bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Sunday 19.11.2017 | Name days: Liza, Līze, Elizabete, Betija
LatviaLatvia

Raising VAT for accommodation sector would cost national economy nearly 47 million euros

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Аuthor: PantherMedia/SCANPIXLatvia’s national economy would lose nearly 47 million euros from increased VAT on accommodation sector, as reported by Economy Ministry.

The ministry notes that Finance Ministry has plans to raise VAT rate on traveller accommodation services from 12% to 21% to find additional budget finances of EUR 9.7 million. However, Economy Ministry and tourism industry have performed analysis of this decision. Experts came to the conclusion that raising VAT would cost the country’s national economy approximately EUR 47 million.

«Losses will appear because the accommodation sector will be forced to raise prices by at least 10% because of increased VAT. This could potentially decrease the number of tourists in Latvia by 25%. Income decrease from tourists’ expenses in places of accommodation and other associated services (public catering, transports, trade, household services, etc.) will create losses worth approximately 47 million euros,» the ministry explains.

This is why Economy Ministry does not support Finance Ministry’s proposal to cancel reduced VAT rate on accommodation services. Results of the study will be presented to the government during the Tax Reform Management Group’s meeting on 11 April.

Economy Ministry also emphasizes that raising VAT rate for the accommodation sector will reduce Latvia’s competitiveness as a tourism destination, slow down the development of tourism services and create significant losses for Latvia’s budget.

«Raising VAT rate will contribute to the increase of the grey sector. It will impact the profitability of hotels and the ability of businesses to cover their financial commitments before the state and creditors. Reduced income will impact businesses’ ability to invest in improvements of hotel equipment,» the ministry notes.

Considering that hotels’ main costs are associated with labour, in order to reduce losses, hotel owners and tourism operators could decide in favour of reducing labour costs, which would impact service quality.

In addition to the aforementioned, Economy Ministry also sees multiple other risks associated with the cancellation of reduced VAT for accommodation sector. The ministry notes that negative impact on Latvia’s export is also expected – tourism is one of Latvia’s largest service export industry. In 2016, it formed 18.4% or EUR 783 million of Latvia’s exported services.

Economy Ministry also believes Latvia’s competitiveness could suffer as a result of this measure – even now Latvia’s VAT rate of 12% is one of the highest in the EU and the highest among neighbouring countries – Estonia and Lithuania (9%) and Finland (10%).

Most countries around the world reduce VAT on accommodation services to improve tourism development, raise employment and competitiveness of their tourism industry. «If other European member states apply reduced VAT, their tourism businesses are put at a more advantageous position than their counterparts in countries that do not,» the ministry explains.

Ref: 224.109.109.6209


Leave a reply

NAF: Russia’s attitude remains unfriendly towards Latvia

So far Russia’s demonstrated attitude has remained unfriendly towards Latvia, said Commander of Latvian Armed Forces Leonīds Kalniņš in an interview to LNT.

Lembergs’ turn to testify before parliamentary committee has come

Aivars Lembergs, who is accused of serious crimes and is suspended from performing duties as chairman of Ventspils City Council, has been invited to come to a meeting of the Saeima’s Investigative Committee and answer questions associated with so-called oligarchs case.

How Latvian communities around the world plan to celebrate Latvia’s birthday?

«Celebration of independence of the Republic of Latvia is an important tradition that allows members of Latvia’s diaspora to maintain ties with their homeland – this year’s event will be even more expansive and inclusive than ever before. This is because events associated with the country’s hundredth birthday will be organized all around the world,» says manager of World Federation of Free Latvians office in Latvia Jānis Andersons.

European Parliament triggers punitive procedure against Poland

Members of the European Parliament have passed a resolution requesting for the application of the so-called «nuclear option» for Poland, Article 7 of the EU Treaty, because of the threat to the rule of law in the biggest Eastern European country.

Wage rules violations most often associated with envelope wages

To promote public awareness and improve commercial environment, honest competition and honest compliance with taxes, Latvia’s State Revenue Service intends to expand its database with new information about taxpayers, BNN was told by SRS.

Management of Unity’s Saeima faction to change in December

«Political consultations with all of Unity’s partner parties that are represented in the Saeima’s faction have concluded. An agreement has been reached to perform management change before the end of Saeima’s autumn session – around 21 December,» says Unity’s chairman Arvils Ašeradens.

EP prepared to commence talks with EU governments on reforming asylum system

The European Parliament is prepared to commence talks about reforming Dublin Regulation to ensure every member state is able to resettle a portion of asylum seekers.

