The Assocation of Hungarian Hotels and Restaurants (MSZÉSZ) has never been closer to achieving a possible VAT cut for accommodation services, MSZÉSZ president László Könnyid said.

The association started negotiations about the potential VAT reduction one and a half years ago and Könnyid is hoping it may become reality.

He said on public television that the government should reduce the current 18% VAT rate for accommodation services to reach its goal of increasing the contribution of tourism to the country's GDP to 16% by 2030 from the current 10%.

The average VAT rate for accommodation in the EU currently stands at only 10.98%, with as many as 24 member states levying lower VAT on these services compared to Hungary, Könnyid said.

He reiterated that the high VAT rate negatively affects the profitability of local market players and the country's international competitiveness largely depends on the amount of tax burden levied on tourism services.

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