Standard VAT rate cut from 23% to 21% for six months
23 July 2020
A €5 billion package of 50 new measures to stimulate economic recovery and help get people back to work, has been agreed by the government. Combined with in excess of €2 billion in loan guarantees, the total stimulus package amounts to some €7.4 billion.
In welcome news for retailers, the new measures include a 2% reduction in the standard VAT rate from 23% to 21% for a six-month period.
The announcement also features a €100 million package of employment supports to create 47,500 training and apprenticeship places and a €450m package of business supports.
The Employment Wage Subsidy Scheme (EWSS) will replace the Temporary Wage Subsidy Scheme (TWSS) from 1 September until 31 March 2020. Instead of an income replacement measure, the new initiative has been designed as a payroll subsidy support.
Some workers who had been excluded from the TWSS, such as seasonal workers and new hires, will now be allowed to enter the EWSS early, and will be able to receive payments during July and August.
To qualify for the new scheme, an employer must be operating on no more than 70% of turnover this year versus last year.
Under the €100m employment stimulus, the government will fund 10,000 work experience places and provide recruitment subsidies of €7,500 – €10,000 to hire up to 8,000 people.
Employers will also receive an incentive of €3,000 to take on apprentices.
Independent retailers’ organization RGDATA has also welcomed the €10 million funding for town centres, contained within the government’s stimulus package. RGDATA director general Tara Buckley said the organisation is urging government to set up a strong engine room to direct policy and programmes for town centre renewal.
AT A GLANCE: JULY STIMULUS PACKAGE
The government has said the measures launched within its stimulus package are designed to do four things:
1 Backing Ireland’s businesses
- A new Employment Wage Support Scheme will succeed the Temporary Wage Subsidy Scheme, and run until April 2021.
- 0% interest for first year of SME loans
- Restart Grant for Enterprises is being extended and expanded.
- The waiver of commercial rates extended until end-September 2020
- A €2 billion Covid-19 Credit Guarantee Scheme,
- Other business finance measures, including supports for start-ups
2 Helping people, especially young people, get back to work
- Extension of the Pandemic Unemployment Payment (PUP) to 1st April 2021
- €200 million investment in training, skills development, work placement schemes, recruitment subsidies, and job search and assistance measures
- 35,000 extra places will be provided in further and higher education.
- Further supports for apprenticeships
3 Building confidence and investing in communities
- Financial Certainty through the Enterprise Wage Support Scheme, the Pandemic Unemployment Scheme, Rates waivers etc.
- €500 million investment in communities • Investment in schools, walking, cycling, public transport, home retrofitting, and town & village renewal
- Tax measures including a temporary reduction in the standard rate of VAT
- Stay and Spend initiative
- Targeted measures for most vulnerable sectors
4 Preparing Ireland for the economy of the future
- €25 million Investment in Life Sciences
- Training and Skills Development
- €10 million to be provided under a New Green Enterprise Fund
- Increase in Seed and Venture Capital for innovation driving enterprises
- Additional supports for IDA promotional and marketing initiatives targeting jobs
- Additional supports to businesses to develop their online presence.
- €20 million Brexit fund to help SMEs to prepare for new customs arrangements
- Expansion of Sustaining Enterprise Fund scheme