after it – you say ok guys – lets come and invest in this area, but those concessions have been existing since the 1960s. The tourism sector in Fiji is now a very mature sector – so we saying ok we’ve helped you now – then lets reduce the concessions we get, but for new hotels we’ve ring fenced it and say ok you get these types of concessions.”
Sayed-Khaiyum says FRCA Reports estimate revenue of the entire hotel sector stood at $830 million for 2014, but Government received only $8.56 million in income tax.
All SLIP applications from now until 31 December 2016 will be processed under existing SLIP framework… but will change thereafter.
