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The Portuguese Government is under renewed pressure from hoteliers and restaurateurs to lower the value-added tax (VAT) rate on the sector.
With a petition from businesses with 21,000 signatures, the Association of Portuguese Hotels, Restaurants and Similar establishments (AHRESP) has begun lobbying the Government to restore the 13 percent rate of value-added tax, which was revoked in the 2012 Budget.
The Association has claimed that the imposition of the 23 percent rate is dampening tourism activity. It has highlighted that the introduction of the headline rate contrasts with policies from other European Union states, in particular Ireland and Greece, which, despite being subject to an excessive deficit procedure, secured approval to lower the tax burden.
Contrary to the Association's claims, Portugal's restaurants are not subject to the highest value-added tax rate in the European Union, but the rate imposed is above average. About half of European Union member states offer reduced rates of VAT, while Hungary and Romania have the heaviest burdens at 27 percent and 24 percent, respectively.
Lower headline rates apply in Madeira and the Azores of 22 percent and 18 percent, respectively.
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