Content uploaded by Gor Aleksanyan
Author content
All content in this area was uploaded by Gor Aleksanyan on Nov 02, 2022
Content may be subject to copyright.
18 | ГЕОГРАФИЯ И ТУРИЗМ
тенденции в современном сервисе и туризме
ТЕНДЕНЦИИ В СОВРЕМЕННОМ СЕРВИСЕ
И ТУРИЗМЕ
D. Khojayan, M. Vardanyan, G. Aleksanyan УДК 338.46
Yerevan State University
THE NECESSITY OF APPLYING «CITY-TOURISM»
TAX IN THE REPUBLIC OF ARMENIA
The content of the city tourist tax and international experience of its is presented in the article. The basis,
resources and prerequisites of its application in Armenia are analyzed. Its geographical, economic and
legal aspects, application problems and potential risks are addressed and practical suggestions are made,
in particular: a) it is proposed to differentiate the tax rate according to international and local hotels, in which
the tax rate will depend on the star classification of the given establishment. However, in this case, there
may be inconsistencies between the classification of the hotel and the quality of the services provided, b) a
more effective way of taxing hotels in Armenia can be the following approach: to set the tax to be paid in the
amount of a certain percentage of the value of the selected room — per person, per night.
Keywords: City tourism, Armenia, tourist tax, hotel.
Д. Коджоян, М. Варданян, Г. Алексанян
Ереванский государственный университет
НЕОБХОДИМОСТЬ ПРИМЕНЕНИЯ ГОРОДСКОГО ТУРИСТИЧЕСКОГО НАЛОГА
В РЕСПУБЛИКЕ АРМЕНИЯ
В статье представлено содержание городского туристического налога и международный опыт его
применения. Анализируются основа, ресурсы и предпосылки его применения в Армении. Рассмотрены
его географические, экономические и юридические аспекты, проблемы применения и возможные
риски. Сделаны практические предложения, в частности: а) предлагается дифференцировать ставку
налога по международным и местным отелям, в которых ставка налога будет зависеть от звездности
данного заведения. Однако в этом случае могут возникнуть несоответствия между классификацией
гостиницы и качеством предоставляемых услуг, б) более эффективным способом налогообложения
гостиниц в Армении может быть следующий подход: установить налог, подлежащий уплате в сумма
определенного процента от стоимости выбранного номера — на человека в сутки.
Ключевые слова: городской туризм, Армения, налог, гостиница.
Problem statement. Taxation plays a par-
ticularly important role among government pol-
icies affecting the tourism sector. Firstly, from
the fiscal system standpoint, this is due to the
size of potential income and the high degree of
social acceptability. Moreover, taxation can sub-
stitute the price of public goods and services
consumed by tourists. Finally, there is also the
reformative (e.g. environmental) role of taxa-
tion to which these taxes may be directed.
Tourism taxes are not a new phenome-
non. Data from the European Tourism Asso-
ciation indicate that 19 of the 28 EU member
states, 150 European cities already have some
type of tourism tax (White Paper: Destina-
tion funding and the impact of tourism taxes,
2020). In major European cities the municipal-
ity charges visitors a tourism tax per person per
night (for instance in France tax rates fluctu-
ate between €0.20–€4.10). In many cases, tour-
ists unknowingly pay the extra cost in the form
of a few dollars tacked on to their hotel fee
or airfare. Prices vary by city and country, as
well as by the rate of accommodation. In some
areas price changing matches the high tourist
season. Others offer discounts or exemptions to
children, campers and business travelers (Busi-
ness Destinations, 2019). ©Khojayan D., Vardanyan M., Aleksanyan G., 2022
| 19
GEOGRAPHY AND TOURISM
trends in modern service and tourism
Studies show that tourism taxes are often
well received by consumers if they are presented
as a modest investment in targeted, restorative
activities and projects. Destinations and accom-
modation providers need to inform in advance
about the tax and especially for what purposes
it will be used. Many tourist destinations around
the world use some form of tourism tax to raise
additional funds that can help mitigate the often
negative effects of tourism and, in the case of
mass tourism, reduce visitor numbers.
