Estonian hotels repeat plea to Riigikogu to postpone VAT hike

Tallink Spa & Conference Hotel. (Postimees/Scanpix)
11/7/2016 4:20 PM
Source: BNS
Category: Business

Estonian tourism and hotel associations have once again asked the Riigikogu to put off the planned increase in the value-added tax (VAT) rate for accommodation establishments.

Although some members of the government are fond of highlighting positive news on the heyday of the tourist business, the positive statistics actually mostly concern accommodation establishments in central Tallinn while problems only continue to deepen outside the capital city, the Estonian Hotel and Restaurant Association, the Estonian Travel and Tourism Association and the Estonian Spa Association said in a joint statement.

The associations drew attention in their statement to the fact that most larger counties have lost foreign tourists in recent years regardless of the efforts made in cooperation with Enterprise Estonia to increase the attractiveness of the country's various regions. "The constant additional taxation of foreign tourists and the enterprises that serve them directly harms international competitiveness of the Estonian economy," the organizations said.

They also criticized domestic transport organization which they said was not well thought through and weakened the tourism industry.

The economic damage from the VAT hike will only become clear in 2018 as Estonia's presidency of the EU in 2017 creates one-off preconditions for the growth of tourism during this period, the associations said.

They also said that businesses of the tourism sector stand to be ripped off twice as the six million euro support measure promised by the government has not yet reached entrepreneurs. According to the associations, the government promised to support energy saving projects, but as far as they knew the measure is not included in the 2017 draft budget.

Minister of Finance Sven Sester told BNS in June that in spite of hotels' opposition, the government did not plan to delay the VAT hike because the number of tourists staying in Estonian hotels was at an all-time high.

The government plans to raise the VAT rate on accommodation services from the current 9 percent to 14 percent at the beginning of next year.

Editor: Aili Vahtla

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