Introducing the Eleventh Amendment to the Tourism Act

The Tourism Act of 1999 is now officially amended for the eleventh time and published in the government gazette on 3 July 2022.

A previous blog post of ours had earlier outlined the key highlights of the government proposed bill when it was first proposed in parliament. Please read it here.

While some provisions of the bill did not make it to the law, most of the bill remained intact. 

Some notable changes in law caused by the Eleventh Amendment to the Tourism Act are summarized below.

Sale of Government Shares 

The government can now sell its shares in a JV company to any third party who is outside the JV partnership. Earlier, the government was restricted to sell its shares only to the other partner(s) to the JV agreement. 

Additionally, the Eleventh Amendment changes the manner in which government shares held in a JV company are valued. From now on, the shares will be valued independently by a valuer appointed under the Public Finance Instructions enforced under the Public Finance Act. The valuation will take into account the land rent payable by the target property and the acquisition cost (if any) paid in respect of the acquisition of the property. 

Splitting the lease

The law now allows leaseholders of lagoons to split their lease agreement into more leases and bifurcate the demised lagoon into more than one lagoon area. The rule applies even if lagoons remain without any development. 

Land Rent Provisions

Unfortunately, the proposed land rent reductions for tourist resorts, tourist hotels, yacht marinas and islands were withdrawn by the government subsequently and therefore, could not make it to the Act.

Extension of Lease

The Eleventh Amendment does not now require a resort to be in operation to be eligible for an extension of the lease period by an additional 49 years. A leaseholder may now obtain the additional period in respect of properties either undeveloped or underdeveloped as well. 

Green Tax Rate

A notable amendment was made to the application of green tax rate. From 1 January 2023 onwards, all tourist hotels and tourist guesthouses with 50 or less rooms operated on inhabited islands will be paying USD 3.00 per day instead of USD 6.00. 

Updating Operating Licenses 

The Eleventh Amendment requires permit holders of tourist hotels, tourist guesthouses and yacht marinas to update their operating licenses in accordance with the new legal provisions. This is to be done within 12 months from the date the law came into effect – that is by 2 July 2023. This will be a mere procedural requirement and will not affect the period of the existing operating license.

Private Islands

The law also has extensive provisions on private islands either by updating the position from the Tenth Amendment or introducing additional rules. 

By EAS

Photo: Courtesy of Mihaaru