The aim of this study is to highlight the advan-
tages and obstacles of the application of the city-
tourism tax in Armenia based on the global expe-
rience and the study of the current state.
The importance of city-tourism tax. The
city-tourism tax (also called accommodation tax,
hotel tax, room tax, bed tax) is the most common
special tax used by governments to ensure tour-
ism sustainability and enhance the quality of the
tourist experience (Gago, 2006) e. The city-tour-
ism tax is applied to hotel guests at a flat rate
or ad valorem based on the number of overnight
stays, sometimes also on the type and qualifi-
cation of the hotel. In addition to hotels, city
tax also applies to motels, guest houses, camp-
grounds, apartments, non-commercial and public
accommodations. Local governments use city
taxes to shift some of the tax burden to non-res-
idents, but such a measure is strongly rejected in
the hospitality industry and is seen as an unfair
tool that harms the competitiveness of compa-
nies (Aguilo, 2005).
The vast majority of specific taxes levied on
hotels and accommodations (such as overnight
stay, occupancy, or occupancy taxes) are admin-
istered at local and mostly municipal levels
(OECD, 2014). Local governments and NGOs in
favor of city taxes argue that the overnight
sector in destinations is better off thanks to the
use of tax revenues (Litvin, 2006). This alloca-
tion of council tax can create investments that
will generate higher returns for the hospital-
ity industry and local government in the long
term. Therefore, taxes collected from tourism
activities in destinations should be spent care-
fully and efficiently to ensure long-term reve-
nue growth (Cetin, 2014).
The amount of tourist tax varies from coun-
try to country and depends on the qualification
level and stars of the hotel facilities. For exam-
ple, in Vienna it varies from €0.50 to 3.2 % per
night, in Paris €0.20–€4.10, in Berlin: 5–7.5 %
of the room price, in Greece: €0.5–€4, Buda-
pest: 4 % of the room price, Rome: €0.28–€7 and
etc. (White Paper: Destination funding and the
impact of tourism taxes, 2020, p. 19).
The foundations of the city-tourism tax
in Armenia. In the case of Armenia, in order
to justify the introduction of the city-tourism
tax, it is necessary to present the current state
of tourism in the country. Tourism is considered
one of the fastest growing branches of Armenia’s
economy, showing growth trends year after year.
According to the data of the RA Statistical Com-
mittee, in 2019, the number of incoming tour-
ists in Armenia was about 1.89 million people
(Socio-economic situation of RA in January-
December 2019, 2020). Compared to the previous
year, the number of arrivals increased by 14.7 %.
Due to Covid-19, the tourism sector of Armenia
also recorded negative results. As can be seen in
Figure 1, in 2020, the number of incoming tour-
ists decreased by 80 % (Socio-economic situation
of RA in January-December 2020, 2021). In 2021,
a positive shift was observed in international
tourism, on the basis of which it can be assumed
that in the coming years the tourist flows visit-
ing to Armenia will restore the previous volumes
and continue to grow.
Armenia, as a touristic country, is most often
visited by the citizens of Russia, Georgia and
Iran. According to the data provided by the
Tourism Committee, most of the tourists who
visited Armenia in 2019, 855,612 people, were
Russian citizens (Tourism statistics of the RA,
2019). They are the ones who mainly provided
most of the tourist arrivals of Armenia in previ-
ous years as well. Next were the citizens of Geor-
gia — 344 thousand people, then Iran — about
160 thousand people (Tourism statistics of the
RA, 2019). Moreover, sixty-three thousand tour-
ists from the USA came to Armenia in 2019.
According to the Ministry of Economy, among
the tourists arriving in Armenia, about 31 % are
Diaspora Armenians and 69 % were foreigners
(Tourism statistics of the RA, 2019). Almost half
of tourists in Armenia were attracted by cultural
tourism, 19 % came to see the nature of Armenia,
16 % came for entertainment. The figure below
shows the percentage share of each sub-sector
of tourism in the economy of Armenia.
