Hospitality Industry Shocked by Proposed Tax Reform

Total Croatia News

VAT rate for catering services will increase substantially.

On Thursday, Finance Minister Zdravko Marić presented tax reform which should be implemented starting from 1 January 2017. The proposal to increase the VAT rate from 13 to 25 percent for catering services was an unpleasant surprise for the hospitality industry, because it directly threatens the survival of their business. They demanded an explanation from Tourism Minister Gari Capelli, reports on October 28, 2016.

“We cannot believe this is happening, but the fact is that this is now almost a done deal, since the laws will soon be debated in Parliament. We are sorry because we have worked hard to save the hospitality sector, particularly caterers which primarily serve food, restaurateurs, confectioners and others”, said Nenad Šepak, chairman of the Catering and Tourism Association.

They wanted to ask Tourism Minister how was it possible that such a decision had been made, and that professionals found out about it only when it was already a done deal. “We still hope we might have the opportunity to respond and come up with some changes”, said Šepak.

Some say they believe that this will in some way be compensated, since the VAT changes are part of a wider tax reform. However, they are not appeased by announcement that from 1 January 2018, the VAT rate will be lowered from 25 to 24 percent. “We cannot be happy with those announcements for 2018 since they will not boost spending or increase the competitiveness of the hospitality industry”, added Šepak.

He wonders what happened with policies of the Ministry of Tourism and the government which were supposed to support consumption, save restaurateurs and make Croatia more competitive in the tourism market in the region. “Hospitality industry does not include just bars and clubs that serve drinks. We have plenty of restaurants, pastry shops and others venues which offer food, and all of them expect from the Ministry of Tourism to prevent these tax changes from happening and to keep things at least as they have been until now”, concluded Šepak.

Tourism Minister Gari Cappelli announced on Thursday evening that he would discuss the proposed changes in the next few days with people in the tourism sector and fellow ministers. “Give me a week to coordinate all the activities and talk with catering, hotel, camping and other professional associations, and with other ministers, especially the Finance Minister, and then I will be able to tell you more”, said Cappelli. “We know what the situation in the budget is and we will all have to give up on something, but the Ministry of Tourism will be in talks with sector representatives and it will take a position on the tax proposals”, said Cappelli.


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