The VAT rate for the hospitality and tourism sector will be cut from 13.5% to 9% with effect from November 1, Minister for Finance Paschal Donohoe has announced.
He said he was making the VAT cut in recognition of the “unprecedented challenges” facing particular sectors of the economy.
As part of the July Stimulus, the standard rate of VAT was cut from 23% to 21% from September until the end of next February.
The minister said this was designed to provide assistance to a wide range of economic activities and, as such, benefits a broad range of businesses and traders.
Under today’s Budget measures, Mr Donohoe said the “Knowledge Development Box” relief is being extended for a further two years until the end of December 2022.
The Knowledge Box is an OECD-compliant intellectual property regime that supports businesses in retaining and exploiting assets that have resulted from research and development activities in Ireland.
Mr Donohoe noted that the film industry is one of many sectors badly affected by Covid-related shut-downs.
He said that as much of the planned incentive effect of the Section 481 regional uplift for 2020 for the sector has been lost, he is changing the scheme to provide for an additional year at its peak rate of 5%. The uplift will now be in place until the end of 2023.
The minister also said he was starting work on the development of a tax credit for the digital gaming sector, with a view to supporting qualifying activity from January 2022 onwards.
“This is a sector that has seen exponential global growth in the past decade, and there are potential synergies with our established film and animation sectors to support quality employment in creative and digital arts in Ireland,” he told the Dáil.
He also said he was extending the accelerated capital allowances scheme for energy efficient equipment for a further three years.
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