According to the ‘Survey of international
visits to Armenia for the January-December
2013’ program, the average expenses for one
inbound tourist were 726.1 USD and the aver-
age daily expenses were 41.8 USD; the aver-
age duration of the visit was 17.4 days (Survey
of international visits to Armenia for the Jan-
uary-December 2013, 2014, pp. 54–56). How-
ever, the inbound tourists’ cost structure
and the average duration of the visit differed
depending on the type of visit (travel package
or independent). On avera ge, visitors to Armenia
with a travel package spent 1331.4 USD (aver-
age duration: 7.7 days, average daily expend-
iture: 172.2 USD). The average expenditure of
one inbound tourist traveling independently
20 | ГЕОГРАФИЯ И ТУРИЗМ
тенденции в современном сервисе и туризме
was $712.6 (average duration: 17.7 days, aver-
age daily expenditure: $40.3), and the average
expenditure of package and independent travel-
ers was $727.7 (average duration: 17.4 days,
average daily expenditure: 41.9 dollars) (Survey
of international visits to Armenia for the Janu-
ary-December 2013, 2014, pp. 54–56)1
The city-tourism tax can be applied as a local
tax at the level of the entire country and can
also be applied in specific urban destinations. As
for Armenia, the basis of this this study was the
urban communities and their tourism potential
expressed by the number of hotel facilities in
the communities, the number of tourists staying
in these facilities and the income received. From
the perspective of tax policy, the city of Yerevan
was considered both in the context of local tax-
ation and as a separate entity.
Since globally the city-tourism tax is mainly
collected in hotels, it is also recommended to
consider hotel facilities in Armenia as a link for
tax collection, which stands between the tourist
and the relevant state body.
About 870,000 tourists visited Armenia in
2021, but only 32 % of them stayed in hotel facil-
ities and the remaining 68 % stayed in a friend’s
or relative’s house, rented apartments, etc (Some
indicators of international tourism in January-
December 2019–2020). The apartments given to
tourists on a rental basis by various individuals
or organizations have also increased, but they
were not included in statistical calculations and
were not considered as overnight accommoda-
tion facilities by tourists. Therefore they cannot
be included in the taxation system until their
activities are legally regulated.
According to Article 8, Clause 2 of the RA Law
«On Tourism and Tourist Activities» (adopted
on December 17, 2003) hotel facilities in RA are
hotels, motels, hotel-type resorts, sanatoriums,
holiday and specialized camps or houses, board-
ing houses, tourist, youth and camp residences
(complexes), tourist houses2. However, RA leg-
islation from 2003 does not define hostels as a
type of hotel facility which in fact operate in the
country. Five hostels operating in Yerevan are
registered on www.hotel.am directory of Arme-
nian hotels. Hence, there are facilities providing
hotel services in Armenia that are not defined
by the legislation as of 2022.
Since data collection by the statistical ser-
vice was carried out in hotel facilities defined
by legislation, the information on tourists stay-
ing in «actual» operating hostels was not being
recorded. Therefore, in order to apply the city-
tourism tax in hostels, it is necessary to make
legislative changes, which will also contribute to
better statistical calculations.
Below is presented the distribution of hotel
facilities in Armenia and the revenues received
by regions and the city of Yerevan.
After Yerevan, the number of hotel establish-
ments is large in Kotayk (93), Tavush (76) and
Gegharkunik (40) in the mentioned period of
2018–2020. Yerevan is certainly the leader in
1 22,100 incoming tourists participated in the survey.
