Tourism crisis: The government is considering a differential VAT rate to provide relief to the sector.
There are plans to reduce the VAT rate for tourism-related activities. The bill under consideration provides for a 10% rate for hotels and restaurants.
The debate over the fragility of the external sector returned to the forefront last week, when the National Institute of Statistics and Census (INDEC) announced that the current account deficit reached more than US$5.1 billion in the first quarter. Travel abroad largely accounted for the jump in the deficit, consuming US$2.755 billion more than current account income.
In May, outbound tourism increased 48.9% year-on-year, while inbound tourism fell 10.1% . Bookings for the winter season are failing to pick up, and business owners are growing concerned. Some destinations are barely exceeding 20%, although hoteliers agree that many people will decide at the last minute.
The government is taking note of the problem. " We have to be very creative at this stage and carry out, with all areas of government, the necessary actions to ensure the growth of inbound tourism ," said Scioli at an event launching promotions for Buquebus and Aerolíneas Argentinas in Uruguay.
The official said that we really need a more efficient tax structure and "not seek competitiveness through devaluation or subsidies, which we know will have consequences ." The initiative was discussed with companies in the sector. In fact, the Argentine Hotel and Restaurant Business Federation has been working on a similar proposal, which was submitted to the authorities.
Amid the debate over the high dollar prices seen on various products in the local economy, Scioli said that "Argentina is not an expensive country; it is a valuable country" and that "inbound tourism has often been subject to the exchange rate, when Argentina has all the conditions to be a destination chosen for its nature and cultural heritage."
For example, Spain has a general VAT rate of 21%, but hotels and restaurants pay 10%. Italy has a general VAT rate of 22% and applies the 10% differential to an even broader range of activities, including cultural services and transportation, among others.
In Uruguay, the policy is even more aggressive . VAT is exempt for foreigners in hotels, while a reduced rate of 9% applies to locals. For restaurants, the rate is 22%, but payments with credit or debit cards receive a 9% refund, and if the card is foreign, the refund is 100% during high season.
The sector welcomes the initiative, but they know that the speed of implementation will depend on the fiscal space, which currently appears limited.
There are plans to reduce the VAT rate for tourism-related activities. The bill under consideration provides for a 10% rate for hotels and restaurants.
The debate over the fragility of the external sector returned to the forefront last week, when the National Institute of Statistics and Census (INDEC) announced that the current account deficit reached more than US$5.1 billion in the first quarter. Travel abroad largely accounted for the jump in the deficit, consuming US$2.755 billion more than current account income.
In May, outbound tourism increased 48.9% year-on-year, while inbound tourism fell 10.1% . Bookings for the winter season are failing to pick up, and business owners are growing concerned. Some destinations are barely exceeding 20%, although hoteliers agree that many people will decide at the last minute.
The government is taking note of the problem. " We have to be very creative at this stage and carry out, with all areas of government, the necessary actions to ensure the growth of inbound tourism ," said Scioli at an event launching promotions for Buquebus and Aerolíneas Argentinas in Uruguay.
What is the tourism VAT that the Government is analyzing?
As this newspaper reported, the government is considering applying a lower VAT rate for tourism-related activities . "We must follow Europe's example, where labor-intensive sectors like tourism are subject to a differential VAT rate of 10%. This will help us gain competitiveness," Scioli confirmed.The official said that we really need a more efficient tax structure and "not seek competitiveness through devaluation or subsidies, which we know will have consequences ." The initiative was discussed with companies in the sector. In fact, the Argentine Hotel and Restaurant Business Federation has been working on a similar proposal, which was submitted to the authorities.
Amid the debate over the high dollar prices seen on various products in the local economy, Scioli said that "Argentina is not an expensive country; it is a valuable country" and that "inbound tourism has often been subject to the exchange rate, when Argentina has all the conditions to be a destination chosen for its nature and cultural heritage."
How does differential VAT work in other countries?
The proposal in question is being implemented in various ways by a long list of countries, including Peru, Ecuador, Uruguay, and the European Union. In the latter case, a type of tariff band is in place, allowing EU countries to move within and define specificities according to their domestic situation.For example, Spain has a general VAT rate of 21%, but hotels and restaurants pay 10%. Italy has a general VAT rate of 22% and applies the 10% differential to an even broader range of activities, including cultural services and transportation, among others.
In Uruguay, the policy is even more aggressive . VAT is exempt for foreigners in hotels, while a reduced rate of 9% applies to locals. For restaurants, the rate is 22%, but payments with credit or debit cards receive a 9% refund, and if the card is foreign, the refund is 100% during high season.
The sector welcomes the initiative, but they know that the speed of implementation will depend on the fiscal space, which currently appears limited.
Crisis del turismo: el Gobierno analiza un IVA diferencial para aliviar al sector
Se piensa en reducir el porcentaje de IVA para las actividades vinculadas al turismo. El proyecto que estudian prevé una alícuota del 10% para hotelería y gastronomía.
www-ambito-com.translate.goog
