9% VAT rate to run through to end of 2013

The temporary 9% VAT rate has been extended to the end of 2013 in a move that will benefit the tourism sector and in particular restaurants and hotels.

Leo Varadkar, the tourism minister, said he is extending the 9% VAT rate to the end of 2013 so that it will be in place for the Gathering Ireland festival.

“Following recent discussions with the minister for finance, I have obtained an assurance that the lower rate of VAT will be maintained during 2013 so that businesses, tour operators, and customers alike can plan for the 2013 season knowing that the 9% rate will apply,” Mr Varadkar said.

“Initial indications suggest that the policy has worked well and there has been an increase in employment in the sector, with prices charged to consumers falling as well.”

The Irish Hotel Federation had carried out research among its members and found that 92% of hotel and guesthouse owners were concerned about the 9% VAT rate, with many owners claiming that returning to the higher VAT rate would drive them out of business.

The president of the federation, Micheal Vaughan, praised Mr Varadkar’s decision to extend the lower VAT rate.

The Government’s pro-tourism policies are contributing to the country’s return to growth, he said.