Higher VAT rate for Irish hospitality sector to remain
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The Irish Minister for Public Expenditure and Reform has said the higher VAT rate for hospitality will remain, despite claims by the Restaurants Association of Ireland that hundreds of businesses are closing as a result.
Paschal Donohoe said the lower 9% VAT rate, reintroduced during the Covid-19 pandemic, was only ever meant to be temporary.
“I always regret any small business within our country closing, but it was made very clear at the time in which we moved down to the lower VAT rate that it was a technical measure to help deal with the effects of the hospitality sector being closed,” Minister Donohoe said.
He was speaking after the Restaurants Association of Ireland (RAI) released new figures showing that the number of restaurants, cafés and other food-led businesses forced to close since the VAT rate increase last September has reached a total of 577.
In July alone, 45 outlets alone closed their doors, the RAI said.
It added that in a recent survey, 74% of respondents said they believe they will have to close their businesses if the VAT rate on food is not reinstated to 9% in October’s Budget.
“While the pace of closures has slowed slightly during the summer compared to the tsunami we witnessed at the beginning of the year, this was expected,” said RAI chief executive, Adrian Cummins.
“Many food-led businesses are holding on by a thread, hoping the busy season will provide some relief and that the Government will act in October’s Budget to restore the 9% VAT rate.”
“But the reality is that these businesses are still in crisis and, without a return to the lower VAT rate, we are guaranteed to see another wave of closures as we leave the summer behind and move into the hospitality sector’s quieter months.”
