Dáil Éireann Debate, Thursday - 16 July 2020
25. Deputy Peter Fitzpatrick asked the Minister for Finance if he will consider measures such as a VAT reduction for the hospitality sector to 5% and the inclusion of seasonal workers in the temporary wage subsidy scheme until at least April 2021. [15750/20]
View answer31. Deputy Brendan Griffin asked the Minister for Finance the position regarding his options for the reduction of the 13% rate of VAT currently applicable to the hospitality sector; if he cannot lower this rate below 5%, the reason therefor; if he has had contact with the European Commission regarding potential VAT reductions; and if he will make a statement on the matter. [16306/20]
View answer32. Deputy Brendan Griffin asked the Minister for Finance if he has considered reducing the VAT rate to stimulate business, particularly in the hospitality sector; and if he will make a statement on the matter. [16307/20]
View answer41. Deputy Éamon Ó Cuív asked the Minister for Finance if he plans to reduce the VAT rate on certain services in 2020 to stabilise vulnerable sectors due to the Covid-19 crisis; if so, when an announcement will be made in this regard; and if he will make a statement on the matter. [15668/20]
View answerI propose to take Questions Nos. 25, 31, 32 and 41 together.
The Government is fully aware of the unprecedented impact that the coronavirus is having on business and people’s livelihoods. In this regard a range of measures have been introduced to provide income support to those who need it while also giving confidence to employers to retain the link with employees so that when this crisis passes our people can get back to work as quickly and seamlessly as possible.
This Government is currently preparing the July stimulus package which will set out supportive measures for a wide range of sectors including the hospitality and tourism sectors to ensure that the economy is in a position to recover rapidly while maintaining a stable tax base. Details of the July stimulus package will be announced by Government shortly.
I am advised by Revenue that the VAT rating of goods and services is subject to the requirements of EU VAT law, with which Irish VAT law must comply. In general, the reduced rate of VAT (13.5%) currently applies to accommodation, certain recreational activities and supplies of food and drink in restaurants, excluding alcohol and soft drinks.
Under EU VAT law, Member States may only have two reduced rates which cannot be higher than 15% and no lower than 5%. These lower rates can only be applied to a prescribed list of services in Annex III of the VAT Directive 2006/112/EC. Ireland currently has two reduced rates, 9% and 13.5%. In order to introduce a new reduced rate, one of the current reduced rates would have to be removed. In general, the VAT rate on accommodation, certain recreational services, such as amusement parks, fairgrounds, cinemas, etc., can be reduced to a rate no lower than 5%. The provision of food and drink in restaurants can also be reduced to a rate no lower than 5%.
Ireland, in line with the VAT Directive, also maintains several standstill provisions and derogations that allows it to maintain reduced rates, zero rates and exemptions to certain supplies for historical reasons. These standstill provisions and derogations cannot be extended.