2 RA Law on Tourism and Tourist Activities. 2003. Retrieved from:
https://www.arlis.am/DocumentView.aspx?DocID=64659
Figure 1. The number of inbound and outbound tourists in Armenia in 2010–2021
Source: RA socio-economic situation 2010–2021
Figure 2. The most preferred types of tourism by tourists
visiting RA according to the Tourism Spotlight Survey
Source: 2020-2030 strategy project for the development
of tourism in Armenia
0
200 000
400 000
600 000
800 000
1 000 000
1 200 000
1 400 000
1 600 000
1 800 000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Inbound
Outbound
729260
715470
832746
830492
963035
965372
1081984
1081021
1203745
1198060
1192119
1187369
1259657
1262687
1484779
1481755
1651782
1622791
1894377
1867888
365216
346093
870308
423380
Longterm
Medical or recreational
Adventure
Business
Entertainment
Nature
Cultural
2%
4%
19%
16%
7%
3%
49%
| 21
GEOGRAPHY AND TOURISM
trends in modern service and tourism
terms of revenue from hotel facilities, followed
by Kotayk and Tavush. Although there has been
an increase in hotel facilities in the regions as
well during the mentioned period, it lags behind
Yerevan in terms of its growth rate. According
to the data of the Statistical Committee of RA,
in 2020 847 hotel facilities operated in Armenia
of which 480 were in Yerevan and the remaining
367 were in the regions. In 2020, the hotel facil-
ities centered in Yerevan provided 11,836.8 mil-
lion drams of revenue, i.e. 72% of the entire turn-
over (Yerevan RA capital in figures, 2021, p. 119).
In case of tourists staying in hotel facili-
ties located in regions, in 2019 the most signifi-
cant indicators were recorded in Tavush (24,559),
Shirak (11,868), Vayots Dzor (11,008) and Kotayk
(5,778) regions (Territorial statistics of RA Sta-
tistical Committee, 2019), where the most visited
tourist destinations of RA are also located such
as Dilijan, Gyumri, Jermuk, Tsaghkadzor cities.
Comparing the number of tourists staying in
the hotel facilities of the region to the number
of hotel facilities in the region it appears that
Jermuk accounts for 70% of the tourists stay-
ing in the region. The same can be said about
Tsaghkadzor in Kotayk region (about 90%), Dili-
jan in Tavush region (about 86 %) (Figure 3). It
should also be noted that the mentioned urban
communities are considered established tourist
destinations in Armenia, and offer unique tour-
ist products, .The latter serves as the basis for
organizing overnight stays for tourists in the
mentioned destinations.
Ministry of Territorial Administration and
Infrastructure there are 45 urban and 480 rural
communities in Armenia as of 2021. Urban pop-
ulation is 63.3% and rural population is 36.7 %.
Table 1
Data of hotel facilities according to regions and Yerevan.
Source: Territorial statistics of RA Statistical Committee
Number of hotel facilities The income.
million drams
2018 2019 2020 2018 2019 2020
Republic of Armenia 652 769 847 3 4 497.5 41794.1 16485.9
Yerevan 390 410 480 27879.9 33772.2 11836.8
Aragatsotn 5 7 7 106.2 87.7 40.0
Ararat 9 8 8 72.1 80.4 64.3
Armavir 4 15 16 43.1 41.7 30.1
Gegharkunik 11 39 40 274.2 735.9 341.2
Lori 19 30 30 323.7 354.6 204.9
Kotayk 65 91 93 297 7.4 3220.0 2001.3
Shirak 28 33 33 400.5 576.9 290.9
Syunik 37 38 38 629.4 830.5 410.7
Vayots Dzor 19 24 26 700.5 588.0 261.5
Tavush 65 74 76 1090.5 1506.2 1004.2
Number of rooms, unit3 10274 11348 9635
3 Statistical yearbook of Armenia 2021 // URL: https://www.
armstat.am/file/doc/99526853.pdf
Figure 3. The distribution of tourists staying in RA urban communities in 2019 and the number of likely overnight stays
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dilijan
Ijevan
Abovyan
Tsaghkadzor
Sevan
Eghegnadzor
Vayk
Jermuk
Goris
Kapan
Meghri
Sisian
The ratio of the number of tourists staying in hotel facilities of regions in 2019 to the number of tourists staying in each region expressed as percentages
Number of likely overnight stays of tourists in hotel facilities of urban communities compared to other urban communities of the region, expressed as percentages
Gyumri
Vanadzor
Alaverdi
Stepanavan
100%
18%
3% 3% 3%
38% 38%
9% 1% 1% 1% 1%
17%
36%
27% 36%
86%
14%
8%
92% 100%
15% 15%
70% 65%
15%
4%
15%
22 | ГЕОГРАФИЯ И ТУРИЗМ
тенденции в современном сервисе и туризме
35 % of the population is concentrated in the
capital Yerevan, making it the most populated
city of the country (Number of permanent pop-
ulation of the republic of Armenia as of January
1, 2021). In case of setting a local tax for increas-
ing the financial capacity of the community and
promoting tourism in the communities, it is nec-
essary to take into account that in 2019 only
3.5 % of inbound tourists stayed in hotel facil-
ities located in the regions of Armenia (Yerevan
RA capital in figures, 2021).
