Finance Dept. questions 9% VAT rate
The tourism services 9% VAT rate is again under the microscope as the Government prepares its 2019 Budget.
The Department of Finance has calculated that the special 9 per cent VAT has cost €2.6 billion since its introduction in 2011, including €490 million in tax foregone last year.
In a review of the rate, which has been published on the department’s website, officials question whether the rate is still “relevant” given the booming state of the tourism sector, which is at record highs.
This view will be strengthened by to-day's Crowe report (see story below) which reveals that hotels enjoyed record turnover for a seventh consecutive year.
The rate was originally cut from 13.5 per cent in 2011 as a temporary stimulus for the sector at the height of the recession.
from an analysis of Irish hotels’ 2017 accounts, shows that key performance metrics have enjoyed a period of sustained improvement with a seventh consecutive year of growth in turnover. Record profit levels, room occupancy levels and average room rates have been recorded in all regions. Notwithstanding such a strong performance in the sector, the levels of profitability recorded are necessary to provide a sustainable business model to allow for a €1.5 billion investment required to deliver an additional 11,000 rooms which are required within the next seven years. Failure to deliver this capacity will impact on competitiveness and Ireland’s ability to maximise revenue from the tourism sector.
