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Low-rate VAT for hospitality industry will end on 1 October

Vincent Van Peteghem (CD&V). © Belga

A special VAT rate of 6% introduced to help the hospitality industry will end on 1 October, federal finance minister Vincent Van Peteghem said.

The low rate was intended to allow bars and restaurants some sort of cushion following all the difficulties they had been through with lockdowns, followed by limited customer numbers and other restrictions.

The 6% meant they could continue to charge the same prices yet pass less on to the government. Normal VAT rates in the industry vary between 12% and 21%.

“The measure was supposed to give the catering industry the opportunity to replenish their buffers a bit, but we have always clearly stated: this is until the end of September,” Van Peteghem (CD&V) told the VRT’s Sunday politics show De Zevende Dag.

So yes, that measure will end on October 1.”

And he also warned that the time was coming to end many other support measures introduced to cope with the effects of the pandemic – referring to the ‘bazooka of measures’ the government had spoken of at the outset of the crisis.

“The measures should now be phased out and that process should be finalised by the end of the year,” he said.

“In total, together with other governments, we have taken measures worth more than 30 billion euros in support. If I translate that per Belgian, that is 3000 euros each. So we have put a lot of money into the economy to support people and companies. But there are also a lot of people who work really hard, who have worked at home with children playing behind them or who had to go to work in difficult circumstances, who did not receive a single euro in corona support. We have to say to those people: economic growth is back to normal.”

Earlier, Van Peteghem also announced the government has no intention of reducing the VAT payable on energy bills, one proposal that has been raised to help households cope with rocketing prices.

Instead, he is proposing a system of surcharges, which can be more flexibly used to deal with individual situations, Reducing VAT, he said, is a very broad-brush measure which brings only momentary relief.

And it is expensive, in the order of 770 million euros per year. Far better to put that money towards a reduction of the charges on labour,” he said.

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