The largest touristic flows belongs to Yere-
van, and the majority of the country’s hotels are
concentrated in Yerevan. In 2019, the number
of hotel rooms in Yerevan reached 5427, record-
ing an increase of about 20 % (Organizations pro-
viding hotel services, 2020). The rapidly grow-
ing demand for tourism services has led to an
increase in the number of hotels as well.
The occupancy rate in Yerevan’s leading
hotels is on average 70–80 %, but it is signifi-
cantly lower in other regions. The average occu-
pancy of hotels in the world ranges from 50–70 %
depending on the season and location (Cobbold,
2021). A high level of employment in regions is
observed only in active tourist centers (Jermuk:
65 %, Tsaghkadzor: 50 %)4. The low employment
rate is also due to the high seasonality of tour-
ist flows. As a rule, there is a shortage of hotel
rooms during the peak period, while the hotels
are mostly empty during the off-season. The low
level of employment hinders the development
of large hotels in the regions. Meanwhile, large
hotels can create opportunities for the devel-
opment of the hotel segment in regions. In this
case, if appropriate tax policy is developed, some
part of the income from the city-tourism tax
can be provided to hotel facilities for the forma-
tion of an additional fund during the low season,
which will contribute to the stable price policy
conducted by hotel facilities, regardless of sea-
sonality. This can also be used by government
agencies as an incentive to initially motivate
hotel properties in accepting the tax.
The population of Yerevan is 1084.6 thou-
sand people as of October 2016, which is about
36 % of the total population of the country
(2959.7 thousand people) (The permanent pop-
ulation of RA as of January 1, 2020). In 2019, the
volume of services in Armenia was 1993439.3
million drams, and in Yerevan — 1661801.9 mil-
lion drams (83.3 % of the total) (Volume of ser-
vices by regions and Yerevan city, 2020). This
dominance of services in Yerevan also creates
favorable conditions for the development of
the tourism sector. Since Yerevan is included
in almost all tourist packages to Armenia, the
number of visitors to Yerevan and Armenia are
often equated.
The tax rate of hotels in the European coun-
tries is mainly defined according to their qual-
ification or star order. The application of this
method in Armenia, however, requires a uniform
legal regulation of the hotel sector, because the
qualification of hotels in Armenia is carried out
on a voluntary basis.
According to the 2021 data of the Ministry of
Economy, there were 8 hotel objects with quali-
fication in RA: 6 hotels, 1 boarding house, 1 tour-
ist house.
There are 10 hotels belonging to 8 interna-
tional hotel chains operating in Yerevan, which
have 3–5 star classification according to inter-
national and local standards. The quality of ser-
vices provided in other hotel facilities is mostly
classified based on its own standards.
Suggestions
The proposed approaches to price policy can
be applied both in case of local application of
city-tourism tax and in case of its application
only in Yerevan.
1. It is proposed to differentiate the tax rate
according to international and local hotels, in
which the tax rate will depend on the star classi-
fication of the given establishment. However, in
this case, there may be inconsistencies between
the classification of the hotel and the quality of
the services provided. Following the example of
4 The hotel sector in Armenia // URL: http://www.isc.am/hy/
inner/473 (15.11.2021)
Figure 4. The number of permanent population in RA by regions
and Yerevan as of January 1, 2021
Source: RA Statistical Committee
Tavush
Vayots Dzor
Syunik
Shirak
Kotayk
Lori
Gegharkunik
Armavir
Ararat
Aragatsotn
Erevan
2%
4%
9%
9%
8%
7%
8%
8%
4%
4%
37%
| 23
GEOGRAPHY AND TOURISM
trends in modern service and tourism
European countries, 500 drams (€0.92) can be set
for 2* and 3* local hotel facilities, 1000 drams
(€1.83) for 3-4* international chain and 4*
local hotel facilities, for local and international
5* hotels, set a rate of 1500 drams (€2.75) (per
person per night).
