The hospitality sector in the UK could benefit if proposals for a reduced VAT rate for restaurants in Europe are approved.
Under the proposals put forward by the European Commission, tax could be cut to as low as 5% on restaurant services in EU countries.
The move is aimed at providing a boost to the sector and fuelling economic growth.
Laszlo Kovacs, EU taxation commissioner, said: “There's no reason why restaurant services, for example, should be allowed to benefit from a reduced rate in one half of the EU and not the other half.”
The British Hospitality Association, however, doesn’t believe that the UK government would implement the lower VAT rates, as it would result in them losing money.
Martin Couchman, Deputy Chief Executive of the BHA said: “The reduced rates will have zero effect on the hospitality industry. The UK government will do nothing because they cannot afford to. All the proposal’s doing is giving the government the legal right to reduce the rate if they wish to.”
At present the minimum standard rate of VAT throughout the EU is 15%, although some of the 27 member countries have already gained exemptions from the full rate until 2010.
The proposals, which would exclude alcoholic drinks sales, would grant all states the same conditions.
The lower levy rates need to receive unanimous backing from all 27 EU governments before being implemented.