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article imageNew Croatian Prime Minister Zoran Milanovic reduces tourism VAT

By Paul Bradbury     Dec 23, 2011 in Travel
New Croatian Prime Minister Zoran Milanovic gives his first television interview and announces a reduction of VAT for tourism.
In his first interview since becoming Prime Minister of Croatia, Zoran Milanovic announced that taxes for tourism would be reduced, indicating the importance of the tourism sector to the economy.
New tourism rate of 10%
In the interview, broadcast on Dnevnik Nove TV, Milanovic announced that the rate of VAT in tourism would be reduced from the current rate of 23% to 10%, a move which reflects the wishes of new tourism minister Veljko Ostojic in an interview on December 8, in which he argued that a reduction in tourism VAT was vital to boost the industry, as Croatia had the highest VAT rates in the Mediterranean.
While Milanovic gave no other commitments regarding taxation in the interview, the move will be welcomed by hoteliers and restauranteurs along the Adriatic coast, as they struggle to compete with a widening tourism offer in the midst of a global recession.
Strong fundamentals of Croatian tourism
The fundamentals of Croatian tourism are strong, and statistics posted by the Ministry of Tourism point to another record year for the former Yugoslav republic, which has successfully rebuilt its tourism industry after the devastating war in the Nineties.
International interest in the Adriatic coast is growing every year, and the naming of the island of Hvar as Lonely Planet's number five global destination is likely to increase demand, making the announcement all the more welcome.
While Croatia has successfully resurrected its coastal tourism under the slogan The Mediterranean as it Once Was, there is a marked change in emphasis for 2012, as highlighted by the new promotional video below. Under the new slogan of Croatia: The New Tourism Star of the European Union, the marketing emphasis has moved to promoting Croatia's rich inland tourism offer.
Whether inland or coastal, the reduction in tourism VAT will be a welcome boost to the industry as a whole.
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