Turkey’s new tourism levy shakes industry

Hotels and travel agencies are suffering as a result of a new 0,75 percent levy which Turkey’s newly founded Tourism Promotion and Development Agency charges on total revenues.

The new tax hit the Turkish tourism industry which has been struggling to overcome a slump in tourist numbers since the failed coup attempt in 2016. The industry has also suffered as a result of bomb blasts that have hit the country in recent years. Strained relations with the US and Moscow and the Syrian war on the border with Turkey have also played a part.

Despite the huge discounts in recent years, the industry has relaxed with the increase in the number of tourists. Turkish Tourism Ministry’s half-year figures released this week show a healthy 13% increase in foreign arrivals to Turkey and a 10% jump in revenue for the sector to $12.6 billion. However, Reuters reports that sector representatives say payment to the Tourism Promotion and Development Agency will erode profit market.

To survive in the Turkish market which has been in recession since last year, many tourism companies were forced to reduce prices to attract clients. The figures show that the average spending per tourist dropped 30 percent compared to $974 in 2013.

Muberra Eresin of the Hotel Association of Turkey told Reuters that the Turkish government calculated the levy from total revenues, which means that even loss-making businesses would be forced to pay.

The levy which will be paid monthly from October includes 1 percent from compound facilities and accommodation facilities, 1 percent from food-drink and entertainment facilities certified by the ministry and 1 percent from sea tourism facilities.

The levy also includes 1 per thousand from travel agencies, 1 per thousand from airline enterprises (commercial passenger transport activities), 2.5 per thousand from the airport operations, except those operated by The General Directorate of State Airports (DHMİ).

The Turkish government is expected to receive around 150 million euros ($166 million) annually for the agency, according to sector representatives.

“The levy should have been taken from profits, or it should be around one-third of that,” Travel agency Tigris Tourism Chairman Davut Gunaydin told Reuters.

During the first five months of this year, the number of foreign tourists increased by 11.3 percent compared to the same period last year and reached  12,757,522.