Financial Services, Latvia, Legislation, Taxation, Tourism

The Riga City Council in September 2019 supported the proposal on introducing a tourism tax as of 2021. However, considering the crisis caused by Covid-19 pandemic, the local government plans to postpone introduction of this tax for a year.

Such a decision has been made after consultations with the sector representatives. The administration will vote on the decision on June 9.

According to the plan, all tourist facilities will have to pay a tax at the amount of EUR 1 per person per night, but not more than EUR 10 if the person is staying longer in the Latvian capital. The tax would not be applied on children below the age of 12.

The local government had estimated that it would collect more than EUR 3 million into the city's budget in this way.

Janis Pinnis, the president of the Latvian Association of Hotels and Restaurants, told LETA that he would like the tax to be postponed further, because a full recovery of the sector cannot be expected sooner than in 2023.

"The coming years will be difficult, therefore any additional burden would cause more difficulties," he said.

He said that EUR 1 per person seems a low tax, but at the moment when conferences are organized for a large number of people, even organizers will start to compare prices and destinations. "It should be understood that first of all we should get people here, and any such additional payment may affect our competitiveness," said Pinnis.

Local tourism tax is common practice in many European cities, including in Kaunas and Vilnius in Lithuania.