• About Us
  • Contact Us
  • Privacy Policy
  • Terms
  • Unsubscribe
No Result
View All Result
Live and Invest Overseas
FREE REPORT
BEST PLACES TO RETIRE
*No spam: We will NEVER give your email address to anyone else.
  • HOME
  • COUNTRIES
    • Top Destinations
      • Portugal
      • Panama
      • Belize
      • France
      • Colombia
      • Dominican Republic
      • Thailand
      • Mexico
      • Spain
      • Argentina
    • Browse All Countries
    • Best For
      • Retire Overseas Index
      • Health Care
      • Cost of Living
      • Investing in Real Estate
      • Editor’s Picks For Retirement
      • Establishing Residency
      • Starting an Online Business
      • Single Women
      • Playing Golf
  • BUDGETS
    • Super Cheap ($)
      • Cuenca, Ecuador
      • Chiang Mai, Thailand
      • The Philippines
      • Las Tablas, Panama
      • Granada, Nicaragua
    • Cheap ($$)
      • Algarve, Portugal
      • Medellin, Colombia
      • Boquete, Panama
      • Carcassone, France
      • Buenos Aires, Argentina
    • Affordable ($$$)
      • Abruzzo, Italy
      • Barcelona, Spain
      • Las Terrenas, Dominican Republic
      • Puerto Vallarta, Mexico
      • Costa de Oro, Uruguay
    • Luxury On A Budget ($$$$)
      • Ambergris Caye, Belize
      • Paris, France
      • Panama City Beach Area
  • Real Estate
  • ARCHIVES
    • Living & Retiring Overseas
    • Raising A Family Abroad
    • Foreign Residency & Citizenship
    • Offshore Diversification
    • Our Latest On Coronavirus ⚠️
  • Making Money
    • International Real Estate
    • Banking
    • Employment
    • Investing
  • CONFERENCES
  • BOOKSTORE
Live and Invest Overseas
  • HOME
  • COUNTRIES
    • Top Destinations
      • Portugal
      • Panama
      • Belize
      • France
      • Colombia
      • Dominican Republic
      • Thailand
      • Mexico
      • Spain
      • Argentina
    • Browse All Countries
    • Best For
      • Retire Overseas Index
      • Health Care
      • Cost of Living
      • Investing in Real Estate
      • Editor’s Picks For Retirement
      • Establishing Residency
      • Starting an Online Business
      • Single Women
      • Playing Golf
  • BUDGETS
    • Super Cheap ($)
      • Cuenca, Ecuador
      • Chiang Mai, Thailand
      • The Philippines
      • Las Tablas, Panama
      • Granada, Nicaragua
    • Cheap ($$)
      • Algarve, Portugal
      • Medellin, Colombia
      • Boquete, Panama
      • Carcassone, France
      • Buenos Aires, Argentina
    • Affordable ($$$)
      • Abruzzo, Italy
      • Barcelona, Spain
      • Las Terrenas, Dominican Republic
      • Puerto Vallarta, Mexico
      • Costa de Oro, Uruguay
    • Luxury On A Budget ($$$$)
      • Ambergris Caye, Belize
      • Paris, France
      • Panama City Beach Area
  • Real Estate
  • ARCHIVES
    • Living & Retiring Overseas
    • Raising A Family Abroad
    • Foreign Residency & Citizenship
    • Offshore Diversification
    • Our Latest On Coronavirus ⚠️
  • Making Money
    • International Real Estate
    • Banking
    • Employment
    • Investing
  • CONFERENCES
  • BOOKSTORE
No Result
View All Result
Live and Invest Overseas
No Result
View All Result
Home Retirement/Living

How to Avoid Add-On Taxes Abroad

Paul Terhorst by Paul Terhorst
Jul 30, 2013
in Retirement/Living
0
You can lose some dollars if you don't Avoid Add-on Taxes Abroad
208
SHARES
3k
VIEWS
Share on FacebookShare on Twitter

Avoid Plus-Plus Prices

Fancier hotels and restaurants in Asia and Latin America, these days, often quote prices “plus plus” or sometimes “plus plus plus.”

Read the fine print and you’ll see the hotel adds as much as 23% for tax and 15% for service. The third plus could be for any other local tax.

Problem is, these plus-plus charges amount to a minor pretense. Hotels and restaurants add them to bills to avoid displaying higher room rates and menu prices. I’d compare them to airline fees. Carriers invent new fees all the time to be able to display lower ticket prices.

Let’s start with the hotel tax, sometimes referred to as “government tax.” In my experience the tax add-on charge most often reflects a value-added tax (VAT). A value-added tax is levied on the producer, not the consumer. The producer deducts value added taxes paid by suppliers. So, if a hotel pays US$100 in VAT, for example, it deducts, say, US$30 of VAT paid to food purveyors, linen services, and other providers. To charge you, the customer, the entire US$100 misleads you, the consumer, into thinking the hotel will pay that US$100 to the government, rather than US$70.

Even charging the US$70 makes little sense to me. Again, the VAT technically falls on the hotel, not its customers. Hotels should properly view the tax as one of their operating costs rather than a customer add-on.

The French agree. France was the first country to adopt VAT. France prohibits breaking out the VAT and charging the customer separately. Why make a customer pay for someone else’s tax? Most European countries follow the same line of thinking.

