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Ireland likely extends energy temporary VAT cut to 9%; inflation at 40 year high

Temporary domestic gas and electricity cut from 13.5% to 9% likely to be extended beyond current October 2022 deadline

Ireland’s inflation hit 9.6% in June, with the energy rate up to 54%. This has prompted the government to bring forward budget plans to September, two weeks earlier than expected. This gives space for potentially extending May’s temporary cut in energy VAT rates at least till the end of 2022.

Speaking to the press on Monday, Finance Minister Donohoe said as soon as “we’re in a position to see a lower price of energy, I’m very confident the Government will act at that point to change the measures that are there.”

May VAT rate cut

The government temporaryily cut VAT on domestic heating gas and electric from 13.5% to 9% between 1 May and 31 October 2022. Solid fuels and and heating oil are excluded.   There will also be additional fuel allowance support payments.

Other European cuts on VAT on fuel and foods have been passed or are under review.

In April 2022, EU states finalised new reduced EU VAT rate setting freedoms .

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