The European Tour Operators Association (ETOA) has shown concern over the European Court of Justice ruling that wholesale travel transactions should fall within TOMS in the UK. The implementation of this rule may lead to the relocation of travel wholesalers, outside the European Union.
Around 96% of UK-based wholesalers fear that the new rule will damage their competitiveness and their ability to promote the UK as a destination. Operators also said it would affect their ability to market the UK.
Managing Director of Discover Travel & Tours, Andrew Grieve feels that operating in the UK and Europe will not remain competitive after the implementation of this rule and that they will have to grow their investment in their US office and shift the business outside the EU. He explained that thousands of jobs in the European based inbound industry will be lost with this tax on exports and they cannot operate and compete effectively in a global marketplace under such an uncompetitive tax regime.
The rule also requires the wholesalers to reveal their gross margins to their clients and to account for taxation on a transaction-by-transaction basis. Operators stated that they deal with markets which are highly price sensitive, and this rule in particular, present them as uncompetitive.
Earlier, TOMS did not apply if packages were being sold business to business in the UK. Chief Executive of ETOA, Tom Jenkins, said that TOMS is in dire need of reform. He also said that it was shocking to grant tax free status to foreign holidays while implying substantial tax on their tourism exports.