Pressure is reportedly building within the Department of Finance to phase out the special 9% VAT rate for the hospitality industry.
The lower rate was originally introduced in 2011 for tourism-related activities, such as restaurant, hotels and cinemas, to encourage growth and employment in the sector.
According to The Irish Times, a briefing note prepared by the Department of Finance for Minister for Finance & Public Expenditure and Reform Paschal Donohoe states that the 9% rate was "initially introduced on a temporary basis to give a boost" to the hospitality sector and was retained in the last budget because of concerns over how Brexit could impact the Irish tourism industry.
The note goes on to proclaim that the lower rate has "done its job" and that "a return to 13.5% for the goods and services in this sector would result in increased revenues of around €500 million."
Speaking out against increasing the current 9% rate, Minister for Tourism, Shane Ross, asserted that the hospitality and tourism sector still needs the measure, which he says is good for the industry.
However, Ross also said that there may be grounds for the lower rate to be removed for large hotels that exceed a certain turnover. In an interview with RTÉ's Morning Ireland, he commented: "If the big hotels don't need it, then leave it for those who do need it."
Ross went on to assert that the reduced rate has been introduced when the tourism industry was "on its knees", adding that "The tourism industry has boomed, we've got to keep it going. It is so important, especially in light of Brexit."
