One in five restaurants likely to close if no-deal Brexit goes ahead, says RAI
Increasing the VAT rate to 13.5% has undermined the competitiveness and viability of Irish businesses, says RAI, which believes the former 9% VAT rate is critical to restaurant survival.
16 August 2019
The Restaurants Association of Ireland (RAI) is calling for a reduction in the restaurant VAT rate in Budget 2020, ahead of what looks increasingly likely to be a no-deal Brexit.
The restaurant VAT rate was reduced in 2011 from 13.5% to 9% with the aim of helping to encourage the growth of small businesses. It was due to expire in 2013, but successive governments deemed the lower rate such a success that it was retained until Budget 2019.
“The restaurant, tourism and hospitality VAT increase has put a huge strain on our members: small businesses are struggling to cope with the huge increase in the cost of doing business,” said Adrian Cummins, RAI CEO.
“Around one in five restaurants in Ireland will close if a hard Brexit goes ahead: the 9% VAT rate is critical to restaurant survival in Ireland,” he added.
According to the RAI, raising the VAT rate to 13.5% has undermined the competitiveness and viability of Irish businesses, at a time when other rising costs, such as insurance and commercial rates are only going up. The RAI fears that if the restaurant VAT rate is not reversed ahead of a no-deal Brexit, it will worsen the divide between urban and rural tourism and continue to put businesses at risk.
According to the CSO, the accommodation and food services sector employs almost 8% of people in the country and contributes over €2.2 billion to the economy. A breakdown of visitor figures shows that the UK accounts for over a quarter of all overseas tourism revenue and almost half of visitors to Ireland, further compounding worries about a no-deal Brexit.