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Ireland Lowers Headline VAT Rate

Wednesday, September 9, 2020

Ireland reduced its standard rate of VAT from 23 percent to 21 percent on September 1, 2020, temporarily until February 28, 2021.

According to the Finance Department, the standard rate of VAT applies to approximately 53 percent of taxable persons' supplies, including the supply of clothes and footwear, electrical equipment, cars, petrol, diesel, alcohol, and tobacco.

Finance Minister Paschal Donohoe said: "This temporary reduction in the standard rate of VAT cuts across a wide range of economic activity and as such there is a broad range of the types of businesses and traders who will benefit. Discretion in relation to the setting of prices charged will remain that of relevant businesses. However, it will help consumer confidence, benefit consumers, and generate economic activity if it was passed on to the final consumer."

There have been calls recently for more support, including from the Drinks Industry Group of Ireland (DIGI), which is calling for a 15 percent reduction in excise tax on alcohol in Budget 2021.