The Party Is Over?
Farmsteads will soon have to play by new rules
Over the past ten years, farmsteads have become one of the most recognizable brands of the Belarusian travel industry. The successes of rural tourism are obvious. However, the Belarusian Sport and Tourism Ministry warns against turning a blind eye on the problems that “tarnish the rustic landscape”. With this in mind, it has initiated amendments to Decree No. 372 that regulates this sector. The innovations have attracted public attention. Both the Ministry of Taxes and Duties and the State Control Committee also expressed their views on the business operating under the guise of rural tourism. What aspects of the proposed draft decree have gone unnoticed? How many farmsteads will have to apply for self-employed businessman licenses and how do other countries develop rural tourism?
Once the draft decree was submitted for public discussion, the attention was immediately drawn to a possible ban on weddings and dinner events. To be more precise, the draft decree suggests considering entertainment services provided by farmsteads as a business activity. The Sport and Tourism Ministry says that in fact farmsteads are not allowed to provide entertainment services today. However, the wording “other services” allows the owners of farmsteads to provide almost any kind of services. The banquet halls and saunas have nothing to do with rural tourism, the Sport and Tourism Ministry believes. The ban may apply to not only wedding parties but also birthday parties and funeral receptions. It is important to note that the ban will not apply to sport events, recreational and cultural activities.
At first, there was a suggestion to allow authentic weddings and ceremonies. However, the question is who will determine the degree of “authenticity” of a wedding party? The activities related to the organization of workshops, seminars, educational events are also unregulated. In fact, these are not tourist services either. And what about birthday parties? If they fall in the “anniversaries and other celebrations” category, then they are subject to the ban. Does this mean that a group of 5 or 6 persons will have no chance of having a birthday party on a farm? Given all these questions and uncertainties, there is a clear need to elaborate the list of services that farmsteads can provide.
The Ministry of Duties and Taxes also wants to make the list of services more detailed to prevent divergence in interpretations by both farmstead owners and watchdogs. This will protect rural and ecotourism entities from uncertainty, surprise inspections and possible penalties. Another novelty in part of taxes is that farmstead owners will have to retain all tourist contracts for three years after they pass a tax inspection.
At the same time, there are no plans to increase the tax burden. The Ministry of Taxes and Duties says this measure is unnecessary. Farmstead owners pay only one base amount to the state budget annually (one base amount is Br21). The practice was introduced in 2006, and has remained in force since then. The tax burden on farmstead owners makes up 0.003% today. In 2006 it was 2%, according to the official rural and ecotourism statistics. Farmsteads are inspected less frequently than other economic entities. The rural hospitality industry is considered the lowest-risk group, with inspections as infrequent as once in five years. The Ministry of Taxes and Duties noted that in early 2016 there were over 2,200 farmsteads in Belarus. Two thirds, or nearly 1,500, of them are currently in service.
While some farmsteads will be forced to reduce the list of services they offer, the new decree will finally give the estates located in the Naroch Lake resort area the preferences that the farmsteads across the country have been enjoying for quite some time. For now, these estates have no such preferences, and it is hardly possible to say that their location in the resort area automatically gives them economic benefits that other farmsteads cannot get.