Jobs Initiative: 9% VAT Rate
2 June 2011
As part of the Jobs Initiative announced by the Minister for Finance, a reduced rate of VAT at 9% will be introduced for certain goods and services. It will come into effect from 1 July 2011 and will apply until the end of December 2013.
The new 9% VAT rate will apply to the following items and services:
- catering and restaurant supplies, including vending machines and take-away food (excluding alcohol and soft drinks sold as part of the meal)
- hotel lettings, including guesthouses, caravan parks, camping sites, etc
- cinemas, theatres, certain musical performances, museums, art gallery exhibitions
- fairgrounds and amusement park services
- facilities for taking part in sporting activities, including green fees charged for golf and subscriptions charged by non-member-owned golf clubs
- certain printed matter, e.g. newspapers, brochures, leaflets, programmes, maps, catalogues, printed music (excluding books)
- hairdressing services.
This is a 1/3 reduction in the VAT rate for some goods and services and is larger than expected. The reduced VAT rate is intended as a boost to the tourism and leisure sector. We believe that it should stimulate employment by reducing prices in hotels, restaurants and theatres.
Businesses will need to consider their IT systems and changes necessary to accommodate the new rate of VAT.
In general, goods and services supplied before 1 July 2011 are liable to VAT at the rate in force at the time of supply, namely 13.5% for the services outlined above. However, where goods and services are supplied in June 2011 by a trader who is obliged to issue a VAT invoice, and that trader issues the invoice after 30 June 2011, the 9% rate applies. However, a trader supplying goods and services to private individuals should always apply the VAT rate in force at the time of supply.
Goods and services which will remain at the 13.5% rate include the supply of fuel, gas and electricity, waste disposal, car rental, property sales and construction services. The 21% VAT rate will continue as before.
Please contact us if you would like to discuss how the rate affects you or how you could maximise available savings.
