Politicians call for VAT harmonisation to help tourism and hospitality in Derry and border areas

At Stormont this week UUP MLA Diana Armstrong spoke of the value hospitality companies add to local economies in the border areas.

She pointed to figures from the Northern Ireland Statistics and Research Agency (NISRA) for 2023 which showed that ‘tourism in border areas is a significant driver for the local economy’.

“For Derry City and Strabane District Council, with the famous Derry walls and 'Derry Girls' acclaim, there were 820,000 night stays with a spend of £63 million. A big part of the tourist experience is eating out at the many hospitality outlets at our tourist attractions,” she said.

The Fermanagh and South Tyrone MLA pointed to the fact that the Irish Government has said it will lower the VAT rate for food-based hospitality from 13.5 per cent to 9 per cent, while in the North it will remain at 20 per cent.

She called on the Minister for the Economy Caoimhe Archibald and the Minister of Finance John O’Dowd ‘to work jointly with Hospitality Ulster to engage with HM Treasury and secure a meeting with the Chancellor of the Exchequer to advocate for a reduction in the VAT rate for hospitality in Northern Ireland to align with the Republic of Ireland’.

During a recent debate at Westminster East Derry MP Gregory Campbell also raised the differential VAT rates on either side of the border.

"The Government in the Republic have indicated that they will reduce their rate yet again from 13% down to 9%, which means that the disadvantage gap for Northern Ireland retailers and consumers will widen considerably,” he remarked.

He asked the Parliamentary Under-Secretary of State for Services, Small Business and Exports Gareth Thomas if he would raise the matter with the Treasury an the Chancellor for the Exchequer Rachel Reeves.

"The Minister rightly points out the devolved nature of much of retail. Does he agree that the chronic level of VAT, which is not devolved—it is a matter for the Treasury—compared with our neighbour in the Irish republic is having a detrimental effect on retailers?” asked the DUP MP.

Mr. Thomas replied: “I will take that question away and look at it. I know that that is an issue particular to Northern Ireland. He will understand that it is not immediately the responsibility of the Department for Business and Trade, but I will none the less take a look at it.”

During the COVID-19 pandemic hospitality businesses in Derry benefited from a reduced rate of 12.5 per cent until 2022 when the 20 per cent rate was restored.

Across the border a temporary 9 per cent VAT rate was introduced during the pandemic prior to being hiked to 13.5 per cent in 2023.

However, the Irish Government has indicated it will slash VAT for food-based hospitality to nine per cent in the next Budget.