As part of the fourth round of tax reform, the Government of the Republic of Croatia announced a reduction of VAT on food preparation and serving in catering to 13%. HUT welcomes the Government’s decision to reduce VAT in tourism “This will partially reduce the pressure of labor shortages, but ultimately lead to better filling of the state budget. I hope that part of this financial relief will be aimed at strengthening the cooperation of caterers with domestic producers, in order to get an additional multiplier effect and strengthen the economy.”, Burilovic emphasized. The Croatian Tourism Association (HUT), the umbrella association of the Croatian tourism sector that unites the largest tourism companies and the professional associations of the Croatian Hotel Employers Association (UPUHH) and the Croatian Camping Association (KUH), also welcomes the Government’s decision on tax relief the fourth package of tax changes. “We are pleased that the Government has recognized the importance of tourism for the Croatian economy and the need to respond, given that most countries in the region further encourage the competitiveness of their tourism sectors. Complete equalization of the VAT rate with that of our competing countries is our medium-term goal and we hope to achieve it in cooperation with the Government of the Republic of Croatia. Most of the funds released by these moves of the Government will be directed to investments in raising the quality of facilities and the overall offer, and in increasing the salaries of employees, which can only stabilize the supply of labor in tourism. In the increasingly complex market competition in the Mediterranean, the tourism sector must increase investments in the quality of the tourist offer, because we can compete with the surrounding countries only in quality. Given that the consolidated net profit of the tourism sector in Croatia is below 6 percent of total revenue, only tax relief can free up the necessary funds to increase investment and raise wages. Ostojic concludes. However, in order for Croatia’s tourist offer to continue to successfully position itself on the competitive international market, reduced VAT rates are crucial. “Therefore, we warmly welcome the efforts of the Ministry of Tourism and the Government of the Republic of Croatia, and we consider the reduction of VAT in tourism to be necessary for the bright future of Croatian tourism.“Concludes Fain. The President of the Association of Travel Agencies of the Croatian Chamber of Commerce also believes that this measure of the Government is a step in the right direction Boris Žgomba. “We are satisfied with this move, primarily because it goes in the direction of raising the competitiveness of the tourism sector in relation to the competition, but this is only the first step and there is still a lot of work ahead of us.”, Said Žgomba. HUP – Association of Hospitality and Tourism, also welcomes the decision of the Government of the Republic of Croatia to include in the current tax changes a reduction in the VAT rate on catering services for food preparation and serving. The Croatian Chamber of Commerce supports the government’s decision to reduce the VAT rate for caterers from 25 to 13 percent, as this will open up space for raising wages for workers and make the entire tourism sector more competitive. President of the Association of Catering Activities of the Croatian Chamber of Commerce Ivan Bogović emphasizes that the reduction of VAT is a great relief for the industry, which will have multiple good effects. Luka Burilović, HGK: VAT reduction wind in the sails of the entire tourism sector The impact of the VAT rate has a significant impact on the competitiveness of accommodation and catering, so the vast majority of EU countries use the possibility of lowering the VAT rate for certain goods and services as an instrument to stimulate consumption of certain products and services, thus achieving a more competitive framework for tourism development. . The fact is that tourism is one of the most promising economic activities in Croatia, but the tourism profession must continue to work on enriching the existing offer by investing in the development of new, innovative and quality tourism products that follow global trends and demand, as well as increasing salaries and working conditions for employees. , points out Tomislav Fain, President of UHPA, and adds: “The Croatian Government has recognized the importance of tourism, so we welcome the reduction of VAT rates in tourism, which will give us a better position for business, and thus for new investments and better status of employees in tourism.” At HUT, we are convinced that this reduction of the tax burden on tourism will result in an increase in investments, employment and salaries, and consequently in the revenues of the state budget and local and regional self-government. Reduction of VAT for the tourism sector is the most efficient measure in the function of increasing salaries and new investments in higher quality tourist facilities and services, and consequently will increase state budget revenues, point out the HUP and point out: “But for us, the goal remains to equalize the VAT rate on all catering services and define for tourism a VAT of 10% as it is in our competing Mediterranean countries, which would achieve even greater effects on increasing investment, employment and salaries for tourists. In order to improve working conditions and retain workers for employers in tourism, an important measure is the introduction of a tax-free hot meal for all workers, which we advocated together with the unions to harmonize the treatment of seasonal and permanent workers. This is a continuation of the measures of the Government of the Republic of Croatia which, through the increase of non-taxable compensations to workers, achieve more competitive working conditions and greater safety and satisfaction of workers. This has already been shown in the effects of the introduction of a new non-taxable amount of 5 thousand, and the same can be expected from the analysis of financial effects conducted by HUP for the introduction of non-taxable hot meals for all workers. from the tourism sector, the same measure will result in HRK 16,5 million of possible savings, ie possible direct investments in increasing the salaries of tourism workers ” conclude from HUP. HUP – Hospitality and Tourism Associations: This tax relief is additionally important for Croatian tourism due to the strengthening of competitors and increasingly demanding market challenges. Finally, it should be noted that a lower VAT rate in the hospitality industry will not automatically mean lower prices, but only a relief for entrepreneurs who should feel more about better working conditions and salaries for employees as well as increased investment. “We welcome this decision because Croatia has so far had the highest VAT rate on food preparation and serving in the Mediterranean and one of the highest rates in the EU. With the return of competitors like Greece and Turkey, we have increasingly lost pace and the situation has become unsustainable, so it is good that the Government has reacted. This is a wind in the sails not only for caterers, but also for the entire tourism sector. “pointed out the president of the Croatian Chamber of Commerce Luka Burilović, adding that he is convinced that the reduction of the VAT rate will open space for businessmen to raise salaries and make new investments. Reduction of the VAT rate on food preparation and serving in catering facilities, exemption from taxation of accommodation and food costs for all employees and introduction of the so-called CRO cards represent a significant step forward in the necessary raising of the competitiveness of Croatian tourism. Competitive business environment in the increasingly complex market competition in the Mediterranean is becoming a key determinant of the success of the coming tourist seasons, says Veljko Ostojic, director of the Croatian Tourism Association and adds: The lower VAT rate on food in the hospitality industry will ensure a better competitive position of Croatia on the world tourism market, the entire tourism profession agrees and welcomes the decision to reduce VAT in tourism. “This is a sign that the Government is still listening to the voice of the economy and realizing how difficult it is for us to do business. Tax relief will make room for hospitality and tourism to become desirable for investment again. This will lead to better conditions for workers, which will make it easier to find labor”, Concludes Bogović. The new VAT rate in the hospitality industry should enter into force on January 1, 2020, although it was announced at the press conference that some measures could take effect earlier.