Expert commentary:

Budget 2021: Tourism & Hospitality Sector Overview

14 October 2020

Austin Hickey, Director, BDO Consulting, provides a breakdown of the measures and supports announced in Budget 2021 that are of relevance to the Tourism & Hospitality sector.

A reduction in the 13.5% VAT rate was firmly on the Tourism & Hospitality sector’s agenda prior to the arrival of Covid-19. It was no surprise, therefore, to see the level of angst amongst key representative groups in the sector, when the Government made the decision to leave the rate unchanged when announcing the July Stimulus Plan.

The decision to reduce the VAT rate to 9% for the tourism and hospitality sector in Budget 2021 will be welcomed following an extremely challenging period for the sector. However, there will be some disappointment due to the temporary nature of the reduction. 

While giving an immediate cashflow benefit to tourism businesses, it will only be when international tourist activity commences and normal business returns that the tourism sector and wider economy will see the full benefit of the reduction in the VAT rate. 

With expectations for relatively low levels of international travel in 2021, for the tourism sector to see any real benefit from the VAT reduction, it is vital that the Government and its agencies now focus their efforts on doing what they can to get Ireland open for international visitors. 

If you have any queries related to the information above, please contact Austin Hickey at [email protected]