Taxing Tourism in Developing Countries : Principles for Improving the Investment Climate Through Simple, Fair, and Transparent Taxation

A good investment climate for tourism, underpinned by a sound tax regime, can play a central role in a government's growth and development strategy. Yet in many countries, tax systems for the tourism sector are characterized by exemption schemes and instruments that generate little revenue and burden business. This note focuses on the three main issues facing policymakers dealing with tourism taxation in developing countries: fiscal incentives, sector-specific levies, and value-added tax (VAT). It discusses different policy options to encourage tourism investments while ensuring sustainable revenue collection. A good business environment for tourism is essential to support the industry's central role in many countries' development strategies. Investments in the sector, which has significant growth potential among developing countries, can have important positive spillovers on poverty reduction. Tourism is a complex industry of numerous subsectors. It is challenging to define exactly what constitutes a tourism product and how to tax it; tourism is not a single commodity, but rather a collection of many different goods and services provided by a wide range of suppliers. The tourism value chain encompasses a variety of different actors, including hotels, air carriers and transport companies, tour operators, travel agents, rental agencies, and countless suppliers from other sectors.

Bibliographic Details

Main Authors:	Corthay, Laurent, Loeprick, Jan
Language:	English
Published:	World Bank, Washington, DC 2010-06
Subjects:	ACCOMMODATIONS, ADDED TAX, ADVOCACY GROUP, AFFLUENT COUNTRIES, AIR, AIR TRAVEL, AIRLINE TICKET, AIRPORT, AIRPORT TAXES, AMORTIZATION, BEACHES, BROKERAGE, BUSINESS ENVIRONMENT, BUSINESS ENVIRONMENTS, BUSINESS INVESTMENT, BUSINESS REGULATIONS, CAPITAL ASSETS, CAPITAL INVESTMENT, CARRIERS, CHECKS, COMMODITY, COMPETITIVE MARKET, COMPETITIVE MARKETS, COMPLIANCE COSTS, CONSUMERS, CORPORATE INCOME TAX, CORPORATE TAX, COST OF CAPITAL, CULTURAL HERITAGE, CURRENCY, DEDUCTIONS, DESTINATIONS, DEVELOPING COUNTRIES, DOMESTIC MARKETS, DOMESTIC TRAVEL, ECONOMIES OF SCALE, EFFECTIVE TAX RATES, EQUIPMENT, EXPENDITURES, EXPORTERS, EXTERNALITIES, FARES, FINANCE CORPORATION, FINANCIAL BURDEN, FIRM GROWTH, FISHING, FOREIGN DIRECT INVESTMENT, FOREIGN FIRMS, FOREIGN INVESTMENT, FOREIGN INVESTORS, FORMS OF TOURISM, FUEL, FUEL CHARGES, FUEL TAX, GIFTS, GLOBAL EXPORTS, GOVERNMENT REVENUE, GROSS DOMESTIC PRODUCT, HOTEL, HOTEL OPERATORS, HOTELS, INCENTIVE REGIMES, INCOME, INCOME TAX, INDIRECT TAXATION, INSPECTION, INSTRUMENT, INSURANCE, INTERNATIONAL DEVELOPMENT, INTERNATIONAL FINANCE, INTERNATIONAL HOTEL, INTERNATIONAL HOTEL ASSOCIATION, INTERNATIONAL TOUR OPERATORS, INTERNATIONAL TRAVEL, INVESTMENT CLIMATE, JOB CREATION, LEISURE TRAVEL, LEVEL PLAYING FIELD, LEVIES, LEVY, LEVY SYSTEM, LOCAL INVESTORS, LOCAL TRANSPORT, MACROECONOMIC ENVIRONMENT, MONETARY FUND, NATIONAL PARK, NATURAL RESOURCE, NATURAL RESOURCES, OUTPUTS, PARKS, PRICE ELASTICITY, PRICE ELASTICITY OF DEMAND, PRIVATE SECTOR DEVELOPMENT, PROFIT MARGINS, REGISTRATION FEE, RESORTS, RETURNS, SAFARIS, SAFETY, SALES TAXES, SMALL BUSINESS, SMALL BUSINESSES, TAX, TAX ADMINISTRATION, TAX AVOIDANCE, TAX BASES, TAX COLLECTION, TAX COMPETITION, TAX CREDITS, TAX INCENTIVES, TAX LAW, TAX OBLIGATIONS, TAX RATE, TAX RATES, TAX REGIME, TAX REGIMES, TAX SYSTEM, TAX SYSTEMS, TAXATION, TAXPAYERS, TOUR GUIDING, TOUR OPERATOR, TOUR OPERATORS, TOURISM, TOURISM ACTIVITIES, TOURISM BUSINESSES, TOURISM DEVELOPMENT, TOURISM INDUSTRY, TOURISM INVESTMENT, TOURISM INVESTMENTS, TOURISM OPERATORS, TOURISM PRODUCT, TOURISM PRODUCTS, TOURISM SECTOR, TOURISM SERVICES, TOURISM TAXATION, TOURISM VALUE CHAIN, TOURIST, TOURISTS, TRANSFER TAXES, TRANSIT, TRANSPARENCY, TRANSPORT, TRANSPORT COSTS, TRANSPORTATION, TRAVEL AGENTS, TRAVEL BUSINESSES, TRAVEL COSTS, TRUE, TURNOVER, VEHICLES, VISITOR, WITHHOLDING TAX, WORLD TOURISM, WORLD TOURISM ORGANIZATION, WORLD TRAVEL &AMP, TOURISM COUNCIL,
Online Access:	http://documents.worldbank.org/curated/en/2010/06/13837868/taxing-tourism-developing-countries https://hdl.handle.net/10986/10485
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