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ISME calls for standard VAT rate to remain at 21%

Under the Jobs Stimulus Package announced on 23rd July 2020, the Government took the decision to reduce the standard rate of VAT from 23% to its previous (permanent) 21% rate, to assist consumers and businesses alike in the face of the impacts of the Coronavirus pandemic. ISME is asking the Government to consider maintaining the lower rate beyond the 28th February date set for the conclusion of the lower rate.

The 9% and 23% rates were originally introduced as temporary measures in 2011, to alleviate the previous economic crisis. While the 9% rate was always recognized as temporary, there seems to be some level of official amnesia about the temporary status of the 23% rate.

“The jobs stimulus introduced by the Government has been a welcome effort and essential in assisting the Irish economy in the severest of circumstances arising from the pandemic,” said Neil McDonnell, CEO, ISME. “It has served as a dual incentive to provide consumers with additional spending capacity and to the providers of products and services who have been able to sell at a slightly reduced rate.”

“Clearly not all businesses have been able to avail of the reduction, because they continue to be closed. However, Irish companies that are continuing to do business are the ones that are keeping the economy moving and they deserve every possible continued support. ISME is therefore asking that reduced rate should remain in place on an ongoing basis, but in the first instance that it should be kept going for an initial review at the next budget.”

There were a range of initiatives announced across an array of sectors that have been essential for those sectors and for the maintenance of economic balance.  But the one instrument that is applicable across the board is the standard VAT rate. Our domestic businesses need to be price competitive. Fixing the standard rate at 21% is one way to help.


Issued on behalf of Irish SME Association (ISME) by Heneghan

Neil McDonnell, ISME –  (087) 299 5658 – [email protected]

Nigel Heneghan  – (086) 258 7206 – [email protected]