Estonia, Financial Services, Legislation, Taxation, Tourism

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Estonian minister analyzes impacts of introducing tourism tax

BC, Tallinn, 01.02.2016.Print version
The minister of entrepreneurship in Estonia, Liisa Oviir, sees need for a more thorough analysis of a tourism tax mentioned as a possibility in the draft administrative reform law so as to assess its impact on Estonia's international competitiveness as a tourist destination, reports LETA/BNS.

Oviir says in her opinion on the administrative reform bill that since the tourism sector makes up a substantial part of the Estonian economy the effect of the introduction of an additional tax on the competitiveness of Estonia as a tourist destination as a whole should be evaluated.

 

The tourism sector together with indirect influences accounts for nearly 7% of gross domestic product and roughly 30% of the export of services, and foreign visitors make up almost 70% of accommodated tourists, the minister observed.

 

Included in the current administrative reform concept as a potential taxation change is the possibility of introducing a new tax – tourism tax. The new tax would help local municipalities to earn money for developing infrastructure, showcasing their regions and making them more attractive, and covering tourist-related expenses, the document says.

 

While the state would create the possibility for introducing a tourism tax, implementing the tax would be voluntary. The tax would be levied on overnight stays in an accommodation establishment and the tax rate would be set by the local self-government.

 

The new tax would increase the tax burden of accommodation establishment operators and raise the cost of overnight stays. According to the concept the tourism tax could yield remarkable revenue to approximately 10 self-government units. With a tax rate of one euro, for instance, the potential revenue of 10 self-governments would be 4.6 million euros per year.

 

The authors of the concept also note that although the tourism tax would have a neutral impact on the government sector it would increase the tax burden somewhat. The change could be implemented from the beginning of 2018.






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