Iran exempts cheap hotels from VAT

August 15, 2020 - 22:45

TEHRAN- Iran has approved a plan to exempt cheap and small hotels from value-added tax (VAT) in a bid to compensate for the losses caused by the coronavirus outbreak, IRIB reported.

The exemption will be implemented for 1-3 star hotels from the beginning of the next Iranian calendar year 1400 (starts on March 21, 2021), and it is also to be considered for four- and five-star hotels, the head of Iran Hotels Association Jamshid Hamzezadeh announced on Saturday.

From about 2200 hotels and apartment hotels in the country, less than 200 ones are four- and five-star hotels and the rest are 1-3 star hotels, he added.

He also noted that most of the four- and five-star hotels are situated in Tehran and Khorasan Razavi provinces, and also Kish Island, which are all among the top tourist destinations in Iran.

Back in April, Hamzezadeh called for a tax exemption for tourism-related businesses at least by the end of the current Iranian calendar year 1399, which ends on March 20, 2021. Talking about the impacts of coronavirus pandemic to the hospitality industry of the country, he noted “The industry has lost 53 trillion rials (about $1.2 billion) just over the past two months… the travel industry has led to direct employment of 240,000 people as well as indirect employment of 550,000 people, who are at risk of losing their jobs.”

Earlier this year, the Iranian government announced it will bail out those which are grappling with fiscal problems by offering loans with a 12-percent interest rate. The Ministry of Cultural Heritage, Tourism and Handicrafts also suggested a rescue package for tourism businesses. The government has also allocated a 750-trillion-rial (about $18 billion) package to help low-income households and small- and medium-sized enterprises suffered by the coronavirus concerns.

“Such amount of bailouts will not compensate for much of the losses as the virus pandemic has brought tourism to a standstill for two months,” Amir-Pouya Rafiei-Shad who presides over Tehran province’s Tour and Travel Agencies Association said in April.

“Last [Iranian calendar] year was a bumpy ride for Iran’s tourism as it suffered from flooding in the spring, protests [over petrol prices] in November, and the fatal Ukraine International Airlines plane crash in January,” Rafiei-Shad explained.

Optimistic forecasts, however, expect Iran to achieve a tourism boom after coronavirus contained, believing its impact would be temporary and short-lived for a country that ranked the third fastest-growing tourism destination in 2019.

The latest available data show eight million tourists visited the Islamic Republic during the first ten months of the past Iranian calendar year (started March 21, 2019).

ABU/MG

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