Fears for tourism businesses over changes to VAT rate

Difficulties could arise for tourism businesses in implementing a change to VAT outlined in the Government Jobs Initiative, the head of a tourism lobby group has claimed.
Changing the rate of VAT from 13.5% to 9% in mid-season may pose problems for some tourism businesses who have been paid in advance for their services, the president of the Shannon Branch of the Irish Hotels Federation, Michael Vaughan, told The Clare Champion.
“There will be some difficulty in managing the VAT reduction for pre-booked tours and the likes, where guests have already paid the overseas tour operator in full for accommodation and meals.
“I expect us to be able to come up with a creative solution on that though, like giving something back in kind in the line of complimentary additional services,” he said.
Mr Vaughan stated that he would be encouraging all of his members to pass this VAT reduction onto customers “even though it will be a difficult thing to do because of how things are in the economy, with margins so tight. Nonetheless I would urge them to pass on this change in full to the public.
“Overall, this change sends a very clear message to tourists and domestic holidaymakers alike that they can expect close to 5% less in their food and accommodation bills in the coming months. We will issue guidelines to the members on how best to portray that message.
“It is a good news story and we should be trying to get it across to individuals. This is an opportunity for people to show goodwill to their customers who are spending money with them in a recession and that is something I will tell my members to do”, he stated.
The new 9% rate will apply mainly to restaurant and catering services, hotel and holiday accommodation and various entertainment services such as admissions to cinemas, theatres, museums, fairgrounds, amusement parks and sporting facilities.
In addition, hairdressing and printed matter such as brochures, maps, programmes and newspapers will also be charged at the new rate.
The purpose of this targeted VAT relief, according to Minister for finance, Michael Noonan, “is to boost tourism and stimulate employment in the sector”.
He said he believed it would give the tourism sector “a much-needed shot in the arm”.