VAT Exemption for Mid-Level Lodging Properties Becomes Law

EghtesadOnline: The Guardians Council—a watchdog that ensures laws are in line with the Iranian Constitution and Islamic law—has approved the parliament’s bill on exemption of value added tax on services offered by mid-level lodging properties, including three-star and lower-rated guesthouses, apartment hotels as well as travel agencies offering Iran tours to foreigners that have secured permits from Iran’s Cultural Heritage, Handicrafts and Tourism Ministry, or related guilds.

News ID: ۷۵۰۷۱۲

16 August 2020

The law will be enforced as soon as it is communicated to the government, Deputy Tourism Minister Vali Teymouri told the Persian-language daily Iran on Saturday.

Teymouri noted that travel agencies active in attracting foreign visitors to Iran have been enjoying tax exemption for years and the new exemption from VAT will help them doubly, particularly the economically straitened ones. He added that the ministry is seeking to secure VAT exemption for four- and five-star hotels from the parliament.

According to Jamshid Hamzehzadeh, the head of the Association of Iranian Hoteliers, there are fewer than 200 four- and five-star hotels, and over 2,000 lower-rated hotels and apartment hotels in Iran.

Tehran has the highest number of four- and five-star hotels in the country.

Hotel occupancy rate in Tehran currently stands at between 5% and 15%, despite a 50% discount in prices, according to the head of Tehran’s Hotel and Apartment Hotel Owners Society.

“Due to the outbreak of coronavirus pandemic, we have seen a 60% decline in the number of guests,” Mohammad Ali Farrokhmehr was also quoted as saying by ILNA.

The official added that some hotels in the capital city have either closed down or are selling properties to be able to meet their expenses and stay afloat.

Farrokhmehr stressed that all health protocols are being observed in hotels and apartment hotels.

The Consumer Price Index of hotels and restaurants grew by 29.3% in the 12-month period ending July 21, which marks the end of the fourth Iranian month, compared with last year’s corresponding period.

CPI stood at 214.2 for the month, indicating a 6.3% growth compared with the month before.

The index, with a coefficient of 1.44%, registered a year-on-year increase of 21.3%.

The group’s annual inflation during the month under review grew by 29.3% compared with last year’s corresponding period.

Overall average annual inflation in Iran stood at 26.4% for the month under review.

SCI had put the average annual inflation rate for the preceding Iranian month, which ended on June 20, at 27.8%.

The consumer inflation for the month under review (June 21-July 21) registered a year-on-year increase of 26.9% compared with the similar month of the previous Iranian year. The year-on-year inflation of the month ending June 20 was 22.5%.

The overall CPI (using the Iranian year to March 2017 as the base year) stood at 227.9 last month, indicating a 6.4% rise compared with the month before.

SCI put the average annual urban and rural inflation for the month under review at 26.4%.

CPI registered a year-on-year increase of 27% for urban areas and 25.9% for rural areas in the month ending July 21.

The overall CPI stood at 226.7 for urban households and 234.9 for rural households, indicating a month-on-month increase of 6.5% and 5.9% for urban and rural areas, respectively.