B Consequences of VAT introduction

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Assignments

Name of assignment

Consequences of VAT introduction.

Situation

In the situation so far, VAT is not taken into account at all. In all of the financial numbers, we refrain from VAT.

Goal

To make all numbers more realistic and to give Jill Jandal a more realistic idea of the situation, the impact of VAT has to be taken into account.
Of course, this is also a legal obligation in running any business anywhere in Europe. Though it seems far fetched to works without, countries in the GCC, have only recently (2018) started introducing VAT.

Task, deliverable

Make an overview what adding VAT would mean

• Consider your city to be in any European country of your choice. Refer to the legal obligations in this. Use in your calculations the actual VAT rate in this country.
• To the customer (marketing perspective, room price)
• To the way of accounting of the hotel. You especially need to look at:
  • What would be the impact on costs & benefits?
  • What would be the impact on liquidity?
  • Is the impact different in any of the three major revenue groups of your hotel?

Please make assumptions and use concrete numbers and data from last years operating review.

Assessed elements

• Is the legal situation assessed well?
• Is the situation to the customers well-judged?
• Are the calculations and correct?
• Are all the source accounted for?

Additional information

• VAT
• Operating review
• VAT and the EU
• Example from UK
• Impact of VAT on tourism

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