Small and medium sized business representative group, ISME, has called for the reduction in the standard rate of VAT to be maintained beyond the end of this month.

The rate was reduced from 23% to 21% last year in order to help businesses and consumers and stimulate economic activity.

"The jobs stimulus introduced by the Government has been a welcome effort and essential in assisting the Irish economy in the severest of circumstances arising from the pandemic," said Neil McDonnell, CEO of ISME. 

"It has served as a dual incentive to provide consumers with additional spending capacity and to the providers of products and services who have been able to sell at a slightly reduced rate."

The organization therefore thinks the reduction must be maintained beyond the planned expiry date of February 28.

"Clearly not all businesses have been able to avail of the reduction, because they continue to be closed," Mr McDonnell said.

"However, Irish companies that are continuing to do business are the ones that are keeping the economy moving and they deserve every possible continued support."

"ISME is therefore asking that reduced rate should remain in place on an ongoing basis, but in the first instance that it should be kept going for an initial review at the next budget."
However, the Minister for Finance recently signaled that the standard rate of VAT would return to the 23% level next month as other supports had since been put in place to help firms.

The lower rate of VAT for hospitality services was reduced to 9% in the Budget in order to help stimulate activity in the sector that has been badly impacted by Covid-19 restrictions.

Mr Donohoe confirmed that this change will continue to run until the end of 2021 as planned.