Different countries seem to take different approaches to generating revenue from tourism. You have some countries that try to stimulate tourism by making it easier and cheaper to visit the country, while you have other countries that try to generate revenue through tourism by charging people to visit, like with an entry fee. I think it’s no secret which strategy I prefer. 😉
Well, this week Argentina has announced a very tourist-friendly move.
Argentina’s president has signed an executive order under which foreign visitors will be refunded the VAT (value added tax) paid on hotel services using foreign debit or credit cards. Best of all, the reimbursement will be “direct and automatic,” meaning you don’t have to go through any hoops or forms to request the reimbursement.
Argentina’s 21% VAT has long been among the highest out there. While hotels in many cities/countries have additional charges around 20% or so, often 10% of that is a service charge. So a 21% outright VAT is high.
This development was announced in connection with World Tourism Day, as Argentina wants to boost their tourism industry, after a rough couple of years. They hope that this change will encourage more people to visit, and will boost jobs in the tourism industry.
Keep in mind that in the past Argentina had a “black market” exchange rate which was significantly better than the official one, though as far as I know that has greatly been reduced lately, due to the fall in the value of the Argentinian Peso.
The problem is that many of the top international hotel chains in Argentina continue to quote prices in USD, and rates in USD haven’t changed much over the past few years. In practice this means that the rates at these hotels have gone up substantially. For example, the Park Hyatt Buenos Aires continues to charge $500+ per night…
This is a great move on the part of the Argentinian government, and shows a real attempt to boost tourism. This should help many travelers save 21% on their hotel stays in the country. This combines nicely with the drop in rates at hotels that are priced based on the Argentinian Peso, given how much the currency value has fallen.
Unfortunately for many international hotel chains, prices continue to be pegged to the USD, which means the rates at these hotels in local currency have largely gone up ~30% over the past year.
Will Argentina eliminating the VAT on hotels encourage you to visit?
(Tip of the hat to No Mas Coach)