Tourism Minister Darko Lorencin on Thursday assessed that the lower Value Added Tax (VAT) rate for hospitality and tourism was generally a good move for Croatia and a long-term measure that positively impacted tourism development.
Asked by reporters after a cabinet meeting whether the lower VAT could be seen as a victory for the Istrian Democratic Party (IDS) in the ruling coalition, Lorencin said that this was not a matter for discussion.
"That was a consensus and an initiative that was included in the Agenda 21 (election platform). It was advocated by the IDS and agreed with the coalition partners. I think we generally did a good job for Croatia", Lorencin said.
Asked about tax inspectors' work and whether it damaged the reputation of Croatia's tourism, considering the case of a hotel shut down early August but reopened the same afternoon, Lorencin said that this was the first such case and that's why it had such an impact in the media, but added that the tourist season was the right time to start doing this.
"Put yourselves in the position of tax inspectors who need to regulate the situation. They are just doing their job. When it comes to accommodation, shutting down has been postponed because tourists who have paid for their accommodation are not at fault if their host has not paid his taxes", said Lorencin.
Apart from that, he added, "95% of our guests come for European Union countries where law and order rule and I think they understand when someone is shut down".
He underscored though that this referred to only a small number of businesses and that the majority tended to their obligations, which then obliges the state to bring others into order.
He reiterated that the lower VAT rate was positive and facilitated Croatia's tourism to be competitive.
