9% VAT Rate For Hospitality Sector, EWSS And CRSS To Be Extended
Published on Jun 2 2021 9:54 AM in Features tagged: Featured Post / IHF / Irish hotels federation / 9% VAT Rate / Employment Wage Subsidy Scheme / Pandemic Unemployment Payment / PUP / COVID Restrictions Support Scheme / CRSS / EWSS / Business Resumption Support Scheme / BRSS
It has been announced that the 9% VAT rate for the hospitality sector will be extended until September of 2022 and the Employment Wage Subsidy Scheme (EWSS) will be extended until the end of 2021, and the COVID Restrictions Support Scheme (CRSS) will also be extended.
The extensions of the 9% VAT rate for the hospitality and tourism sector, the EWSS and the CRSS are part of the government’s newly-announced National Economic Recovery Plan.
9% VAT Rate For The Hospitality And Tourism Sector
Gov.ie stated regarding the extension of the 9% VAT rate for the hospitality and tourism sector, "The government recognises the continuing challenges facing the hospitality and tourism sector, and have agreed that the reduced VAT rate of 9% applying to the sector on a temporary basis will be extended to 1 September 2022. The extension of the reduced rate until the end of the 2022 summer season allows for a longer period of recovery for the sector."
Employment Wage Subsidy Scheme
Gov.ie stated regarding the EWSS, "The EWSS continues to represent a substantial and key part of the government response to the COVID-19 pandemic, supporting businesses, encouraging employment and helping to maintain the link between employers and employees.
"As at the week ending 27 May, a total of €3.835 billion has been spent under the scheme of which €3.293 billion relates to direct subsidies and €0.542 billion relates to employers’ PRSI foregone.
"For Q3, the government has decided to broadly maintain the status quo for EWSS, including the enhanced rates of support and the reduced rate of Employers' PRSI with a modification to widen eligibility.
"For Q4, the government has approved the extension of the EWSS, however, it is considered too early yet to prescribe the precise operational parameters of the scheme that should apply for that quarter and decisions in that regard would be taken closer to the time around the end of August/early September."
COVID Restrictions Support Scheme
Gov.ie stated regarded the CRSS, "The CRSS in its current form will be continued to the end of 2021 for the reducing number of businesses that are still directly affected by public health restrictions that may remain in place. The qualification criteria and payment rates will remain unchanged.
"The government will also provide for an enhanced restart week payment - a single payment of three double week to businesses upon re-opening (subject to a maximum of €30,000). This will provide additional support to the businesses in restocking and making the necessary preparations to welcome their customers back in a safe manner.
"This enhanced restart payment is intended to incentivise them to exit the scheme and return to trading as early as possible."
Business Resumption Support Scheme
A new business support scheme called the Business Resumption Support Scheme (BRSS) will also be introduced.
Gov.ie stated regarding the BRSS, "As the economy reopens, a further scheme is being introduced for vulnerable but viable businesses, particularly in sectors that were significantly impacted throughout the pandemic, even during periods when restrictions were eased.
"Businesses whose turnover is reduced by 75% in the reference period (1 September 2020 to 31 August 2021) compared with 2019 will be eligible. The scheme will not be restricted by location, rate paying or physical premises. It is expected that there will be a limited number of such businesses and recognised that it is important that such businesses are supported.
"Businesses who previously availed of other schemes such as SBASC and the Tourism Business Continuity Scheme for example as well as CRSS will be eligible to apply provided they meet the qualifying criteria.
"The BRSS will be administered by Revenue and will operate in a similar way to CRSS."
"No 'Cliff Edge' To Supports For Businesses"
Gov.ie quotes minister for finance Paschal Donohoe as saying, "The government and I have committed on multiple occasions that there will be no 'cliff edge' to supports for business. We are now taking decisive actions to provide businesses with clarity and certainty on their situation as they reopen, as far as it is possible to do so with the uncertain situation in relation to public health."
Pandemic Unemployment Payment
Additionally, as reported by rte.ie, the Pandemic Unemployment Payment (PUP) will continue at its current level until September, when gradual reductions will commence.
Rte.ie quotes Donohoe as saying that "as things begin to change, we have to look at how we can begin to get our country back to work and how very carefully and gradually we can phase out and change programmes like this".
Responding to the announcement of the government's National Economic Recovery Plan, the Irish Hotels Federation (IHF) stated, "Hotel and guesthouse owners have welcomed government initiatives to restore the 270,000 livelihoods and tourism communities throughout Ireland included in the Economic Recovery Plan announced today. Irish Hotels Federation (IHF) president Elaina Fitzgerald Kane welcomed in particular the retention of business and employment supports including the Employment Wage Subsidy Scheme (EWSS), the 9% tourism VAT rate and the COVID Restrictions Support Scheme (CRSS). Ms Fitzgerald Kane also welcomed the return of non-essential travel on the 19th July as an important step in the restoration of international connectivity, the recognition of tourism as a very significant employer in regional locations and commitments around the development of sustainable tourism."
Fitzgerald Kane stated, "The certainty over the 9% VAT rate is vitally important. Many hotels are already contracting for international business up to two years out. Tourism is highly competitive, and the 9% is proven to be the right rate of VAT vis-à-vis our European competitors.
"We also welcome the various business and employment supports, including the extension of Commercial Rates Waiver and the Tax Debt Warehousing Scheme. We look forward to engaging with the government on the detail of the new additional Business Resumption Support Scheme, as well as the enhanced restart grants that are proposed.
"Hotels and guesthouses are facing reopening costs of approximately €964 per bedroom - equivalent to over €72,000 for an average 75-bedroom hotel, according to a recent member survey. This is a huge cash flow challenge for most hotels and guesthouses who have already experienced nothing short of a catastrophic financial shock from this pandemic with months of prolonged closure and partial reopening. It is essential that reopening grants are put in place that reflect the true scale of the reopening costs whilst laying the building blocks for recovery and the restoration of employment.
Fitzgerald Kane added that continued employment supports will be vital in helping hotels to keep their teams together beyond the peak summer season, and said, "The summer months are typically the busiest period and help to sustain many businesses for the remainder of the year. However, occupancy levels this year are still lagging significantly behind pre-COVID levels and the hotel sector is facing a slow recovery. Having rebuilt their teams over the summer, it is important that hotels can retain them. This is critical to the morale and livelihoods of the people involved, and to the sustainable recovery of the businesses themselves and the wider tourism industry.
"Tourism will recover but it will take time. Hotels and guesthouses, which are an integral part of its infrastructure, are committed to restoring livelihoods as quickly as possible. That requires continued government supports to enable them to survive until such time as tourism is sustainable and this is not expected to happen before summer 2022 at the very earliest with the return of a meaningful increase in international visitor numbers."
Estimated €1 Billion For The Economy
Hotels and guesthouses reopened for business today (Tuesday June 2), with their restaurants and bars opening for residents only. As reported by The Irish Times, according to Fáilte Ireland, the reopening of the hospitality and tourism sector will help inject an estimated €1 billion into Ireland's economy in the coming months.
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