The recreational tourism market in Romania could increase, as an annual average, by 30pct, until 2021, up to a value of 240 million lei, given that for 2018 it is being estimated at 36 million lei, shows a PwC survey on the impact of a reduced VAT rate on recreational services, presented on Monday in a speciality conference.
Specialists believe that applying a reduced VAT rate of 9pct for recreational services would generate a positive impact of some 340 million lei on the state budget until 2021.
“Applying a reduced VAT rate to this sector would have a significant multiplying effect due to the development of new related activities for which additional charges and taxes would be paid. The development of the industry and attracting investment would be two of the effects of such a measure. Increasing the collection would be achieved by stimulating consumption in terms of recreational services and diversifying the accessed services. Practice has demonstrated this as a result of the application of a reduced VAT rate in the food industry as of June 1, 2015. At the same time, the effect of lowering the VAT rate would have a positive impact on the reduction of the “gray economy”, which places Romania on an undesirable leading position among the EU member states,” says Daniel Anghel, Tax Consultant partner, PwC Romania.
According to the survey, only 15.6pct of Romania’s population dedicates “at least one hour” weekly to sports and recreational activities, compared with over 50pct at European level. At the same time, Romania has a higher percentage of smokers in the total population and a higher alcohol consumption per capita compared to the EU’s average.
“The increase in consumption is more pronounced in Romania and has doubled in the last two years. At the level of 75 lei per capita, Romania has about 4pct allocated for consumption and recreation compared to the EU average of 8pct. Romanians spend almost twice more on drinks than on wellness. The major recreational complexes in Romania are currently concentrated around Bucharest and in Transylvania,” Anghel told the PwC conference.
Regarding the application of reduced VAT rate for various categories of recreational activities, Bogdan Belciu, partner Business and Management Consulting Services with PwC Romania, considers that the measure would generate an additional 1.1 million visitors to the specialized complexes.
PwC Romania’s representative said that France, Poland, Germany, the Czech Republic and Finland are among the countries that applied reduced VAT on recreational services.
The survey drawn up by PwC Romania shows that worldwide global market segments in recreational services are estimated to rise by 6pct annually, with the greatest impact being recorded in medical and wellness tourism, by 10-15pct per year.
Of the total number of trips made, 14pct are dedicated to wellness and spa, the rest for complementary tourism. Also, 66pct of wellness tourism takes place internally, the rest at international level.
PwC Romania organized on Monday the presentation conference of the report titled “Analysis of Market for Recreational Activities and Facilities in Romania” regarding the impact of the application of a reduced VAT rate on this segment of activity.
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