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Hospitality VAT rate to return to 13.5% next year

The Minister for Finance is holding firm on the decision to return the VAT rate for hospitality to 13.5% next year.

It currently stands at 9% and will continue until February 28, 2023.

However, the Tánaiste said the Government will review the situation surrounding the hospitality VAT rate before it increases in March.

When asked if the "door was closed" on the issue he said the situation would be reviewed before then in terms of the economy and Government finances.

The Chief Executive of the Restaurants' Association of Ireland has said that there is "big disappointment" around the decision not to extend the 9% VAT rate for the hospitality industry.

Adrian Cummins said that there was "no price gouging" within the restaurant industry and that an increase in VAT in February would place further pressure on businesses and consumers.

He said that the industry would continue to lobby Government over the coming months.

The Licensed Vintners Association (LVA) also said it is disappointed by the decision.

"The current VAT measures continue until the end of February 2023, so we look forward to further engagement with Government and hope they will extend this rate beyond the current timeframe," said Donall O'Keeffe, Chief Executive of the LVA.

Denyse Campbell, President of the Irish Hotels Federation, said that while elements of the Budget will help hoteliers, the sector feels that the Government have missed an opportunity to continue support for employment recovery and growth in tourism.

"This increase will make Ireland's tourism VAT rate the second highest in the European Union, and far above other European countries where tourism is a significant part of their economies, such as Portugal, Turkey and Malta.

"Hoteliers and the tourism industry believe that 9% is the right VAT rate for long-term sustainable growth," she added.

Minister Paschal Donohoe said the Government is aware of the critical role that newspapers play in society, "from reporting on local communities to holding those in power to account".

He announced the reduction of the VAT on newspapers from 9% to zero from January 1, 2023.

"This is in line with the Government's commitment to support an independent press and the Future of Media Commission's recommendation on this matter."

The Minister also announced the removal of VAT on life-saving defibrillators from January 1.

A zero rate of VAT will be applied to hormone replacement and nicotine replacement therapies, as well as the small number of period products that are currently subject to a 9%cent rate.

Minister Donohoe said the Government is committed to supporting the night time economy, and he announced that the cost of applying for a Special Exemption Order for late night venues has been halved in the Budget from €110 to €55.

The Minister is granting up to 50 cent excise relief to independent small producers of cider and pear cider also known as 'perry'.

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