The Northern Irish Parliament has launched an enquiry into whether its VAT rate - currently at 20 per cent - has a detrimental effect on the tourism trade.
According to the Belfast Telegraph, the Northern Ireland Affairs Committee of MPs will review how it can help an industry struggling to compete with the Republic, where the special tourism VAT rate stands at nine per cent.
Chairman of the Committee Laurence Robertson said they will consider whether the higher VAT rate puts Northern Irish hospitality businesses at a disadvantage compared to its counterparts in the Republic.
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"The tourism and hospitality industry has a vital role to play in growing the Northern Irish economy and we are keen to find out how, through the tax system, HM Government can better support hotels, restaurants and other businesses to attract visitors," said Robertson.
The tourism industry in Northern ireland has been hurt by the widening gap between the euro and sterling currencies, as border towns in the Republic have prospered. The Northern Irish Minister for Enterprise Jonathan Bell has vowed to get the VAT rate reduced to a similar rate as in the Republic.
The news comes after it was revealed this week that investment in Northern Ireland hotels has reached £70 million in 2015, buoyed by big acquisitions from US and Irish investors.