Hospitality Sector Appeals for Lower VAT

ZAGREB, November 30, 2020 – Croatia’s hospitality sector has the highest VAT in Europe, and Croatia is one of the few countries that has not reduced its VAT during the corona crisis, so the hospitality sector has appealed to the prime minister to help reduce VAT, the head of the national association of bar and restaurant owners, Marin Medak, said on Monday.

“We talked about everything, but Finance Minister Zdravko Maric would not hear of reducing VAT. So we are appealing to the prime minister and government to help us because without it we have no reason to continue working in this crisis, even if we are allowed to reopen at the end of December or in January,” Medak said after a meeting at the Ministry of Labour and Pension System between government representatives and representatives of the hospitality sector to discuss the government’s latest measures in the new mild lockdown.

The government is set to present the latest measures on Monday. Minister Maric said that the measures related to keeping jobs, relaunching and accelerating the issuance of COVID loans through the SMEs agency Hamag-Bicro and exempting some costs of doing business in December.

Commenting on what the ministers presented and which measures were accepted as compensation for shutting down their businesses, Medak underlined that the measures came too late and that the national COVID response team had failed.

“Everything they are offering us now will not be sufficient, hence we appeal to the prime minister and government to clearly tell us if there is any hope for the future because we no longer have any and we have no idea what will happen in these circumstances. As far as we could see, the ministers themselves do not know what costs we have nor how much the proposed measures will cost the economy. If they were to reduce VAT, which is about HRK 300 million a year, and if that is a problem, then where is the HRK 1.3 billion for COVID loans going to come from, or the HRK 470 million for the monthly allowance of HRK 4,000  to keep jobs,” said Medak.

He said that they did not want their workers to live off that, nor off the HRK 4,000 when until now they had paid VAT and all other allowances and fees. He added that now the entire hospitality sector had a lot of problems and many of them believed that it was better not to reopen in January after the measures were lifted because the fall in turnover would continue.

Disappointed with the meeting and the ministers’ proposals, the head of the association of bar and restaurant owners from from Istria and Kvarner, Vedran Jakominic, said that they were more “shaken up than satisfied.”

He described the proposed measures as a minimum and a mere PR campaign rather than an economic analysis and activity.

 

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