Many countries have published tax relief measures to address the economic impact of the coronavirus. We provide an overview with a brief summary of tax measures for businesses taken by 8 countries.
The Dutch Tax and Customs Administration allows entrepreneurs and freelancers to apply for special deferment of payment for income tax, corporate tax, sales tax (VAT) and payroll (wage) taxes. Other measures are the reduction of provisional assessments for businesses that expect a lower profit due to the coronavirus and the temporary reduction of interest penalties. As of March 23, 2020, the late payment interest for all tax debts is reduced from 4 to 0.01 percent.
The ATO implements a series of relief options. Affected businesses can apply for deferment of some payments and various instalments that are due, such as income tax, activity statement (including PAYG instalments), fringe benefits tax (FBT) and excise payments by up to 4 months. Businesses on a quarterly reporting cycle may elect to change their goods and services tax (GST) reporting and payment to monthly, to get quicker access to GST refunds. For affected businesses, the ATO considers remitting interest and penalties applied to tax liabilities incurred after January 23, 2020. Businesses can discuss with the ATO to entering a low interest payment plan. Employers still need to meet ‘super guarantee obligations’ for their employees.
The US House of Representatives approved a series of changes to the Families First Coronavirus Response Act (H.R. 6201), which makes emergency supplemental appropriations for the fiscal year ending September 30, 2020, and for other purposes. The law is expected to quickly become law after it goes to the Senate. The document of 110 pages describes various measures and budgets. It is a multi-billion dollar tax and spending package and describes, among others, tax credits for paid sick and paid family and medical leave.
Germany’s Finance Ministry and Economic Affairs Ministry jointly unveiled an assistance programme and tax policy measures totalling billions of euros. The two ministries agreed on an extensive package of measures to protect jobs and to protect businesses of all sizes in all sectors. In order to improve companies’ liquidity situation, the options for deferring tax payments and reducing prepayments will be enhanced, and enforcement rules will be adapted.
The French government is implementing measures to support businesses. Companies can request for deferment of the payment of their next due dates for direct taxes (tax deposit on companies, payroll tax) without penalty. For the self-employed it is also possible to defer the payment of their withholding taxes on their professional income from one month to another up to three times if their instalments are monthly, or from one quarter to the next if their deposits are quarterly.
The Swedish government developed a crisis package that, depending on how the situation develops, can encompass more than SEK 300 billion if the entire liquidity reinforcement through tax accounts is used. Employers’ wage costs can be halved, as the central government will cover a larger share of the costs. The employee receives more than 90 percent of his or her wage. It is proposed that the central government takes the entire cost of all sick pay during April and May. Self-employed persons will also be compensated in that they can receive standardised sick pay for days 1 to 14. Companies can defer payment of employers’ social security contributions, preliminary tax on salaries and VAT that are reported monthly or quarterly. Company payment respite covers tax payments for 3 months and is granted for up to 12 months.
Companies that encounter financial difficulties following the spread of the coronavirus can request support measures from the Federal Public Service Finance. The measures are available to natural or legal persons with a business number and consist of a tax payment plan, exemption from late payment interest, and an exemption from fines for non-payment. The measures apply to professional withholding tax, VAT, corporate income tax, and the tax on entities not subject to corporate income tax.
he New Zealand Government announced a Business Continuity Package to assist businesses struggling due to the impact of the coronavirus. The first proposal concerns giving the Inland Revenue the discretion to remit use-of-money interest (UOMI) for customers significantly adversely affected by the coronavirus. The second is about increasing the provisional tax threshold from $2,500 to $5,000 from 2020/2021. The third is on increasing the small asset depreciation threshold from $500 to $1,000, and to $5,000 for the 2020/21 tax year. The fourth concerns allowing depreciation on commercial and industrial buildings from 2020/2021. And the fifth is about removing the hours test from the In-Work Tax Credit (IWTC) from July 1, 2020.
Sources: Dutch Tax and Customs Administration, ATO, US Families First Coronavirus Response Act, German Federal Ministry of Finance, French Ministry of Finance, Swedish government, Federal Public Service Finance Belgium, New Zealand Inland Revenue