Estonia to pour into Finnish-Estonian cultural fund 700 000 euros

Estonian cabinet of ministers has decided to attribute 700,000 euros to the Finno-Estonian Cultural Fund, an organisation working since 2015 aimed at fostering cooperation between the two states in culture, creative economy and training both for individuals and organizations.

Russia in UN vetoes extension of Syrian chemical attack investigation

At the UN Security Council, Russia has used its veto powers to block a resolution with which it would be allowed to continue the international investigation into a chemical attack this spring in Syria, which prompted the U.S. to launch missile strikes on a Syrian airbase.

Latvia’s birthday expected to be windy

A precipitation zone will reach Latvia from the west on Friday, 17 November. The precipitation zone will, however, pass over Latvia quickly, making rainfall short and periods of clear sky more frequent and longer. Air temperature is expected to stay within +5° C… +8° C, as reported by State Environment, Geology and Meteorology Centre.

State of emergency in force in flood-hit Greece

Rescue services in Greece are looking for no less than five people, who have gone missing following unexpected and disastrous floods on Wednesday, November 15, that killed 15 people; however, bad weather is still expected.

Laupīšanas 101 director: Latvia’s film industry has yet to reach its potential height

There is sufficient evidence to prove that Latvia’s film industry is capable, but at the same time many films are directed basically the same way. There is a lack of creativity, which means very slow development for the industry, said Kaspars Marhlevičs, director of short comedy Laupīšanas 101, in an interview to BNN.

Medical cannabis bill paves way in Lithuanian legislature

Otherwise conservative Lithuania has made a big stride forward legalising cannabis for medical use with 92 Lithuanian parliamentarians voting Thursday, November 15, to open the bill draft on medication containing cannabis. The law draft should go back to the parliamentary floor for deliberations on December 12.

Latvian sentenced to ten years in prison for fighting on the side of ISIS in Syria

On Thursday, 16 November, Latvian citizen Mārtiņš Grīnbergs was sentenced by Riga Regional Court to ten years and three months in prison for fighting on the side of Islamic State terrorist organization.

European Parliament: Africa’s development requires a new stimulus

To resolve economic, social and migration-related problems, which usually accompany lasting crises, better African-EU cooperation is needed, European Parliament members say.

Latvian Chamber for Commerce and Industry proposes preventing new MPC reforms

Increase of mandatory procurement components cannot be allowed. Exactly the opposite – this cost should be dropped entirely for end electricity prices in an attempt to improve international competitiveness of companies, BNN was told by council members of Latvian Chamber for Commerce and Industry.

Matīss: LDz cannot raise tariffs and perform rail electrification under cargo anti-record

Because Latvijas dzelzceļš has set an anti-record in cargo transports in the first ten months of this year, Saeima deputy and member of the National Economy Committee Anrijs Matīss says raising the fee for the use of infrastructure cannot be allowed. He adds that the intended railway electrification project should be considered very carefully.

Lithuania and Latvia placed in top 10 in climate policy index

In the annual Climate Change Performance Index, where climate policy action in 57 countries has been evaluated, on a scale from «very high» to «very low», 11 EU member states have been evaluated with as having been highly active, with Sweden showing the best results ahead of Lithuania, the UK, Finland and Latvia.

Bite Latvija buys Stream Networks and Latnet

Mobile commutations operator Bite Latvija has signed a purchase agreement for 100% of shares of Stream Networks and its subsidiary Latner Serviss, as BNN was informed by Bite manager in Latvia Kaspars Buls.

airBaltic carried three million passengers in first ten months of 2017

In the first ten months of 2017, airBaltic carried a total of 3,007,034 passengers to destinations in Europe, Scandinavia, Russia, CIS and the Middle East, BNN was told by the company.

Kaljulaid sees African opportunities to outplace EU in digitalisation

During a visit to Ethiopia, Estonian President Kersti Kaljulaid has discussed African-EU relations with the African Commissioner for Trade and Industry and recommended investing into digital development that would be beneficial for the continent itself.

Most employed people in Latvia are satisfied with their jobs

More and more often employers experience lack of qualified labour force, as well as increase of employees’ confidence about their competitiveness on the labour market and their openness for better job offers.

Estonian railways operator happy about increasing freight volume

Freight carried on the infrastructure of the Estonian state railway company Estonian Railways in October amounted to one million tons, which is a 10.4% hike compared to October 2016.

European Parliament: rule of law in Malta should be monitored more closely

Malta should strengthen the rule of law and the European Commission should follow the situation in the country more closely to ensure objective protection of rights, members of the European Parliament say.

Greece hit by sudden, disastrous floods

Towns in central Greece have suffered severe damages as unexpectedly heavy rain caused floods on Wednesday, November 15, taking the lives of no less than 15 people.

Newest comments