The 9% VAT rate for the hospitality sector looks set to be extended under plans to be approved by Cabinet.
The measure was due to expire at the end of August.
It is understood Finance Minister Paschal Donohoe discussed the matter with coalition leaders on Monday night.
He is set to bring a memo to Cabinet outlining the details of the extension.
While it is not clear how long the extension will remain in place, there is speculation it could be until the end of the year.
The lower rate was introduced following intense lobbying from the hospitality and restaurants sectors in 2021, when the country was in the grips of the COVID-19 pandemic.
Money and receipts. Picture by: Daniele Mezzadri / Alamy Stock PhotoThe reduction applies to services such as catering and restaurants, tourist accommodation, cinemas, theatres, museums, historic houses, open farms, amusement parks and hairdressing.
It is anticipated that extending the 9% rate until the end of year would cost in the region €200m to €250m.
While a survey of over 150 businesses across different areas of the hospitality industry found wide support for the move.
The research, carried out by Kroll and the Restaurants Association of Ireland (RAI), revealed that 96% of restaurant and hospitality business owners surveyed felt the reduced VAT rate should be retained.
Withdrawing support as early as this summer will have "a negative impact on short-term recovery", they say.
The survey also examined sentiment from hospitality managers about the current workforce.
It found 61% of restaurant owners believe that staffing would pose the biggest challenge in the future - while more than 80% of respondents say wages will need to increase to retain employees.
Adrian Cummins, CEO of the Restaurants Association of Ireland, says: "There's no question that staffing is now the biggest issue for our sector, with the vast majority of restaurant and hospitality businesses having to increase wages to retain staff.
"We now have six weeks to recruit to save the Irish summer and retain our standards."
Additional reporting: Alan Cantwell
