engleski

CHANGES IN VAT RATE AND LIQUIDITY INDICATORS IN THE HOSPITALITY AND CATERING INDUSTRY IN THE REPUBLIC OF CROATIA

This paper deals with the increase of the value added tax (VAT) rate in the hospitality and catering industry from 13% to 25%, in part related to food and beverage preparation and service in hospitality and catering facilities, as implemented since January 1st, 2017 as part of a tax reform. The accurate analysis of the effects of increased VAT rates is time- consuming, which is why in this paper the liquidity of hospitality and catering entities within the National Classification of Economic Activities 56 - Food and beverages service activities - has been analyzed as one of the most important measures of business stability, but in a reversed situation, based on past tax changes. The analysis covers the period when the VAT rate was reduced from 25% (as it was in 2012) to 10% (in 2013), or to 13% (in 2014). Using a representative sample of hospitality and catering enterprises from eight most developed tourism-oriented counties (public disclosure obligators which in 2015 generated over 5.2 million HRK of total revenues, thus excluding micro-enterprises), a significant increase in liquidity was confirmed for that period. The average current ratio grew by 55% in 2013, i.e. by 66% in 2014, the average quick ratio by 70% in 2013, i.e. by 76% in 2014, while the cash ratio rose by as much as 104% in 2013, i.e. by 117% in 2014. All the differences in average indicators for the current, quick and cash ratios between 2012 and 2013, and between 2012 and 2014 were statistically significant, which was not the case with differences in average values between 2013 and 2014. Although in the period 2012 - 2014 many other reasons, apart from the VAT rate reduction, could have affected the results, they point towards a significantly higher liquidity of hospitality and catering entities in terms of lower VAT rates, as well as to the need to research it in more detail in future studies.

Hospitality and catering services ; Liquidity ; Reduced rate ; Value-added tax

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