Tourism establishments that have expanded or started since 1 September 2000 and have invested in capital assets have been allowed a period of grace until the end of August to qualify for tax incentives.
The department of trade and industry announced an incentive scheme under the Small and Medium Enterprise Development Programme (SMEDP) for the industry in May this year.
Charl Human, incentive manager at Deloitte & Touche trade and investment solutions says this effectively means tourist entities may still qualify for the incentives provided applications are submitted before 31 August.
Normally applications for new operations must be submitted within 180 days after the commissioning of the assets, whereas expansions must apply prior to commissioning date, he says.
The incentive is payable for a period of two years on approved qualifying assets including land, buildings, furnishings and vehicles to transport tourists, he continues, and is paid in the form of a tax-free cash grant.
Applicants can qualify for an additional incentive in the third year provided a human resource remuneration requirement has been met.
Tourism activities covered by the incentive include those providing short-term accommodation such as hotels, lodges and guesthouses, while tour operators, funicular and private railways and aerial cableways are also eligible.
The definition of qualifying activities has also been extended to include the operation of water transport vehicles that are used exclusively for tourists on dams, lakes, rivers, in harbours and to islands along the coastline.
The SMEDP is geared towards new tourism companies as well as those wishing to expand and focuses on enterprises investing in assets for new projects or expansions of existing operations up to R100 million, Human explains.
The incentive is calculated as a percentage of the investment in qualifying assets, applied on a sliding scale basis from an effective 10% for the first R5 million invested to an effective3% on investments to the maximum R100 million limit.
"Currently the SMEDP programme caters for the manufacturing and tourism industries. It is expected that the guidelines pertaining to the other SMEDP industries such as agro-processing, business services, recycling, bio-technology, IT and communications, culture and aqua-culture industries will be announced in the near future," says Human.
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