Open AccessImpact Of Value Added Tax On Tourism
Author(s) -
Renata Dombrovski,
Sabina Hodžić
Publication year - 2010
Publication title -
the international business and economic research journal/the international business and economics research journal
Language(s) - English
Resource type - Journals
eISSN - 2157-9393
pISSN - 1535-0754
DOI - 10.19030/iber.v9i10.646
Subject(s) - tourism , business , competitor analysis , harmonization , value added tax , european union , order (exchange) , directive , added value , position (finance) , set aside , legislature , accounting , international economics , economic policy , finance , economics , public economics , marketing , history , agronomy , physics , archaeology , biology , political science , acoustics , computer science , law , programming language
The Republic of Croatia is currently carrying out preparatory measures for accession to the European Union. One of them is the harmonization of value added tax (VAT) with the requirements of Directive 2006/112/EC. Strong taxation affects tourism negatively. Hoteliers in Croatia set aside large funds for facility investments, which include partly high VAT rate of 23%, in order to achieve the market standards. Tourists face higher bid prices which puts the country in an unenviable position among Mediterranean competitors. It is important to find an optimal solution within the VAT system to encourage tourism development. Budget funds collected from tourism need to be refunded to the tourism industry.