Greetings all-An associate of mine sent the following email to me and its important we respond. If you are a travel agent, tour op or hotel selling packages, you will be affected and Income tax will audit the last 7 yrs. Its important you attend BTIA AGM to discuss with BTIA board and have them go to bat for us. And hire legal assistance as well. Contact me at 610 1923 for more info....
Since you and I initially met I have visited the Income Tax Department twice. My initial meeting with them was to review the printed paperwork you provided and to explain the reservation/invoicing process to them. I left one set of paperwork with them so they can analyze and discuss with the Commissioner of Income Tax. The second meeting was called to address specific questions they had regarding a number of reservations. I reviewed the questions and addressed their queries, which primarily dealt with (1) the mark-up you have on most services you offer and (2) the fuel surcharge and rider fee charged by the domestic airlines.
Per the Business Tax and Income Tax Guide (http://www.incometaxbelize.gov.bz/PDFs/business_tax_guide2009.pdf
- Page 10) the following specific conduit payments are allowed as deductions:
 Border fee
 Entrance fees to sites
 Guide/Tour Guide fees, if provided by a separate and independent guide
 Hotel Accommodation
 Transportation provided by a separate and independent person
The deductions disallowed in your case were the following:
 Service charge on hotel accommodation
 Service charge on meals
 Admin fee
Even though meals, in this instance, is a conduit payment, because meals are not specifically exempted by the Business Tax Act, it is not a permissible conduit deductions. And in that same vein, because the meals are not permitted as a deduction the corresponding service charge would not be permitted either. The Commissioner of Income Tax and his advisory committee are to meet and decide if they will allow the deduction for service charge on hotel accommodations. This is not specifically exempted by the Business Tax Act but because Hotel Accommodation is exempted they will consider also exempting the corresponding service charge, especially since we can prove that all of it is a conduit payment and that none of it is enjoyed by XXXXXXXXX and/or it’ staff. The Commissioner and his advisory committee meet once a month. Last month they addressed a number of issues but did not get far enough down the list to get to this issue pertaining to XXXXX. The next schedule meeting is December 9th, 2013. I will touch base with them on the 9th to remind them of this issue and will also follow up with them on the 10th to hopefully get a favorable response.
I am in the process of drafting a proposal to the Commissioner of Income Tax asking for meals, service charge on meals, and service charge on hotel accommodation to be specifically added to the list of approved conduit exemptions. I was told that an amendment to the Business and Income Tax Act will be proposed for approval by GOB in early 2014 and it would be extremely beneficial to tour operators to have this included. I have requested an appointment with the Commissioner to present this proposal but to date the appointment has not been confirmed. I will continue to pursue this and keep you posted. Unfortunately even if this is approved, it will not be helpful to you for the current assessments. It will however be beneficial after the approved date.