Tour operators complain of high tax burden

TIRANA, Feb. 22 – Apart from the underdeveloped infrastructure, the high tax burden is another factor preventing the progress and competitiveness of the Albanian tourism industry. With three months to go before the new tourist season officially kicks off, the Albanian Tourism Association (ATA) has reiterated its perennial request for the review of the value added tax on this sector.
Zak Topuzi, the head of the hotel section at ATA told reporters this week that Albania’s current 20 percent VAT on accommodation is the highest in the region, more than double compared to regional competitors such as Montenegro, Greece and Turkey where this tax varies from 7 to 9 percent.
“We are not competitive with regional countries considering that the current VAT rate is 20 percent at a time when 20 out of 27 regional countries have a VAT rate lower than 10 percent,” said the ATA’s representative Topuzi, also warning that the local government taxes stand at high rates.
The Association had earlier demanded a cut in the value added tax (VAT) from 20 percent to 8 percent and a decrease in accommodation taxes paid to local government units from 5 to 1 percent.
According to Albanian tour operators, high taxes are being reflected on additional costs and more Albanians choosing to spend their holidays abroad because of competitive and often lower prices.
Tour operators are also worried about the presence of urban waste in coastal areas, as well as relatively high prices of bank transactions, electricity and oil.
The ongoing tense political situation which escalated in the killing of 4 anti-government protestors on Jan. 21 in Tirana is another concern for the country’s developing industry, which says the country’s image has already been spoilt after violent acts aired all over the world. “Selling Albanian tourism products is not easy at all even under normal conditions. The marketing and the negative effects of the footage of incidents cannot be compensated by increasing the number of promotional spots on foreign TV networks or even intensive media communication to convince the audience for the opposite.”
However, Albania’s placing as the top travel destination in 2011 by Lonely Planet Guide and sixth global destination by CNN experts are expected to bring positive effects this year.
Tourism revenues during the third quarter of 2010 grew by only a slight 26 million euros year-on-year and dropped by 59 million euros compared to the first nine months of 2009, figures proving Albania’s most promising future industry did not manage to escape the crisis effects despite a significant rise in visitors reported by government officials.
Central bank data show travel revenues during the July-September period, the peak of tourist season, increased to 534 million euros, up from 508 million euros in the third quarter of 2009. However, total revenues for the first nine months of 2010 dropped to 960 million euros, down from 1.019 billion euros during the same period in 2009. Statistics prove visitors to Albania, the majority of whom are Albanian immigrants living in Greece and Italy and tourists from neighbouring Kosovo and Macedonia spent significantly smaller amounts during their stay in Albania despite their number growing.
The situation was mainly a result of the poor performance registered in the first half of 2010 when revenues dropped by 85 million euros year-on-year.
Albanians also sharply cut their expenditure in tourist trips abroad by 115 million euros during the first 9 months of 2010, careful about their household economies which have been affected by lower immigrant remittances, fewer jobs, and a saving trend as the economy continues to gradually recover from the shrink in the last quarter of 2009.
Government statistics on foreign visitors, excluding Albanian immigrants who hold Albanian citizenship and are residents in different host countries, show some 549,105 tourists or 26,908 people more, visited Albania during the first half of 2010. The Tourism Ministry says the figure for the first six months of 2010 marked a 5.2 percent increase compared to the same period in 2009 and 77 percent compared to 2006.
The biggest number of tourists during the first half of 2010 came from neighbouring countries, with Macedonia topping the list with 21 percent, followed by Kosovo with 19 percent, Montenegro 12 percent, Italy 8 percent, Greece 8 percent, Serbia 4 percent, UK and Germany 3 percent each.
Latest tourism ministry data published on the 2007-2013 tourism strategy show Albania had 627 hotels with a capacity of 22,743 beds and 908 other tourist accommodation units with another 33,943 beds back in 2007.
Albanian tourism has grown at a significant pace over the last few years, contributing over US$ 2.4 billion in 2009 to the Albanian economy, with expectations to grow by 4% in 2011 — based on statistics from the World Travel and Tourism Council. Over 200,000 Albanians are involved in tourism businesses and this number is expected to grow in 2010-11, despite the effects of the global crisis on the travel and tourism industry.