The Irish government has announced plans to extend the reduced VAT rate for the tourism and hospitality sector and the tax debt warehousing scheme to aid businesses that are struggling because of the COVID-19 pandemic.
Ireland’s economy recovery plan, published June 1, calls for extending the tax debt warehousing scheme to the end of 2021 for eligible taxpayers, with an interest-free period throughout 2022. According to the Department of Finance’s June 1 release, the scheme has provided businesses with about €2.3 billion in liquidity during the pandemic. The government will draft legislation that includes the various tax measures to provide businesses with certainty as COVID-19 restrictions are lifted, the release says.
Ireland’s Department of Finance announced in May 2020 that it would provide liquidity support for businesses affected by the COVID-19 pandemic, including “warehousing” for 12 months VAT and payroll tax debts due from March 1, 2020, to the date when sectoral restrictions are lifted. According to Finance Minister Paschal Donohoe, under the tax debt warehousing scheme, interest would not accrue on businesses' pandemic-related tax debts, and there will be no debt enforcement actions for 12 months after recommencement of business activities. After that period, a 3 percent interest rate will apply to outstanding debts — a 7 percentage point reduction from standard tax debt rates.
In October 2020 Ireland reduced the VAT rate for its tourism and hospitality sector from 13.5 percent to 9 percent from November 1, 2020, to the end of 2021 to provide support for the struggling sector. Under the recovery plan, the reduced rate would be extended to September 1, 2022. The government said it is essential to continue to provide aid as businesses reopen in June and July.
The Irish Revenue Commissioners reminded online shoppers in a May 31 release that beginning July 1, the VAT exemption for imported goods worth less than €22 will no longer apply. According to the release, consumers should take note of the changes and potential VAT charges when purchasing online goods from non-EU member states. The revenue commissioners said the new VAT rules aim to eliminate preferential VAT treatment of imported goods.