Impact of Changes in VAT System on Tourist Sector Growth in Croatia

Abstract

The purpose of this research paper is to determine the impact of decreasing VAT rate on tourist sector services on the size and performance of the tourist sector activity. The important question is: is there any correlation between VAT rate and tourist sector growth? Also, we will try to determine did these changes in VAT system have any effect on structure of tourist. Especially this means to investigate changes in share of domestic and foreign tourist in total number of tourists. This will be done by observing the number of domestic and foreign tourist arrivals, before and after the change in VAT system. Finally, the purpose of this paper is to conclude whether or not reduced tax rate on tourist sector is justified or not. CZU: 336.226.322:338.48(439.24).