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Oireachtas Committee Calls For Extension Of 9% VAT Rate For Hospitality Sector To 2025

Published on Jul 22 2021 8:45 AM in General Industry tagged: Trending Posts / IHF / Irish hotels federation / 9% VAT Rate / Employment Wage Subsidy Scheme / Pandemic Unemployment Payment / PUP / COVID Restrictions Support Scheme / CRSS / EWSS

Oireachtas Committee Calls For Extension Of 9% VAT Rate For Hospitality Sector To 2025

An Oireachtas committee has called on the government to extend the 9% VAT rate for the hospitality sector to 2025 to help hospitality and entertainment businesses recover from the impact of the COVID-19 pandemic.

As reported by The Irish Times, in a report on the two sectors, the committee on tourism, culture, arts, sport and media has made 27 recommendations ranging from financial supports and consumer spending initiatives to reform of legislation and guidelines.

Facility for the 9% VAT rate for the hospitality sector, which was reduced from 13.5% as part of the government’s response to the COVID-19 crisis, is reportedly due to expire at the end of 2021.

Committee Chair Statements

The Irish Times quotes the committee's chair, Fianna Fáil TD Niamh Smyth, as saying that the sectors have "suffered immense adversity" due to the pandemic.

Smyth reportedly said, "We heard evidence that hospitality businesses are on the brink of collapse, with some 50% of restaurants facing permanent closure, while revenue across the hotel sector fell by more than €2.5 billion in 2020, marking an unprecedented drop of 60%.

"The challenges facing the entertainment sector are no less severe. Evidence presented to the committee notes that, of 55,000 workers in the arts, 58% have been wholly reliant on the Pandemic Unemployment Payment (PUP) or Employment Wage Subsidy Scheme."

Smyth reportedly added that the economic and social consequences of COVID-19 will continue to present "significant difficulties" for employees and businesses over the months and years to come, and the committee reportedly concluded that an extension of the 9% VAT rate for the hospitality sector to 2025 would "provide certainty" for businesses.

CRSS, Local Authority Rates, Voucher Scheme And New Public Holiday

The committee has reportedly also recommended that the rates paid under the COVID Restrictions Support Scheme (CRSS) be doubled for hospitality and tourism businesses, that the waiving of local authority rates be extended for these businesses for a full year, and that the government establish a voucher scheme and introduce a new public holiday to stimulate domestic spending.

Licensing Laws, Trading Hours, Insurance And PUP

The committee reportedly said that the government should modernise licensing laws and application processes to reduce bureaucracy and stimulate the night-time economy, and that extended trading hours should be brought in line with those of other European countries.

The committee reportedly also said that all additional licensing requirements, such as outdoor seating permits, should be simplified and moved online, that insurance reform should also be tackled urgently, and that the full rate of PUP should be maintained for entertainment sector employees until their industry is fully reopened.

IHF Response

The Irish Hotels Federation (IHF) has welcomed the committee’s report, in particular its recommendations in relation to the extension of the 9% VAT rate for the hospitality sector to 2025, as well as the recommended extension of the local authority waiver and the recommended doubling of the COVID Restrictions Support Scheme (CRSS).

IHF chief executive Tim Fenn stated, "The certainty over the 9% VAT rate is vitally important. Many hotels are already contracting for international business up to two years out. Our current 9% VAT rate has only been committed to until September 2022. This is causing confusion in our highly competitive international marketplace and particularly as we seek to restore international connectivity to our island nation and rebuild international tourism against the backdrop of this pandemic.  The 9% VAT rate is proven to be the right rate of VAT vis-á-vis our European competitors."

Fenn said that the committee's recommendation to extend the local authority rates waiver for a full year for tourism and hospitality businesses along with a doubling of the CRSS would help tourism and hospitality businesses to plan for the longer term.

He continued, "The tourism and hospitality industry has been disproportionately impacted by government restrictions around this pandemic. Government supports to date have been very welcome and have been a lifeline to many businesses. Tourism will recover, but it will take time, and businesses need greater certainty over costs to ensure competitiveness and to allow them to plan for the years ahead."

According to the IHF, Pre-COVID-19, tourism supported over 270,000 livelihoods, one in 10 of all Irish jobs, with 70% of these jobs located outside of Dublin.

Fenn added, "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 recover when there is a meaningful increase in international visitor numbers."

© 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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