Serbian government contemplating reducing value-added tax (VAT) on services rendered in the tourism and catering sector from 20 to 10% is a wrong measure to help tourism companies during the pandemic, says tax expert Nikola Altiparmakov, because “not all travel agencies have suffered the same drop in revenue, and for those with a small turnover such help would mean nothing”.
“Reducing VAT on services provided in the tourism and catering sector when the tourism season is destroyed cannot help companies in the sector to increase their revenue,” said Altiparmakov, who is also a member of the Tax Council.
He added that it would be fairer if there was only be one VAT rate in the tax system. Altiparmakov also said that the Fiscal Council recommended that VAT should have the same rate for all goods and services, and not different rates which currently range from 10 and 20%.
For instance, the same VAT rate (of 10%) is applied to the cheapest bread which is usually bought by people with low living standard, but also to the more expensive bread. By reducing the VAT rate to 10% for tourism services, the state would subsidize” tourism companies that still work well and have customers.
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According to him, the system whereby VAT is collected after goods are sold or services rendered was introduced in 2012 and it suits only a small number of companies.
The Honorary President of the Union of Employers of Serbia, Nebojsa Atanackovic, said instead that tour operators thought that reducing VAT would help them mitigate the consequences of the pandemic and that the Union of Employers requested this from the government on behalf of tour operators.
“I agree that this measure would not be effective if applied linearly, but it can be applied selectively to those tourism companies which revenues have fallen dramatically,” Atanackovic said.
He estimated that the option of collecting VAT once goods or services are paid for would be good not only because of companies would defer paying VAT, but also because, at the moment, the goods are often paid for in instalments but since VAT is paid immediately after they are sold, in this way, the supplier credits the state.
“Currently, the supplier of goods is damaged twice – by waiting for payment for their goods and services and by having to pay VAT immediately,” Atanackovic said.
This post is also available in: Italiano