The Ministry of Economics entered the taxation of tourism – Newspaper Kommersant No. 13 (7458) dated 01/25/2023

The Ministry of Economy, which recently became the curator of the tourism industry, has proposed to exempt operators of domestic and inbound tourism from paying VAT for four years from this year. The Ministry of Finance also supported the idea. This measure should allow market participants to significantly increase their profitability and compete more actively with direct sales of hoteliers, who have been enjoying tax breaks for some time. Market participants promise to make travel for Russians and foreign tourists within the country more accessible during the VAT holidays.

The head of the Ministry of Economy Maxim Reshetnikov proposed exempting operators specializing in domestic and inbound tourism from paying VAT from January 1 this year until the end of 2027. This idea was supported by the Ministry of Finance, whose head Anton Siluanov said that the issue had been worked out, and “the reduction in the revenue base would be insignificant” – about 3-4 billion rubles. The ministries did not answer additional questions from Kommersant. Yury Fedyukin, managing partner of Enterprise Legal Solutions, suggests that the initiative can be implemented through amendments to federal legislation, which may take several months.

The issue of the need to reset VAT for tour operators got up after a similar decision was made in July 2022 for hotel services and earlier for rail and air travel.

According to Mr. Reshetnikov, now tour operators actually pay VAT on turnover. Sergey Romashkin, CEO of the Dolphin tour operator, explains that VAT is traditionally calculated as the difference between input and output taxes.

“If a hotelier’s room costs 90 rubles when booking, then he used to indicate in reporting documents that we pay him 72 rubles for it. plus 18 rubles. VAT. Then we sold this room to a tourist for 80 rubles. plus 20 rubles. VAT, the amount of tax paid was 2 rubles, ”the expert gives an example. After zeroing VAT for hotels, the cost of a room for a tour operator, according to the expert, began to be indicated as a single amount – 90 rubles, and the amount of actual VAT payment automatically increased to 20 rubles.

Mr. Romashkin explains that this situation has significantly complicated accounting and led to an unfair decrease in business profitability. Obviously, companies in the same chain should have the same VAT, he adds. “Tourism is a low-margin business, the average is 1.5-2%, and an increase of 0.5 percentage points in our case means an increase by a third,” says Mr. Romashkin.

The VAT reset may also affect online travel agencies and booking systems. B2B.Ostrovok explained to Kommersant that the company has a tour operator license.

Intourist assumes that the measure will increase the competitiveness of the company’s tourism product by making packages containing transportation and accommodation more affordable for travelers. “In the current situation, we cannot compete with hotel rates, as we are obliged to charge VAT in excess of the rate,” a company representative explained. Fun & Sun explained that the exemption from VAT will reduce the cost of tour packages.

Mr. Romashkin points out that, in general, the price parity in the market was respected: the hotels with which the tourist industry entered into contracts did not conduct direct sales at more favorable rates.

The hotelier can give the tour operator the same rate that he offers at home, but the travel company is forced to add VAT to the amount, explains Daria Kochetkova, director of the B2B direction at Ostrovok.ru.

According to her, this situation gave hotels an advantage for the development of direct sales. Vadim Prasov, Vice President of the Federation of Restaurateurs and Hoteliers of Russia, points out that it is traditionally important for hoteliers to work with different sales channels.

The head of the Ministry of Economy on January 24 also notedthat the ministry closed the issue of compensation to tour operators for the costs of exporting tourists from abroad in February-March. At the end of 2022, the ministry announced the approval of applications from 26 tour operators for a total of 2.1 billion rubles. But the interlocutor of Kommersant in the tourist market indicates that the companies have not yet been able to receive these payments. He suggests that delays in payments are related to administrative processes in the government, pointing out that business has not yet been able to receive a subsidy for charter programs in the regions of Russia. It was envisaged to allocate a total of 1.2 billion rubles for this.

Another interlocutor of Kommersant calls the problems with the actual payment of funds temporary, drawing attention to the fact that the process of obtaining federal funds is always drawn out. He believes that the more significant point is that the business managed to get approval for applications for only half of the actual volume of exported tourists. According to a Kommersant source, we are talking about the delivery to Russia and additional payment for accommodation of 117 thousand people, although only 50 thousand people will be compensated. For the rest of the clients, the travel business could not provide the necessary amount of documents, since at the moment the situation was resolved in an emergency mode .

Alexandra Mertsalova