On-trade

9% VAT rate extension welcomed

The Hospitality sector has welcomed the recent decision taken by the Minister for Finance Paschal Donohoe to extend the 9% VAT Rate for Tourism and Hospitality by a further six months to the 28th of February 2023.
The Hospitality sector has welcomed the recent decision taken by the Minister for Finance Paschal Donohoe to extend the 9% VAT Rate for Tourism and Hospitality by a further six months.

The Hospitality sector has welcomed the recent decision taken by the Minister for Finance Paschal Donohoe to extend the 9% VAT Rate for Tourism and Hospitality by a further six months.

Speaking about the Minister’s announcement Restaurants Association of Ireland Chief Executive Adrian Cummins said, “Since the Budget last October the Restaurants Association of Ireland has called for this extension as tourism and hospitality businesses, some of the worst impacted by Covid trading restrictions, continue to recover. This decision to extend the rate is welcome at a time when hospitality businesses face rising input costs and inflation.”

The Minister’s proposal, at an estimated cost of €250 million, was approved by Government at a Cabinet meeting.

This extension will cover the same goods and services as the original measure – restaurant supplies, tourist accommodation, cinemas, theatres, museums, historic houses, open farms, amusement parks and hairdressing as well as certain printed matter such as brochures, leaflets, programmes and catalogues.

“The tourism and hospitality sector was one of those most impacted by the public health restrictions put in place throughout the pandemic,” noted Minister Paschal Donohoe, “Through no fault of their own, bars, hotels and restaurants had to close on multiple occasions to help the country make its way through the worst of the public health crisis.

“The government put in place unprecedented support for the economy with the wage subsidy scheme supporting the incomes of citizens across the country. The accommodation and food services sector was the most supported by the Employment Wage Subsidy Scheme to ensure that workers maintained the link with their employers and to give businesses the best possible chance to weather the pandemic.”

The extension provides support to the tourism and hospitality sectors over the busy November/December period and into the early New Year, he said.

Minister for Tourism. Culture, Arts Gaeltacht, Sport and Media Catherine Martin added, “The Hospitality and Tourism Forum, which I co-chair with the Tánaiste, has repeatedly raised the importance of extending the lower VAT rate for the entirety of 2022. I’ve pressed on this issue for several months now and I know that this extension will give the sector time to rebuild and consolidate after a harrowing two years under Covid-19.”

The 9% rate for these industries was reintroduced in Budget 2021 from the 1st of November 2020 to the 31st of December 2021 at an estimated cost of €401 million.

This measure was initially extended in Budget 2022 to the 31st of August 2022 at a further estimated cost of €251 million.

No further extension to this measure is envisaged so the 13.5% rate will apply to these sectors from the 1st of March 2023.

 

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