Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

The Senators have raised a number of issues and I will try to deal with them as concisely as possible. The Finance Act 2020 provided that the 9% VAT rate would apply until 31 December 2021. It applies to certain goods and services which primarily relate to the hospitality and tourism sector which were then subject to the VAT rate of 13.5%. It has been decided this extension should run until 31 August 2022. I know there are requests to extend it to 2023 given the time it will take for the tourism industry to recover. Obviously, I am not making any commitment here, but I am sure those points will be raised well in advance of the budget for 2022. These matters can be dealt with in the budgetary context. I give no commitment except to say I expect that matter will be considered as we approach the budget in the autumn.

The extension will cost the Exchequer approximately €350 million. We all know that when a VAT rate is reduced, businesses have discretion over the prices they set and it will remain their choice. In some cases, businesses will pass on, at their discretion, the full reduction in VAT and others will not because they will need it for cash flow purposes to meet their daily costs. That is a matter for businesses and it is a matter that comes up every time there is reduction in a VAT rate.It is up to consumers to watch out for that when they go to different premises.

I was asked specifically about the music and entertainment sector by a couple of Members. I assure Senators that the provision introduced in budget 2021 does apply the temporary 9% VAT rate to admission fees for cinemas, theatres and musical performances. Under long-standing provision in Irish legislation, admission fees to live theatre or music performances are exempt from VAT subject to certain conditions. The VAT treatment of admission to theatre and musical performance is dependent on the type of event which takes place and the facilities that are available for the consumption of food and drink, including alcohol, during all or part of the performance. Broadly, if there is a live performance and food and drink are not available, the admission tickets are exempt from VAT. If there is a live performance with food and drink available, the admission tickets are subject to the reduced rate of VAT of 9%. For venues where the entertainment is not a live theatre or music performance, including dances, discos, nightclubs and pubs, the standard rate of VAT at 23% continues to apply. Therefore it is not only the performance but what else is happening in the venue at the time.

Looking to 2023 can be considered separately but not as part of the legislation here today.