The hotel sector today called on the Government to immediately re-assess the current policy on VAT, which it says is seriously hampering tourism growth in Ireland.
Delegates at the Irish Hotels Federation 67th annual conference in Cork today are seeking a reduction of VAT on hotel accommodation from the current rate of 13.5% to a more competitive VAT rate of 10%.
Ireland currently has the second highest VAT rate in the euro zone for hotel accommodation charges. Compounding the issue is that this high VAT rate is non-recoverable for legitimate business expenditure.
'Ireland's VAT regime for the hotel sector as a time bomb for Irish tourism, which can only inhibit the industry's growth potential', John Power, IHF's CEO said.
'The 13.5% VAT rate applied to accommodation and meals is a blockage to competitiveness and growth in its own right. However, coupled with the fact that the Irish tax system prohibits the refunding of VAT on corporate hotel and restaurant expenditure, this regime puts the Irish tourism sector at a distinct disadvantage to other competing destinations,' he said.
He said the federation is urging the Minister for Finance to reduce the 13.5% VAT rate and introduce measures to allow VAT on business expenses, incurred on hotel and restaurant costs, to count as inputs for VAT registered businesses.
