Press release
Minister Donohoe announces extension of 9% VAT rate for the tourism and hospitality sectors
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Published on
Last updated on
The Minister for Finance, Paschal Donohoe, has today (Tuesday) announced the extension of the 9% Value Added Tax (VAT) rate for the tourism and hospitality industry for a further six months. The proposal was approved by Government at the Cabinet meeting today. The 9% VAT rate will therefore remain for these sectors until 28 February 2023.
The estimated cost of this further extension is €250 million.
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.
Minister Donohoe noted:
“The tourism and hospitality sector was one of those most impacted by the public health restrictions put in place throughout the pandemic. 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 9% VAT rate was introduced in response to the challenges posed by COVID-19 to support the hospitality sector and today the government has decided to extend the period when the 9% rate will apply for a further six months. This will provide further support to the tourism and hospitality sectors over the busy November/December period and into the early New Year.”
Minister for Tourism. Culture, Arts Gaeltacht, Sport and Media Catherine Martin said:
“I am delighted that the Minister for Finance, Paschal Donohoe, and my colleagues in Government have agreed to extend the reduced VAT rate until end-February 2023. 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 have 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 extension will promote business survival and support employment in the industry.”
The 9% rate for these industries was reintroduced in Budget 2021 from 1 November 2020 to 31 December 2021 at an estimated cost of €401 million.
This measure was initially extended in Budget 2022 to 31 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 1 March 2023.