Business group Ibec has called on the Government to make the temporary 9% VAT rate for the experience economy permanent.
The 9% rate for the industry is due to expire at the end of the month, when it will revert to 13.5%.
Ibec said that the 9% rate has been "instrumental" in helping businesses stay afloat and maintaining many jobs across the country.
"Removal of this buffer at this time will put many in the experience economy, particularly SMEs, in jeopardy, and only stands to add to inflationary pressures and undermine international competitiveness," the group said in a statement.
Sharon Higgins, Executive Director of Membership and Sectors at Ibec said the experience economy is facing significant challenges.
"Across the country, many businesses in the experience economy are operating on continually tight margins that are impacting on day-to-day business decision-making, including staffing," she said.
"A return to the 13.5% rate of VAT, the third highest rate of VAT for the experience economy in Europe, would significantly harm the viability of this important sector.
"We recognise that Government is dealing with how best to help consumers and businesses cope with the current significant cost of living issues and we urge that tomorrow’s package will see the 9% rate of VAT made permanent," she added.
The experience economy includes hospitality, retail, travel, food, drink, tourism, entertainment, the arts, events, and activities that span many sectors and the entire country.
Employing over 300,000 people, or 20% of the private sector workforce, Ibec said it is worth €4 billion to the Irish economy.
