Guests from the EU Know What Order Is and Understand Closures Due to Fiscalization

Tourism Minister Darko Lorencin stated today that reducing the VAT rate for hospitality and tourism to 10 percent is generally a good move for Croatia and a long-term measure that positively impacts the development of tourism.

When asked by journalists after the Government session whether the reduction of the VAT rate for hospitality and tourism was a victory for the IDS in the coalition, Lorencin replied that such relationships and victories cannot be discussed.

– This is a consensus and an initiative that was also in the program 21 and which was advocated by the IDS, which was accepted and agreed upon with coalition partners. I believe we have done a generally good job for Croatia – said Lorencin.

When asked how he views the work of ‘Linić’s’ inspectors and whether it harms the reputation of tourism, considering, for example, the recent case with the hotel in Senj (which was closed by tax authorities in early August due to tax debt in the morning and reopened in the afternoon), he said that this was the first case and therefore caused such an uproar, and that the tourist season is the time when this should start happening.

– Put yourself in the position of tax inspectors who need to regulate the situation. They were just doing their job. When it comes to accommodation, the part about the closure was postponed because the tourist who paid for their vacation is not to blame for their host not fulfilling tax obligations – he said.

In addition, he adds, “95 percent of guests come from EU countries where order prevails, and I think they understand when someone loses that right and when they are closed.”

The Minister of Tourism emphasizes that, however, it concerns a minority of entrepreneurs and that the vast majority regularly fulfill their obligations, which then obliges the state to establish order with others as well.

Lorencin reiterated that reducing the VAT rate for hospitality and tourism to 10 percent is absolutely a long-term measure that positively affects the development of tourism on several grounds, one of the more important being that the rate is approximately equalized with other tourist countries in the region. France has a rate of 7 percent, Turkey and Greece have 8 percent, and Italy, like us, has 10 percent, so our economic entities can now compete equally, he said, adding that this positions Croatian tourism similarly to other countries and regarding the investment climate.

– Ask yourself as an investor – if a product for the end customer is 25 or 10 percent higher somewhere – you will go somewhere else. And now we have leveled that out – said Lorencin. He believes that the accumulations that economic entities will achieve will partly be investment-related, generating certain consumption, so the effects will be multiplicative on tourism, but also on the entire economy.

When asked how much we have potentially gained when everything is summed up, Lorencin replied that this is only the first year and that it is difficult to analyze it now.

– However, the fact is that any tax reduction additionally affects the increase in consumption. And the starting arguments are investment position and competitiveness – he concluded.