Dáil Éireann Debate, Tuesday - 26 April 2022
491. Deputy Christopher O'Sullivan asked the Minister for Finance if consideration will be given to extending the VAT rate of 9% beyond August 2022; and if he will make a statement on the matter. [19802/22]
View answerAs part of the Government’s response to Covid-19, Budget 2021 brought the VAT rate for Hospitality and Tourism related services and goods down from 13.5% to 9%. This was initially planned for 14 months, from 1 November 2020 to 31 December 2021. This was then extended to 31 August 2022 in recognition of the difficulties facing these sectors.
This extension provides support for a further 8 months to the end of the 2022 summer season, allowing for a longer period of recovery for tourism and hospitality. This measure is only one of the supports the Government has provided for businesses over the course of the pandemic and was always designed to be temporary, with a sunset clause included in the enacting legislation.
A review was undertaken of the 9% VAT rate in advance of Budget 2019. This review found that tourism expenditure is more sensitive to income growth and the economic cycle than price changes, which reduces the relevance of the VAT rate applying to the sector.
Should the economic position or tourism demand alter, the VAT rate applicable to tourism will be reviewed as part of the budgetary cycle.