2. A more effective way of taxing hotels in
Armenia can be the following approach: to set
the tax to be paid in the amount of a certain per-
centage of the value of the selected room - per
person, per night. That is, if, for example, a person
spends a night at the cost of 30,000 drams, then
in case of a 3% tax, the tourist will pay an addi-
tional 900 drams. The amount payable will vary
depending on the value of the selected room, not
the star rating of the hotel.
Since there are no clear statistics on what
kind of rooms tourists stay in hotel facilities and
for how many days, it is therefore not possible
to calculate how much money will be generated
from the application of the city-tourism tax.
An important question is who will bear the
hotel tax, depending on the elasticity of supply
and demand for the mentioned services and the
sales strategy of the hotel properties. If the
prices of hotel services are increased and the
local tax shown in a separate line in the total
account, then the tax must be paid by the tour-
ist. If the prices are kept the same and the tax
is absorbed, the hotel owner will pay the hotel
tax at the expense of the profit. The demand
for hotels that raise prices will be lower than
the demand for competitive hotels, which
decide to keep prices unchanged. However, it is
important to consider that the demand for low-
end hotels is relatively elastic to price changes,
while the demand for luxury hotels is relatively
inelastic to prices. This means if low-end hotels
increase their prices, it will greatly affect the
demand for hotel services, while a price increase
will have little effect on the demand for high-
end hotels.
The control and management of the money
received from the city-tourism tax in Yerevan
will be carried out by the relevant departments
of the Yerevan Municipality, the legal basis of
which is derived from the law on local self-gov-
ernance in Yerevan5. The received revenues can
enter the budget of Yerevan and be allocated to
the tourism development projects of the city of
Yerevan. In 2019, the tourism development con-
cept of the city of Yerevan, developed by the ini-
tiative of the tourism department of the munic-
ipality, mentions the funds obtained from the
application of the tourist tax as a source of addi-
tional financing for the appropriate design and
modernization of the existing archaeological
and historical-cultural monuments, parks, recre-
ational places and parks, streets in the city (Con-
cept of tourism development of Yerevan city,
2019).
There are such touristic resources in Arme-
nia, which can be of primary importance for the
development of tourism, but due to the scar-
city of financial flows, the cultural and religious
structures are in need of repair and restora-
tion, and the existing infrastructures are poorly
developed. For this purpose, it is proposed to use
the financial resources received from the city-
tourism tax not only for tackling tourism related
problems in the city of Yerevan but also invest
them for the development of the tourism of the
entire country. According to the RA 2021 state
budget law, 7,280,285.4 thousand drams were
provided for the implementation of the tour-
ism development program, of which 5,824,228.3
thousand drams were loan funds and 1,456,057.1
thousand drams were co-financed6. The money
received from the city-tourism tax can reduce
the share of credit funds provided by the state
to the tourism sector.
Discussion
Based on the data of the conducted research,
it can be argued that the application of the
city-tourism tax is still more appropriate to
apply only in the city of Yerevan, although the
5 The law on local self-governance in Yerevan. 2008: Re-
trieved from // URL: https://www.arlis.am/documentview.
aspx?docid=73279 (25.10.2021)
6 Law on the RA 2021 state budget. https://www.gov.am/files/
docs/4337.pdf
Table 2
The list of qualified hotel facilities in RA according to the RA Ministry of Economy, 2021
Name of the facility Qualification and type
of hotel facility
Location
Multi Grand Hotel 5* «Deluxe» hotel Kotayk region, Verin Ptghni
Opera Suite Hotel 4* hotel Yerevan
Central Hotel 4* hotel Yerevan
Ani Plaza 4* hotel Yerevan
Ararat Hotel 4* hotel Yerevan
§Dghyak, boarding house Class III boarding house Tavush region, Dilijan
§Takht-House Class III tourist house Tavush region, Dilijan
24 | ГЕОГРАФИЯ И ТУРИЗМ
тенденции в современном сервисе и туризме
city-tourism tax has many positive aspects. Not-
withstanding, its application in Armenia may
face many challenges:
This type of tax can have a direct impact
on the number of tourists visiting Armenia.
