Minister for Finance Paschal Donohoe has confirmed the reduced VAT rate of 9% for the hospitality sector will expire at end of August 2022 as planned.
There is disappointment among businesses in hospitality that the 9% rate was not extended beyond next summer.
The Irish Hotels Federation called on the Government to reconsider its position on the 9% VAT rate. Chief Executive Tim Fenn said the measure should be extended until after 2025 in order to safeguard overseas tourism recovery and competitiveness.
The Restaurants Association of Ireland said the VAT rate ending, and wage supports tapering off will be the death knell of many hospitality businesses.
"Although the supports offered in today's budget are welcomed, there are still some long hard months ahead," said Adrian Cummins, CEO of RAI.
"Since lockdown measures and restrictions have been put in place, our industry has complied with the rules. Public safety and the safety of workers have always been at the top of our agenda. But this has meant serious financial difficulties for many," he said
"We needed the Government to help us fight for survival, today's announcements fall short of that, and we will need ongoing support to trade out of this," he added.
The Vintners' Federation of Ireland said the Government's decision not to extend the 9% hospitality VAT rate past August 2022 is disappointing given the challenges the hospitality trade will face over the coming year.
It said the fact most European countries utilise the 9% rate places Ireland at a disadvantage when seeking to attract inbound trade.
In his Budget 2022 speech to the Dáil, Minister Donohoe also acknowledged that the aviation sector had paid a particularly heavy price during the pandemic.
He said he is amending the taxation arrangements which apply to international air crews under Section 127B of the income tax code.
Minister for Finance says the tax arrangements applying to international air crews will be amended in the Finance Bill to support the sector in its recovery.— Will Goodbody (@willgoodbody) October 12, 2021
"This move will support the sector in its recovery," the Minister said.
Eoghan O'Mara Walsh, CEO of the Irish Tourism Industry Confederation (ITIC), said today's budget was a mixed one for the Irish tourism industry.
Mr O'Mara Walsh welcomed the extension of the wage subsidy scheme to April and the €90m aviation fund to help restore connectivity from key source markets.
"These measures as well as tourism business continuity grants and increased marketing budgets are important for tourism's recovery," he said.
"However the industry is hugely disappointed that the tourism VAT rate of 9% was not extended beyond August next year. That means on September 1, Ireland's tourism VAT rate will be hiked by 50% thereby damaging our competitiveness and giving us one of the highest tourism VAT rates across Europe," he added.