The Irish hospitality and tourism sector has been thrown a lifeline in the form of a 4.5% cut in the VAT rate.
The VAT rate will be cut from 13.5% to 9% from November 1, 2020. Irish Minister for Finance Paschal Donohoe said he made the decision as a result of the “unprecedented challenges” facing this particular sector of the economy due to the COVID-19 pandemic.
The cut, which is a temporary measure until December 2021, had been a key lobbying focus since lock-down measures were implemented in March.
Additionally, the standard VAT rate was cut by 2% in July from 23% to 21%. The cut, which is effective from September until the end of February 2021, was designed to provide assistance to a wide range of economic activities as a result of the financial impact of the pandemic.
R&D incentives to help boost recovery
Minister Donohoe also announced that the “Knowledge Development Box” relief is being extended for a further two years until the end of December 2022.
The Knowledge Development Box was introduced in 2016 and applies relief to income from qualifying patents, computer programs and, for smaller companies, certain other certified intellectual property that resulted from research and development activities in Ireland.
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. He also said he was extending the accelerated capital allowances scheme for energy efficient equipment for a further three years.