Since city tax is not applied in neighboring
countries (Georgia (9.3 million tourists), Azer-
baijan (3.1 million tourists)), to make more accu-
rate predictions, it is necessary to conduct large-
scale surveys among tourists and find out their
willingness to pay the tax.
Disagreements may arise between hotel-
iers and government agencies over the increase
in overall prices of hotel services due to the tax.
Moreover, it can lead to the low profitability of
promotion mechanisms, the drop in demand for
hotel facilities in urban communities due to the
tax, and other possible issues.
In order to promote the use of city-tourism
tax in hotel economy facilities, the state can
apply various measures. For example, in the case
of developing an appropriate tax policy, some
part of the income from the city-tourism tax can
be provided to hotel facilities for the formation
of an additional fund during the low season, or
depending on the type of tax paid by the hotel
facility, tax benefits can be applied.
In order to introduce the city-tourism tax
as a local tax in the urban communities of Arme-
nia, it is necessary to make changes in the tax
code and develop a draft of legislative amend-
ments. The adoption of the latter will allow to
ensure the application of the tax at the local
level. In case of application of the tax the
organization and control of the tax collection
should be properly organized by the municipal
governments.
If the city-tourism tax is applied only in Yere-
van, it will also be necessary to make legislative
changes that will allow the tax to be applied only
within the city of Yerevan. This can be a special
type of tax that can later be applied in other
urban communities, for example in Jermuk, Dili-
jan, Tsaghkadzor, which have great touristic
potential.
In case of application of city-tourism tax
as a local tax throughout the country, each
urban community will spend the money gen-
erated from the tax for the solution of tourism
problems and development of tourism in its com-
munity. In this case, a disproportional distribu-
tion of income between urban communities can
occur due to the large difference in the number
of tourists staying in the communities.
When applying the tax only in Yerevan, the
authority to deal with the collection of the
tax and the use of the received funds belongs
to the Yerevan Municipality. Collected taxes
entering Yerevan’s budget are distributed to
relevant sectors. In the case of city-tourism tax
they should be used for developing the poten-
tial of tourism in the city (or in Yerevan). How-
ever, in this case, the money received from the
tax cannot be used in the development or res-
toration projects of various tourist destinations
of the country. One of the options for solving
the problem can be the transfer of the money
received from the tax by the municipality to the
Treasury of the Republic of Armenia, from where,
according to the government’s annual budget
project, the money will be transferred to the
Ministry of Economy and will be allocated to the
State Tourism Committee. The latter taking into
account the priorities of the sector defined by
its annual development plans, will provide appro-
priate funds for various activities. However, it is
necessary to set a certain minimum amount that
will be directed to the development of tourism
in specific regions and the rest for general activ-
ities by the committee.
Since the highest indicators of the tour-
ism sector in Armenia were recorded in 2019,
the conclusions and suggestions given in the
research work were based on the statistical data
of that year.
Dianna Khojayan
student of Yerevan State University,
dianna.kh@mail.ru
Marianna Vardanyan,
student of Yerevan State University,
mariannvard@gmail.com
Gor Aleksanyan,
аssistant professor of Yerevan State University,
goraleksanyan@ysu.am
References:
1. Aguilo, E. A. (2005). The Short-Term Price Effect
of a Tourist Tax through a Dynamic Demand Model:
The Case of the Balearic Islands. Tourism Management
26, 359-365.
