26. Exemption: hotels
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(1) Subject to this section the income accruing from a hotel shall be exempt where the construction of such hotel or of any extensions to the residential accommodation therein commenced after the commencement of this Act.
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(2) An exemption under subsection (1) shall not apply unless approval of such exemption is given by Cabinet following application in writing made to the Minister.
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(3) Where approval has been given in respect of the construction of an hotel there is exempt from tax for such period of time as may be determined by Cabinet, but not exceeding a maximum of 15 years all income accruing to the owner or to the lessee from the carrying on of the business of the hotel.
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(4) Where any hotel ceases to be used as a hotel by the owner or lessee thereof during the tax holiday period the exemption provided by this section shall cease to apply from the date of cessation of such use.
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(5) Where any hotel is sold during the tax holiday period but continues to be used as a hotel, the exemption provided by this section continues to apply to the new owner or the lessee, as the case may be, for the remainder of the period.
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(6) Where approval has been given in respect of any extensions to an existing hotel there is exempt from tax for such period of time as may be determined by Cabinet, but not exceeding a maximum of 10 years all income attributable to such extensions, accruing to the owner or to the lessee from the carrying on of the business of the hotel.
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(7) The income exempted under subsection (3) or (6) are ascertained after taking into account any allowances for capital expenditure to which the owner or the lessee would have been entitled under Schedule 2 if such income had not been exempt from tax.
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(8) For the purpose of subsection (6) income attributable to the extensions to an existing hotel shall be taken to be such proportion of the total income accruing from the hotel as the number of additional bedrooms in the extensions bears to the total number of bedrooms in the hotel.
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(9) In this section—
“hotel” means a building or group of buildings used to provide services and accommodation to guests for reward, containing—
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(a) not less than 6 bedrooms;
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(b) one or more kitchens in which meals may be prepared by employees of the hotel owner or hotel operator for the guests; and
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(c) one or more dining rooms shared in common by all the guests in which meals may be served by employees of the hotel owner or hotel operator to such guests;
(Amended by Act 15 of 2003)
“tax holiday period” means any period of exemption from tax granted by Cabinet under this section.