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Minister For Finance Reportedly Resisting Lobbying Efforts By Tourism Industry Representatives To Extend Sector's 9% VAT Rate Until End Of 2022

Published on Oct 22 2021 9:10 AM in General Industry tagged: Trending Posts / ITIC / 9% VAT Rate / Irish Tourism Industry Confederation

Minister For Finance Reportedly Resisting Lobbying Efforts By Tourism Industry Representatives To Extend Sector's 9% VAT Rate Until End Of 2022

Minister for Finance Paschal Donohoe is reportedly resisting lobbying efforts by tourism industry representatives to extend the sector's 9% VAT rate until the end of 2022. As reported by The Irish...

Minister for Finance Paschal Donohoe is reportedly resisting lobbying efforts by tourism industry representatives to extend the sector's 9% VAT rate until the end of 2022.

As reported by The Irish Times, the Irish Tourism Industry Confederation (ITIC) wrote to the Donohoe last week seeking an extension of at least four months to the sunset clause on the rate, which was introduced in October of last year in Budget 2021 to aid the sector's recovery from the impact of the COVID-19 pandemic.

Donohoe reportedly confirmed in his Budget 2022 speech this month that the special rate will finish at the end of August of 2022, reverting to 13.5% and effectively taking 4.5 percentage points from the profit margins of tourism operators.

ITIC Letter Statements

ITIC reportedly wrote to Donohoe last week to express "disappointment and frustration" that the rate is going back up next September. ITIC had reportedly campaigned prior to the budget for the rate to be extended to 2025, but reportedly subsequently sought a shorter extension to be agreed after the budget, but before publication of the Finance Bill.

ITIC chief executive Eoghan O'Mara Walsh reportedly said in the letter that an extension to the end of the financial year in 2022 would have a "modest" cost to the state in tax foregone but would help "the sector stabilise after a particularly difficult pandemic period". The Department of Finance has reportedly previously estimated that the preferential rate would cost approximately €336 million for a full year.

"No Change" Planned

The department reportedly said in response to queries from The Irish Times that there is "no change" planned to the August 2022 end date.

Renewing The Push For An Extension

ITIC, along with several other business lobby groups, is reportedly due to meet the Tánaiste Leo Varadkar today (Friday October 22), when it will reportedly renew its push for an extension.

O'Mara Walsh reportedly said, "We will still be making the case. It has merit. Until it is in black and white in the Finance Bill, we will fight it. Raising the VAT rate in the middle of a financial year will slow down recovery."

9% VAT Rate History

The government reportedly previously cut the sector's VAT rate from 13.5% to 9% in 2011 but raised it again in Budget 2019 to fund spending, after a departmental report reportedly said that it had become a "deadweight". Trade union groups, which are reportedly often critical of the sector, which reportedly has a low rate of union membership, reportedly had also campaigned for it to be raised in Budget 2019.

© 2021 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.

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