IN line with the Programme for Government commitment, the 9 per cent VAT rate has been reintroduced since July 1 2026. This reduced rate will apply to food and catering services and to hairdressing. While the measure will not apply to hotel accommodation, it will apply to food and catering services provided by hotels.
The objective of this measure is to support businesses in these sectors who are facing increased cost pressures.
Independent local TD Marian Harkin said “It is expected to support over 150,000 jobs nationwide. CSO data shows that over 99% of businesses in these sectors are SMEs, with more than half being microenterprises employing fewer than ten people.
“Approximately 85% of the benefit of this measure will go directly to SMEs.”
She said that she strongly welcomed the VAT reduction, which she says she has consistently advocated for. “It will be particularly important for the many SMEs across Ireland — and especially for those in Sligo, Leitrim and South Donegal, where small and family‑run hospitality businesses are central to the local economy.”
“Across the region cafés, restaurants, food producers, catering companies and hairdressers operate on very tight margins. These businesses are often the anchors of our towns and villages – from Tubbercurry to Ballyshannon, from Ballymote to Ballinamore – providing employment, supporting local suppliers, and sustaining year‑round economic activity.”
“The hospitality sector in the North‑West has faced significant financial pressures in recent years due to rising costs. By reducing the VAT burden, this measure will provide much‑needed financial relief and improve cash flow for local businesses. It will help them remain competitive, particularly in a region where tourism is a vital driver of growth.”
“This VAT reduction also brings us more in line with rates in neighbouring European tourist destinations such as France and Spain.
“That matters for Sligo, Leitrim South Donegal, where tourism continues to grow — from adventure tourism in Bundoran and North Leitrim to cultural and coastal tourism in Sligo.
“A more competitive VAT rate strengthens our offering and supports the continued development of the region as a destination.”
“Crucially, this measure will inject greater viability into the sector, helping to protect jobs, encourage investment, and ensure that hospitality businesses across the region can continue to serve their communities and contribute to the wider economic and social life of the North‑West.”
The 9% VAT rate for small businesses in the hospitality, tourism, and food industries will protect jobs and help businesses thrive, Leas Cathaoirleach of Sligo County Council has said.
Cllr Walsh said the reduction in VAT for hospitality will help businesses remain competitive, continue to create jobs and provide quality services in our local communities across Sligo.
“In Fine Gael, we know that running a business isn’t easy and we are committed to working hard to reduce costs for businesses.
“There are around 20,000 restaurants, pubs and hotels across the country. They are in every town and village, like Sligo providing a great service for the community.
In 2022, according to the Central Statistics Office, there were 244 food and beverage businesses in the county of Sligo, with 1,828 employees.
“Jobs in hospitality are vital for so many communities across Ireland, and we need to do all we can to protect them and our economy.
“In 2025, there were 186,000 people employed in Accommodation and Food Services, with 75% of businesses employing less than 10 staff.
“That’s why this reduction in VAT for the hospitality sector will be a huge help to so many.
“This change will be felt on the ground; by our family-run shops, cafés and service providers who have worked hard through challenging times. It gives them space to reinvest, innovate, and expand,” he said.
“Fine Gael is committed to supporting our SMEs in our local communities in Sligo by helping them reduce costs,” concluded Walsh.
