TIRANA, April 5 – In an unexpected move ahead of the general elections, the Albanian government has cut the key value added tax on accommodation units in the tourism industry, meeting a perennial request by tourism operators.
Under a draft law approved this week, the ruling Socialist Party-led government decided to cut VAT applied on hotels from a current 20 percent to 6 percent, making the first differentiation in a key tax that is levied at a fixed 20 percent rate on almost all products and services.
Tour operators say the move is expected to benefit some 3,900 accommodation units, increasing the country’s competitiveness compared to other regional countries already applying VAT rates of below 10 percent and trigger new investments.
The government decision, which has to be approved by Parliament to become effective, will have a small impact on public finances as the government collects about €2 million a year in VAT from hotels and other accommodation units.
In the 2017 report on travel and tourism competitiveness published by the World Economic Forum, Albania climbed eight spots to rank 98th among 136 global economies, but yet lagging behind regional competitors. The biannual report measures a set of factors and policies that enable the sustainable development of the travel and tourism sector, which in turn, contributes to the development and competitiveness of a country.
The tourism industry has been one of the country’s fastest growing in the past few years, attracting more than 4 million tourists and generating about €1.5 billion.