But in Asia and Latin America, the big players–the Hyatts and Sheratons, the Peninsulas and Orientals, the Four Seasons and others–often add the entire VAT to customer bills at check-out. Complacent governments either permit the practice or refuse to enforce laws that ban it. After all, hotels make big investments in these countries, and governments promote big investments.

Second, and more important, hotels worldwide know they can get away with it. Most customers live in, or have visited, the United States. Most U.S. states charge retail sales taxes. So, hotels and their bars and restaurants figure customers have become accustomed to a sales-tax add-on. Their customers will rarely complain, figuring they’re paying a sales tax even when there is no sales tax. Presto, the VAT becomes a sales tax. The two taxes are closely related, so when customers see a “government tax” add-on, they just shrug.

You often see service charges added, too. Again, the service charge comes from profit-oriented minds rather than local law or customs. Most countries in Asia lack the notion of tipping or paying extra for service. But since travelers in the United States have become used to tipping, and since so many travelers have been to the United States, big hotels figure they can get away with the service add-on.

In the case of service charges, unions around the world support the idea. After all, sometimes, at least some of the service charge gets kicked back to employees. Unions figure the kickback might amount to extra salary, although presumably hotels use the kickback to justify paying lower salaries in the first place.

So, how do you fight misleading add-ons for taxes and service? You don’t. If you complain, management will likely have a hard time even understanding you, they’ve become so used to the practice.

Instead, you can avoid dealing with plus-plus providers. In general only global companies add the charges. Very few locals have adopted the practice. Stick with the noodle shop around the corner rather than the plus-plus noodle shop in the Marriott.

In our case, when we wander into a hotel, bar, or restaurant and see plus-plus pricing, warning bells go off: “I’m in a place that caters to tourists, not locals. Management chooses to follow a misleading practice of add-on pricing.”

We may decide to stay in the place. A minor pretense is, after all, minor. But we prefer local places, and being treated like locals, and avoiding the pretense altogether.

Paul Terhorst

Continue Reading: Can I Find A Safe Short-Term Rental In Panama That’s On The Water?

Tags: Hotels In AsiaHotels In Latin AmericaPaul TerhorstTaxestaxes abroadTraveling In AsiaTraveling In Latin America
Share83Tweet52
Previous Post

The Man Who Is Too Fat For New Zealand

Next Post

How Do I Figure My Tax Home If I Spend Time In Different Countries Overseas?

Paul Terhorst

Paul Terhorst

Paul Terhorst and his wife, Vicki, retired young and can now be found traveling the globe. These perpetual travelers have been everywhere from Chiang Mai, Thailand to Paris, France, and beyond. Paul regularly writes for the retirement and investing publications of Live and Invest Overseas.

Related Posts

Thai style garden located in Royal Park Rajapruek, Chiang Mai, Thailand.
Investing

The Best Way To Beat Inflation For Retirees

by Kathleen Peddicord
June 26, 2022
0

Inflation is running at better than 8%... the greatest rate in more than 40 years. Your weekly grocery shop is...

Read more
Guanajuato, scenic city lookout near Pipila

How To Love Your Life Abroad After The Honeymoon Period Is Over

June 24, 2022
Taipei's City Skyline at sunset with the famous Taipei 101

The Top Affordable Places To Retire In Asia And Live Well

June 19, 2022
A grid with several Latin American countries

Finding The Best Places To Live In Latin America

June 9, 2022
Palms and beach at Caye Caulker island, Belize

Choose The Lifestyle You Want In Belize

June 6, 2022
People enjoying a tropical Caribbean beach with white sands and clear waters

Move To Latin America And Retire In Style Without Compromise

May 25, 2022
Exotic wooden huts on the water, Maldives

How To Move Overseas Despite A Pandemic

May 24, 2022
Next Post
usa flag in the breeze

How Do I Figure My Tax Home If I Spend Time In Different Countries Overseas?

Start Your New Life Today, Overseas

A world full of fun, adventure, and profit awaits! Sign up for our free daily e-letter, Overseas Opportunity Letter, and we’ll send you a FREE report on the 10 Best Places To Retire In Style Overseas Today.







LIOS Resources


  • New To LIOS
  • Ask An Expert
  • Media Center
  • Contact Us
  • FAQs

Quick Links


  • Best Places To Live
  • Best Places To Retire
  • Finding A Job Overseas
  • Real Estate

Sign up for our free daily e-letter, Overseas Opportunity Letter, and get your FREE report: The 10 Best Places To Retire Overseas In 2022

  • About Us
  • Contact Us
  • Privacy Policy
  • Terms
  • Unsubscribe

© 2008-2021 - Live and Invest Overseas - All Rights Reserved.

No Result
View All Result
  • Home
  • Countries
  • Budgets
  • Archives
  • News
  • Events
  • Bookstore
  • Newsletters
  • About Us
  • Members Area
  • Contact Us

© 2008-2021 - Live and Invest Overseas - All Rights Reserved.

Sign up for FREE and learn how to live the good life on a modest budget, find bargain property, and more. Plus, check out our free report on the 10 BEST PLACES TO RETIRE.

RETIRE OVERSEAS AND LIVE LIKE ROYALTY

The World’s Best Places To Be In 2022?

Discover Them Here…