A new decision will allow reducing prices in tourist complexes, says the expert [COMMENTARY]

Tourism is considered a promising but not fully activated economic sector in Azerbaijan. Many believe that this area of ​​business will be one of the main driving forces in Azerbaijan’s economy, especially in the post-oil era. Government policy in this direction and achievements in the sector strengthen the belief. Thus, Azerbaijan is in 39th place among 148 countries in tourism competitiveness indicators. The World Travel and Tourism Council reported that the country ranks among the top ten countries with the largest increase in visitor exports from 2010 to 2016. Also, as the chart shows, tourism has increased rapidly in the country.

In addition, the government has made several projects for the development of the sector. To promote tourism, Azerbaijan sponsored Atletico Madird jerseys depicting “Azerbaijan: Tierra del Fuego”. In 2018, a new tourism brand and slogan “Look Again” was introduced. Baku introduces an e-visa that makes it easier to get a visa. Azerbaijan launched tourism development planning for 2002–2005 and 2010–2014.

In addition, Azerbaijan’s Milli Mejlis (Parliament) passed new legislation that exempts tourist complexes located in the regions (except the Absheron Peninsula) from property taxes.

Officials say it is known that revenue from regional tourism is mainly formed by seasonal activity, and the level of revenue in this sector at other times drops sharply. The value of residential assets in the tourism sector is quite large. For this reason, property tax, being a fixed expense, creates a significant tax burden on businesses operating seasonally.

Therefore, in order to develop regional tourism and reduce fixed tax costs, it is envisaged to provide tax incentives for tourist entities (hotels and sanatoriums). For this purpose, with the exception of the cities of Baku, Sumgait, Hirdalan and the Absheron region, the tax on real estate used in hotels and sanatoriums in other cities and regions of the republic (except for the period when entrepreneurial activity is temporarily suspended in accordance with Article 16.3 of the Tax Code) is 2024. A change was made in the Tax Code regarding a reduction of 75 percent for a period of 3 years from January 1.

Speaking to Azernews on the matter, tourism expert Rahman Kuliev said that first, the new decision, which will come into force on January 1, can be considered a step taken to improve the social economy of the regions. In addition, this decision will have a positive effect on the conditions and mode of operation of tourist complexes and hotels operating in the regions.

“Thus, the introduction of 75 percent property tax exemption will also give hotel owners an opportunity to review their pricing policy. I expect this decision to reduce prices by about 5-15 percent. This percentage may seem small at first glance, but it is a large amount for individuals and families who buy a package for a week’s holiday in the regions. Undoubtedly, it would be better if this decision applied to the whole country and was more comprehensive. As is known, there are hotels on the coast of the Absheron Peninsula, which are visited by both domestic and foreign tourists during the season. Their price would also be acceptable,” the expert believes.

The expert notes that prices occupy an important place in the tourism sector, as well as in other sectors. He stated that reasonable prices will make foreign tourists come to Azerbaijan more regularly, which will positively affect the country’s image in terms of tourism.

“It should also be noted that reasonable prices are important not only for foreign but also for domestic tourists. Reasonable prices will undoubtedly direct local tourists to choose tourist centers in the country,” said expert Rehman Kuliev.

Kabil Ashirov is a staff journalist of AzerNews, follow him on Twitter: @g_Ashirov

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