The temporary VAT rate of 9 per cent on tourism services such as restaurant meals and hotel accommodation will remain in place until the end of 2013, Minister for Tourism Leo Varadkar told the Dáil today.
He said the policy had worked well, bringing an increase in employment to the sector and lowering prices.
"Following recent discussions with the Minister for Finance, I have obtained an assurance that the lower rate of VAT will be maintained during 2013 so that businesses, tour operators and customers alike can plan for the 2013 season knowing that the 9 per cent rate will apply," he said .
"It is particularly good news for The Gathering Ireland 2013, the year-long festival of festivals taking place next year, as it will help to achieve our target of bringing an extra 325,000 extra visitors to Ireland."
He said the retention of the rate was indicative of the importance the Government attached to the tourism industry.
The Restaurants Association of Ireland (RAI) welcomed the announcement today saying many restaurants directly attributed the reduction in the rate to being able to hire new staff. Chief executive Adrian Cummins said he was happy the Minister had recognised the importance of the industry to Ireland.
"The next 18 months or so is an important time for our sector with The Gathering taking place throughout 2013 and also other important events to take place nationwide, including the Heineken Cup," he said.
Tourism Ireland also welcomed the news, saying perceptions of the value available in Ireland had improved in recent years.
"Value for money is a key message in our advertising and promotions around the globe and the announcement today that the special 9 per cent VAT rate for tourism and hospitality services will be maintained until the end of 2013 is good news indeed," said chief executive Niall Gibbons.