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Tourism looks for that extra push

The Vietnam National Administration of Tourism is proposing the government for enactment of incentives to hotel and tourism businesses.

Vietnam Hotel Association chairwoman Do Thi Hong Xoan said current land taxes on tourism residences were unreasonable.

“A resort covers 20 hectares, but the developer builds facilities on 35-40 per cent of the total area only. However, the same tax rate is applied to the whole area, costing the business a hefty sum and it is unreasonable,” Xoan said.

Xoan added that hotels and resorts sprung up in recent years but high-class tourism residences were still scarce. In her mind, this was partly due to the fact that businesses pouring investments into tourism accommodations were facing a host of difficulties associated with land taxes as well as electricity and water costs.

Many hotel and resort operators claim current enterprise income tax and power costs towards tourism residences stay overly high.

“Tourism companies for many times proposed revision of the current land tax levied on them. However, they got no feedback in return,” said chairman of Vietnam Travel Association Vu The Binh.

There are two capital intensive areas with a long capital recouping process in the tourism sector – hotels and transport vehicles investments, according to Hanoitourist business director Phung Quang Thang.

“These areas are in urgent need for state incentives,” Thang said.

In fact, the Tourism Law regulated some state incentives towards tourism residences investments. Accordingly, the state offers land, finance and credit incentives towards organisations and individuals investing in tourism material base, particularly in rural and remote areas and gives the green light for import of cutting edge specialised equipment for hi-end tourism residences.

However, only tax incentives towards first-time equipment imporst are in place thus far, according to deputy head of VNAT’s Hotel Department Le Mai Khanh.

VNAT’s Travel Department former head Vu The Binh said the Tourism Law contained many irrationalities since its dawn that need to be soon addressed.

In this context, VNAT executives said they had proposed including the Tourism Law amendments in the National Assembly agenda next session.

In the short-term, to help business disentangle VNAT is proposing the government for enactment of some tax, land, power and water cost incentives towards businesses building tourism residences.

A representative from the Ministry of Planning and Investment’s Department for Services said investment incentive proposals must be compliant with the Tourism Law and Vietnam’s tourism development strategy towards 2020 which will be submitted to the government for approval.

Upon the proposal of offering tax incentives to non-building areas within resorts or hotels a ministry representative argued “Resort customers have to pay the service fee for the whole resort but not only for the room they rent, so taxing only tourism residences within the resorts would be impractical.”

Some proposals VNAT is considering for submission to the government:

On land: Requiring local governments to earmark well-placed areas for building tourism residences, particularly hi-end residences;

On taxes: requiring the Ministry of Finance to consider tax incentives towards import of specialised equipment for every time tourism residences undergoing upgrading and expansion; revising taxes towards non-building areas within hotels, resorts or other tourism residences;

On power and water costs: requiring the Ministry of Industry and Trade to treat businesses trading in tourism residences as industrial production facilities with similar power and water costs (tourism is taken as an industry).

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