ROI Tourism VAT Rate Increase Still Shows NI Hospitality Sector Working At Competitive Disadvantage

09 October 2018

The shift to a 13.5% VAT rate on food, accommodation and visitor attractions outlined in the Irish Budget today reinforces the need to cut tourism VAT in Northern Ireland.

The rate has been at 9% for a number of years in the Republic of Ireland but will be raised to 13.5% as outlined by the Irish Finance Minister, Paschal Donohoe.

The rate continues to place Northern Ireland at a disadvantage, with tourism VAT at 20% in Northern Ireland – a new gap of 6.5%.

The UK’s 20% Tourism VAT rate is one of the highest in Europe, and Northern Ireland hospitality and tourism businesses are particularly vulnerable as the Republic of Ireland is its second largest market and nearest competitor.

The disadvantage will continue to be acutely felt right across Northern Ireland with the NI VAT rate acting as a brake on the growth of the hospitality and tourism sector.

Colin Neill, Chief Executive, Hospitality Ulster said:

"Hospitality Ulster is leading the campaign for a reduction in the hospitality and tourism VAT rate in Northern Ireland, which at 20% puts us at a distinct competitive disadvantage, particularly as our nearest market, the Republic of Ireland, has had a 9% tourism VAT rate for some years but will now go to 13.5%.

The new incoming 13.5% rate in the Republic means that there will be a 6.5% difference which is a huge gap and highly detrimental to a sector which supports more than 60,000 jobs across Northern Ireland.”

Colin Neill added:

“The latest independent research shows that more than 12,000 jobs would be created across accommodation, visitor attractions and food if the VAT rate was cut to 5%. This would create a sustained positive impression on the economy.”

Sammy Wilson MP, the DUPs Westminster spokesperson on the Treasury added:

“The decision by the Irish Finance Minister to raise the VAT rate to 13.5% still sounds an alarm bell in the hospitality sector in Northern Ireland.

How can the sector here be expected to compete when the UK government continues to tie the hands of the sector behind its back on this issue as the Republic pushes on.

It is imperative that the rate is cut in Northern Ireland so we can continue to grow a vital part of the regional economy. The hospitality sector is an engine for growth and we can no longer suffocate it.

This is a live and real problem which is crippling trade.

We now look ahead to the UK Autumn Statement to push the Chancellor to do the right thing and create a more competitive environment by reducing the VAT rate in NI.

Last year we welcomed his commitment to review the issue, but now the answer is staring Philip Hammond and the Treasury in the face after the announcement in Dublin. Another year has passed and he must now make the important decision to support the hospitality sector in an area of the UK that he is responsible for.”