Hotels in Croatia want to reduce the VAT

Hotel and inn owners in Croatia addressed to the government with the proposal to reduce the rate of value added tax, which for the tourist businesses is now higher than for any other industry. The proposal was voiced at the 14th congress of hotel owners in Croatia.

Today in Croatia the VAT for the tourism sector is 23%. According to local hotel industry experts, reducing of the tax rate to 8% will free considerable funds, which can then be invested into the hotels modernization.

At the same time, Croatian Hotel Owners Association marks that such Mediterranean countries as Cyprus, Malta, Portugal, Spain and Greece have significantly lower VAT rate for the hotel services.

Reducing of the VAT rate was used in France, which eventually led to the recovering of the hotel market, reports croatiantimes.com. According to the French Hotelier Association director Frank True, two years after the introduction of the 5.5% VAT rate instead of the previous 19.6% they could reduce the prices for hotel services in France by 2.5%, saved 50 000 jobs and created 52 000 new ones. As a result, direct losses of the French budget from reduction of the VAT rate were about 2.5 billion Euros, but indirect payments to the budget, which increased due to growth of revenue and the number of employees, was amounted up to 4.7 billion Euros.

Croatia is now one of the leaders of southern Europe by the number of tourists, who come to vacation here. Thus, according to the forecasts, and in particular the Ministry of Tourism of Croatia, until the end of 2011 it will be visited by about 11.5 million people. Croatia is among the three most popular tourist destinations in the Mediterranean.