TOUR operators in the south beware - you're now liable for VAT on holidays to Cyprus, Malta and the eight other countries that joined the EU this month.

The extra bill could significantly dent their profit margins, according to experts at professional services firm Deloitte.

Some Accession States have also taken the opportunity of EU membership to raise their VAT rates on supplies such as hotel accommodation, which will hit any purchaser, be it tour operator, online agent or consumer.

Simon Baxter, VAT director at Deloitte's Southampton offices, said: "While the opening up of new markets from EU Accession presents huge opportunities for the travel industry, the tax ramifications are a major threat.

"For a typical UK package holiday to Cyprus, Deloitte's calculations show that the VAT now payable would equate to a 15 per cent reduction in a tour operator's gross profit margin.

"With Malta and Cyprus being two of Europe's most popular holiday destinations, the impact of EU Accession will be huge, particularly for those operators focused on these regions.

"With some Accession States also increasing their VAT on certain supplies such as hotel rooms, the travel industry faces a double blow.

"Weekend breaks to Prague will suffer particularly as the Czech Republic intends to increase its rate on hotel accommodation from five per cent to the standard rate of 22 per cent.

"On a hotel room rate of £150, this will mean an extra £25.50 for the purchaser. Ultimately the increased VAT could affect consumers' decisions as to which destinations they choose."