Starting from 01 January 2011 local councils may decide to introduce a tourism duty. According to the Tax Code of Ukraine (the “Tax Code”), citizens of Ukraine, foreigners, as well as stateless persons who stay in the territory of a region where a tourism duty has been introduced shall pay the tourism duty (the “Tourism Duty”).

The Tax Code expressly states the categories of people exempt from the Tourism Duty, namely: (i) persons who permanently rent residential property, (ii) disabled individuals, (iii) handicapped children and persons who accompany them (no more than one carer), (iv) persons who travel on business trips, (v) war veterans, (vi) people who travel to sanatoria, (vii) emergency workers of the Chernobyl consequences.

The Tax Code provides for the collection of Tourism Duty according to the decisions of local councils in an amount between 0.5% to 1% of the cost of staying in hotels, campgrounds, motels, hostels other hotel, and spa facilities (the “Accommodation”). At the discretion of the city council, the Tourism Duty may be deducted the tax agents such as: Accomodation administrators, accommodation mediation organizations, legal entities or individual businessmen authorised by the village, town or city council to collect the applicable duty on the basis of a contract concluded with the relevant council.

The cost of staying in Accommodation does not include accommodation expenses for meals or personal services (laundry, cleaning, ironing clothes, shoes or clothes repair), phone bills, processing of passports, entry permits (visas), mandatory insurance, the cost of oral and written translation, and other documented expenses related to the rules of entry to the territory of a region which has implemented the Tourism Duty.

As of 01 of February 2011 the cities where the Tourism duty was implemented are: Kyiv, Lviv, Odesa, Sevastopyl, Zaporozhye, Lutsk, Ternopyl, Ivano-Frankyvsk, Kamyaanets-Podylskyi. The rate of the Tourism Duty for all these cities is 1% of the cost of staying in Accomodation.

Thus, the Tourism duty is a local fee implemented by the Tax Code rather than a national government tax and starting from 01 January 2011 such duty shall be paid by tourists who stay in the territory of a region of Ukraine where the Tourism Duty is implemented by its city council.