The low VAT rate of 8% introduced for the tourism industry is being secured by businesses that are not operating with the sector.
The Department of Finance has told the Irish Times that it was "not possible" to prevent certain companies that have little or no substantive operations in the tourism sector from availing of the tax break brought in five years ago to boost business for the likes of hotels and restaurants.
It means corporate caterers to the multinational likes of Apple, Facebook and Google have benefitted from a break estimated to cost the taxpayer up to €350m per year. It is up for renewal in next month’s budget.
Meanwhile, certain firms that actually deliver tourism services such as cycling tours and boat and caravan hire can't avail of it.
By way of example, the Irish Times cited Clew Bay Bike Hire in Westport, which won the Mayo Tourism Business of the Year award last year but is still not allowed charge the 9% VAT rate. The Irish Boat Rental Association was recently unsuccessful in lobbying the Government to apply the rate to its members.
The department has said that it is restricted by "competition law" and EU VAT directives in how the rate can be applied by “competition law” and EU VAT directives and to apply differing VAT rates to catering companies that directly service tourists and those that do not.
