The national chamber of entrepreneurs of the Republic Kazakhstan "Atameken"
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TOURIST BED TAX: TO BE OR NOT TO BE?

05 April 2018
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Business voice concerns for introducing a tourist tax.

At the Atameken site, the first meeting on the introduction of the tourist "Bed Tax" was held. Deputy Chairman of the Board of the NCE RK Yulia Yakupbayeva, Vice Minister of Culture and Sports of the RK Yerlan Kozhagapanov, Chairman of the Board of "Kazakh Tourism" JSC Rashid Kuzembayev, as well as representatives of major hotel chains took part in the event.

"The introduction of the tourist "Bed Tax" is actively discussed in the framework of work on the Concept of the draft law on tourism activities. This issue is initiated by the "Kazakh Tourism" National Company. However, to date, the business community, including representatives of 6 regional associations, expressed their suspicion to this initiative and put forward a position on the prematureness of introducing a tourist tax. Therefore, we gathered to discuss all the proposals and risks associated with the introduction of "Bed Tax," - Yulia Yakupbayeva said.

Further, Rashid Kuzembayev reflected the vision of the introduction of "Bed Tax" in his presentation, taking into account the world experience.

"Uzbekistan has the most close experience in introducing a tourist tax. The size of the tourist hotel fee amounts 10% of the minimum wage for each day of residence and it is equal to about 2 dollars. Funds are accumulated in special accounts in second-tier banks and are transferred on a monthly basis to the non-budgetary Fund for the Support of the Tourist Sphere, whilst penalty is paid for late or incomplete transfer of amounts. We want to introduce a similar mechanism in Kazakhstan," - Rashid Kuzembayev said

According to his words, "tourist tax" is planned to be implemented in stages, after test examination of this mechanism in the cities of Astana and Almaty. The cost of the "tax" is planned to be fixed in the ratio of 10% of the monthly calculated index (MCI), which is 240 tenge in average. The administration will be implemented using a specialized IT-program that integrates migration registration of foreign citizens, statistical data and automatic generation of reports.

The initiators of the project also plan to accumulate all funds in the extrabudgetary Fund, whereas the decision on the use of funds will be taken by the Supervisory Board under the Fund. The council will be composed of representatives of the authorized body represented by the Committee of the tourism industry of the MKS RK, as well as the "Kazakh Tourism" NC and NCE.

After the demonstration of the initiative, representatives of the regional associations of the East-Kazakhstan and South-Kazakhstan regions asked about the objectives for which the collected funds are to be sent. In their opinion, the majority of the "tax" should be focused on the development of infrastructure projects in the region where the funds were collected.

This opinion was not agreed by the Deputy Chairman of the Board of NC "Kazakh Tourism" Timur Duysengaliyev. He noted that first and foremost it is important to improve the recognition of the country on the world market of the tourism industry, to ensure a constant growth in the number of tourists, as well as to raise the level of qualification of personnel in the country. Moreover, in his opinion, this tax will not affect the activities of campsites, guest houses, ethno-auls, children's camps, etc.  

Yerlan Kozhagapanov also agreed with such opinion.

"For the moment, the funds allocated in Kazakhstan to promote the country's tourism potential are not enough. We, as an economic sector, should show our self-sustainability and development potential. Thanks to "Bed Tax" we want to increase the recognition of our country, i.е. to direct part of the funds left by a foreign tourist to attract more tourists. The second direction of funds collection is the training of personnel in the industry. According to expert opinion, these are two areas where we need to pay close attention. Of course, infrastructure issues are no less relevant for Kazakhstan, but first, it is necessary to make the brand of Kazakhstan recognizable all over the world. We are confident that the tourist fee will affect the growth of hotels occupancy, which in turn will increase the investment attractiveness of the industry," - Kozhagapanov stated.

However, the unresolved question is whether the "tourist tax" will be paid only by foreigners or by Kazakhstanis too. According to the initiators of the project, this and other issues of a substantive nature are important to discuss with industry representatives and adopt a consolidated opinion.

The question concerning the tax bearers was especially puzzling to representatives of large hotels.  

According to the representative of "Rixos" hotel chain, a significant part of their visitors are corporate clients, who stay for several months. In this case, the "tourist tax" can seriously affect the pricing of hotels. If it is introduced, the cost of living in a hotel for corporate clients per month can increase by 7200 tenge.

In turn, according to the question raised by the representative of the Wyndham Garden hotel regarding the source of financing the maintenance of the IT application, the representatives of NC "Kazakh Tourism" noted that it is also planned to use part of the collected funds for this aim.

In addition, the participants expressed their concern that the tax may bear charges as an additional income, what could create an additional burden on hotels. 

However, according to Yulia Yakupbayeva, if the proposed rule is introduced, this issue can be resolved by introducing amendments to the Tax Code of the Republic of Kazakhstan.

At the conclusion of the meeting, Yakupbayeva noted that the NCE will compile a list of issues of concern to the market, on the basis of which, jointly with the authorized body, a table of questions and answers will be developed. According to her, the proposed norm requires a repeated discussion of all the details, in connection with which, in the near future such meetings on the site of the National Chamber will be continued.

"Today's meeting showed that the market representatives have a lot of questions that require answers and explanations. It is also worth noting that the initiators of this assembly, represented by the Ministry and "Kazakh Tourism", are open for discussion, as evidenced by their current composition. In turn, you can send issues of concern to the NCE. With the accumulation of questions, we will publish answers of state bodies and hold similar meetings on our site. Also, as part of the work of the Tourism Committee of the NCE, we are creating a subcommittee on placement issues, and invite you to take an active part in the work of the new body," - Yulia Yakupbayeva summarized.

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