Britain’s decision to leave the European Union could provide a huge boost to Northern Ireland’s tourism, thanks to freedom from EU laws over VAT rates for tourism.

For Northern Ireland – the only part of the UK sharing a land border with another state – tourism-related businesses pay a 20 per cent VAT tax, more than double that of the neighbouring Republic of Ireland, which only pays a 9 per cent tax.

At present, EU law prevents member states from setting different levels of tax for different regions, meaning Northern Ireland has to have the same rate as the rest of the UK. Following the conclusion of the brexit process, Britain will not have to enforce that rule.

“Levels of VAT and Air Passenger Duty (APD) are making businesses less competitive than their equivalents in the Republic of Ireland,” said Northern Ireland Affairs committee chair, Laurence Robertson.

“We are calling on the UK Government to examine options for reducing these tax burdens on tourism and creating the right environment for the sector to flourish.”

Cuts to APD for Northern Ireland would mean the Treasury also reducing the amount it provides the devolved administration to run public services.

Northern Ireland’s tourism sector has shown growth following the recession, but is still weaker in comparison to the rest of the UK. According to Hospitality Ulster, which represents bars, hotels and restaurants, matching a VAT rate of the Republic of Ireland would create 8,500 jobs and increase visitor numbers by 16 per cent.