The Government is set to agree to extend the lower VAT rate for the hospitality sector when the Cabinet meets this morning.
Minister for Finance Paschal Donohoe is likely to bring what is termed an “under the arm” memo outlining the details of the extension.
It is thought that the 9% lower VAT rate, which was due to expire at the end of August, could now run for a further six months.
Discussions within the coalition on the issue so far have centred on the need to continue to support the hospitality sector as Covid-19 supports are phased out.
The cost of maintaining the 9% rate is likely to be in the region of €200 million.
Adrian Cummins of the Restaurants Association of Ireland welcomed the proposed move on the lower VAT rate.
He said it would help settle businesses ahead of what will be a “bumpy tourist season”.
However, he said the lower rate should be extended to the end of 2023 given that tourist numbers have not yet returned to pre-Covid levels.
Minister for the Environment Eamon Ryan said the extension of the lower VAT rate is being timed in a way to give the hospitality industry the best chance of getting back on its feet.
Speaking on his way into this morning’s Cabinet meeting, Mr Ryan said the rate will be raised at some stage but it will be done in a way that will not adversely affect the industry.
Asked when the rate would be increased, the minister said he did not want to disclose that before the meeting.