Following the Department of Trade and Industry`s announcement in May this year of an incentive scheme for the tourism industry, 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.
This, according to Charl Human, Incentive Manager at Deloitte & Touche Trade & Investment Solutions, this effectively means that tourist entities that started or expanded their operations on or after 1 September 2000, may still qualify for the incentive, provided applications are submitted before 31 August 2001. Normally applications for new operations must be submitted within 180 days after commissioning of the assets whereas expansions must apply prior to commissioning date.
The incentive is payable for a period of two years on approved qualifying assets which include buildings, furnishings and vehicles to transport tourists. The incentive 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.
Qualifying assets include land and buildings, furniture and equipment and certain vehicles designed for transportation of tourists. These may be owned or leased.
Qualifying tourism activities include those providing short-term accommodation such as hotels, lodges and guesthouses. In addition tour operators, funicular and private railways and aerial cableways are eligible. The definition of qualifying activities was also extended to include the operation of water transport vehicles that are used exclusively for tourists on dams, lakes, down rivers, in harbours and to islands along the South African coastline.
The Small Medium Enterprise Development Programme (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. 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.
"Deloitte & Touche Trade & Investment Solutions focuses on all incentives available to all industries. 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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