Retail Excellence Ireland has called on the Government to follow through on its promise to permanently cut the rate of VAT for the hospitality industry to 9% in Budget 2026.
Media reports this week suggested that the Government is reconsidering its pledge to cut the VAT rate in October and instead delaying it until next summer.
Retail Excellence Ireland also reiterated its call that the general rate of VAT be cut from 23% to 21% to assist the retail industry
“The retail and hospitality industries work hand in glove to provide a world-class consumer experience in Ireland. However, both industries have been severely impacted in recent years by the rising business costs, and numerous business owners have been forced to close their doors after unsustainable financial pressure”, Jean McCabe, the CEO of REI, said.
She said that after a tough few years, the Government’s promise to cut the VAT rate for the hospitality industry was welcome, and it would be regrettable for it to delay its promise now.
“There are too many livelihoods at stake not to introduce a measure as soon as possible that would have such a significant impact on the industry, and on related industries such as retail. Every day counts for the industry,” she added.
“We are living in a period of deep uncertainty because of volatile geo-political and economic tensions. The least that business owners deserve in Ireland is clear, consistent leadership to safeguard thousands of jobs,” she said.
“We must do everything in our power to strengthen our domestic economy at a time when we need it most. As such, the VAT rate for hospitality must be cut in Budget 2026 as promised,” she added.
Irish Hotels Federation pushes back against ‘misleading’ VAT cut costs
Meanwhile, the Irish Hotels Federation has criticised as deeply misleading recent reports that reducing the 9% VAT for hospitality businesses would cost the Exchequer €1 billion a year
IHF chief executive Paul Gallagher said that in the lead up to the General Election and afterwards, discussions between hospitality representative bodies and the Government have always been on the basis that any VAT reduction would apply to hospitality food services only and not accommodation services.
“To suggest anything else was on the table is disingenuous. It is time for a more honest, balanced debate – one that recognises the economic and social importance of hospitality food service businesses and gives them a fighting chance to survive,” Mr Gallagher said.
“The true cost involved is significantly lower than the widely quoted figure cited by the Government in recent days,” he added.
The Department of Finance yesterday confirmed the cost of reducing the 13.5% VAT rate to 9% for the hospitality sector would be €867.7m in a full year.
It broke the cost down to €134.9m for accommodation, €674.6m for food and catering, €19.8m for entertainment and €38.4m for hairdressing.