2. Business Destinations. (19 August, 2019). Retrieved
2 October, 2021, from: https://www.businessdestinations.
com/destinations/destinations-introduce-tourist-tax-in-
attempt-to-control-swelling-visitor-numbers/
3. Cetin (2014). Sustaining tourism development
through city tax: The case of Istanbul. e-Review of Tourism
Research 11(1), 29-31. Retrieved 11 November, 2021, from:
https://www.researchgate.net/publication/286769590_
Sustaining_tourism_development_through_city_tax_The_
case_of_Istanbul
4. Cobbold, L. (2021, May 13). Global hotel occu-
pancy. Retrieved November 15, 2021, from Amade-
us: https://amadeus.com/en/insights/press-release/
rebuilding-hospitality-research-report
| 25
GEOGRAPHY AND TOURISM
trends in modern service and tourism
5. Concept of tourism development of Yerevan city.
(2019). Retrieved from https://www.yerevan.am/uploads/
media/default/0001/94/61229b9495224af7468c26d24738e8
646d28bee8.pdf
6. Gago, A. L. (2006). Taxing Tourism in Spain: Results
and Recommendations. Working Paper No. 40; Milano: Fon-
dazione Eni Enrico Mattei.
7. Litvin, S. W. (2006). Expenditures of Accommoda-
tions Tax Revenue: A South Carolina Study. y. Journal of
Travel Research 45.
8. Number of permanent population of the republic of
Armenia as of January 1, 2021. (n.d.). Retrieved from Sta-
tistical Committee of the RA: https://armstat.am/file/arti-
cle/nasel_01.01.2021.pdf
9. OECD. (2014). Taxation and tourism. OECD Tour-
ism Trends and Policies 2014. doi: https://doi.org/10.1787/
tour-2014-6-en
10. Organizations providing hotel services. (2020). RA
socio-economic situation in 2020 in January-May. Retrieved
from Statistical Committee of the Republic of Armenia:
https://armstat.am/file/article/sv_05_20a_460.pdf
11. RA Law on Local Self-Government in the City of Yere-
van https://www.arlis.am/documentview.aspx?docid=73279
12. RA Law on Tourism and Tourist Activities: https://
www.arlis.am/DocumentView.aspx?DocID=64659
13. Socio-economic situation of RA in January-Decem-
ber 2019. (2020). Retrieved from Statistical Committee of
the Republic of Armenia: https://www.armstat.am/file/
article/sv_12_19a_421.pdf
14. Socio-economic situation of RA in January-Decem-
ber 2020. (2021). Retrieved from Statistical Committee of
the Republic of Armenia: https://www.armstat.am/file/
article/sv_12_20a_421.pdf
15. Some indicators of international tourism in Jan-
uary-December 2019-2020. Retrieved from RA Sta-
tistical Committee.: https://armstat.am/file/article/
sv_01_22a_421.pdf
16. Survey of international visits to Armenia for the
January-December 2013. (2014, March). Retrieved from
https://www.mineconomy.am/media/2076/1456.pdf.
17. Territorial statistics of RA Statistical Commit-
tee. (2019). Retrieved from https://www.armstat.am/
am/?nid=130
18. The permanent population of RA as of January 1,
2020. Retrieved from RA Statistical Committee: https://
armstat.am/file/article/nasel_01.01.2020.pdf
19. Tourism statistics of the RA. (2019). Retrieved
in 11, October, 2021, from Tourism Committee. Ministry
of economy of the RA: https://www.mineconomy.am/
page/89
20. Volume of services by regions and Yerevan city.
(2020). Statistical yearbook of Armenia. Retrieved from
Statistical Committee of RA: https://armstat.am/file/
doc/99520958.pdf
21. White Paper: Destination funding and the impact
of tourism taxes. (2020, November). Taxing for Better Tour-
ism? Retrieved July 22, 2022, from GROUP NAO: https://
groupnao.com/wp-content/uploads/2020/11/TOURISM-
TAXES-BY-DESIGN-NOV12-2020_rettet-compressed-2.pdf
22. Yerevan RA capital in figures. (2021). Hotel facil-
ities. Retrieved from Statistical Committee of RA: https://
armstat.am/file/doc/99527598.pdf
