News Pricer.lt

Prekybos naujienos

The consequences could be sad: the Union of Hotels and Restaurants calls not to increase VAT

Последствия могут быть печальными: Союз отелей и ресторанов призывает не повышать НСО

The Hotel and Restaurant Union today sent a letter to coalition negotiators calling on the new government to reconsider last year's decision on hotel turnover tax, which will increase the current nine percent VAT to 13 percent from January 1, 2025. The government plans to increase the turnover tax in the hotel sector to 13 percent. The government plans to increase the turnover tax in the hotel sector to 13 percent. Photo: Martin Ilustrumm

The Hotel and Restaurant Union today sent a letter to coalition negotiators calling on the new government to reconsider last year's decision on hotel turnover tax, which will increase the current nine percent VAT to 13 percent from January 1, 2025.

According to Ain Käpp, Chairman of the Board of the Estonian Hotel and Restaurant Association (EHRL), tourism is an important part of the Estonian economy, so it is important to make tax breaks and maintain the current tax rate for this sector. “The tourism sector has not yet recovered from the consequences of coronavirus and Russian aggression,” Käpp said.

Accommodation services are a key component of tourism and the largest export item, representing 6.3% of Estonia's total exports in 2023, up from 10% in 2019.

Käpp added that tourism is also important in terms of national security, employment and regional development.

“But more importantly, each visit by a foreign representative helps to create a positive emotional connection with our country, which is certainly useful from a political point of view in potentially difficult situations,” Käpp said.

In its appeal, EHRL draws the attention of policymakers to the following:

  • The change in the VAT rate was based on the government's calculation that the change would bring an additional €12 million into the state budget. However, EHRL disagrees with this assessment because the recovery of the sector on which it was based has not materialized;
  • In 2023, the hotel sector collected €2.6 million in VAT. This also shows that the 12 million forecast is quite optimistic. The forecast that a VAT increase could be added to sales prices is unlikely – prices can only be increased if demand increases, and it has not yet recovered (the number of overnight stays by foreign tourists in 2023 compared to 2019 is down by 23%);
  • An increase in VAT complicates the competitiveness of the industry in an already difficult situation and at the same time poses a threat to the growth of the shadow economy. Accommodation and food are the most important components of tourism exports, even today the VAT rate on meals in Estonia is very high compared to the European average, twice the tax rate of most countries. Today's nine percent VAT on accommodation is the European average, increasing it to 13 percent would put us among the few countries with higher taxes;
  • The accommodation sector is a very labor-intensive sector, our contribution to the state budget is important primarily due to labor taxes. According to EHRL, a VAT increase will inevitably lead to company layoffs and lower labor tax revenues for the government: the number of people employed in the industry is forecast to fall by 10 percent, which could reduce labor taxes by almost five million and increase additional costs (benefits unemployment) to a level of approximately five million euros.

News source

Dalintis:
0 0 balsai
Straipsnio vertinimas
guest
0 Komentarai
Inline Feedbacks
Rodyti visus komentarus

Taip pat skaitykite: