Increased TOMS ‘threatening UK jobs’
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Increased taxation on wholesalers through the Tour Operators Margin Scheme (TOMS) could force business to leave the UK if continued, the European Tour Operators Association (ETOA) has warned.
The association’s consultation on members has found 96% think a new European Court of Justice (ECJ) ruling would damage their competitiveness and could lead them to relocate outside the EU.
The ruling meant TOMS was applied on business to business transactions last year and also means companies must account for tax by each transaction, with ETOA members complaining of the competitive and administrative burden.
Competitors outside of the EU do not pay tax on gross margins while those in the UK do, plus calculating VAT will be difficult for UK-based firms that have hundreds of thousands of transactions each year.
If the system is not reformed ETOA is concerned companies will relocate to countries outside of the UK to avoid high levels of tax, therefore putting jobs at risk.
In addition companies are worried that pushing up prices to accommodate on VAT for all tourism exports will see some markets travel elsewhere instead of the UK.
“The ruling is an attack on the process of adding value to tourism services. It inadvertently delivers a devastating blow to growth businesses working in growth markets. It is hallmarked ‘industrial catastrophe’,” said Tom Jenkins, chief executive of ETOA. “But how the ruling is implemented lies in the hands of the government. This taxation scheme (TOMS) is in dire need of reform; one of the shocking aspects of this judgement is that it grants tax free status to foreign holidays, whilst landing a new and substantial tax on our tourism exports.”
ETOA’s consultation came from respondents that have a combined turnover of GBP2.4 billion and employ more than 2,500 people.
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