Retail Excellence Ireland calls for Vat cut and warns of mass business closures

Retail Excellence Ireland calls for Vat cut and warns of mass business closures

Retail Excellence Ireland has called on the Government to introduce a lower rate of VAT as it warned that the industry is facing mass closures, according to a report in the Irish Independent.

The representative group urged the Government to intervene as retailers across Ireland battle against the rising cost of doing business.

The standard VAT rate of 23pc applies to most goods sold by retailers.

Retail Excellence pointed to a number of costs that have impacted retailers so far this year, including the recently increased minimum wage and statutory sick pay. The Red Sea crisis is also contributing to supply chain issues for some in the sector.

Irish businesses in the sector are also challenged by high interest rates, as well as legacy tax debt.

The Irish Independent reported that Retail Excellence had ‘warned that these costs will be exacerbated further by new European Union legislation on repayment which is set to be introduced in the coming months. This will see firms have 30 days to repay all invoices. Other issues include enhanced employer reporting requirements set out by Revenue.

‘Around 47pc of 128 retail companies surveyed by the group said they will not be able to accommodate the rising costs of doing businesses. These businesses represent around 3,000 stores across the country.

‘A total of 83pc of retailers have made changes to their operating model as a result of increased costs. This includes introducing price rises or reducing hours.

Around 72pc said they have seen a rise in employees taking sick leave following the introductory of the new policy, while the same number also believe current economic policies will disrupt their business in 2024.

A reduction in VAT would be welcomed by 46pc of businesses, the survey found.

“The Government is mistaken if it believes that hard-pressed retailers can absorb a series of rapidly mounting labour costs, punitive repayment terms, and ongoing supply chain issues – and still remain in business,” the group’s chief executive Jean McCabe told the Irish Independent.

“The reality is that without significant financial support, specifically on VAT, we will see mass closures.”

She added that 10pc of the country’s workforce are in the retail industry.