Covid19 Updates - Tax and Economic Support Packages Across the Globe - Last Updated on May 18, 2020

GOVERNMENT STIMULUS PACKAGES ACROSS THE WORLD TO FIGHT THE CORONA VIRUS IMPACT ON THE ECONOMY.

The world is facing an unprecedented challenge due to COVID-19 outbreak. The biological impact will certainly be followed by an economic impact. Keeping in mind the possible economic impact, many governments have started declaring the stimulus packages. Most countries will follow this soon.

Nucleus will ensure that the benefits are appropriately availed to help your local operations and employees.

 

Country

Stimulus packages, Tax measures and deadline extensions of withholding tax and other taxes in light of Corona Virus economic impact

Australia

The Government had announced economic stimulus package of AUD 17.6 billion on March 12, 2020 and also has announced second stimulus package on March 22, 2020, bringing the total economic value to AUD 189 billion. This includes AUD 17.6 billion for the Government’s first economic stimulus package, AUD 90 billion from the Reserve bank (RBA) and AUD 15 billion from the Government to deliver easier access to finance, and AUD 66.1 billion in economic support package.

Sydney has implemented a relief measure valued AUD 25 million to support the business. These measures will be for initial period of 6 month. The City of Sydney is also in a process of developing second support package for small businesses.

New South Wales (NSW) Government has announced AUD 2.3 billion health boost and economic stimulus package on March 17, 2020. On March 27, 2020 New South Wales Government released the second stage of its economic package, which supplements the first stage announced on March 17, 2020. 

The key measures include:

  • Businesses affected by COVID-19 are given an option to defer payroll tax payments until July 21, 2020;
  • Small businesses paying payroll tax will be receiving a one-off grant of AUD 17,500;
  • AUD 1 million payroll tax threshold brought forward to July 1, 2020;
  • Employee Assistance Program (“EAP”) will be provided with AUD 91 million to double the EAP in 2020-21 to provide additional aid to Western Australians.
  • Businesses with regular GST credits / refunds are to be provided with an option to switch from quarterly to monthly filings for quick refunds.
  • Any businesses facing shortage of cash flow may co-ordinate with the ATO for deferred payment schedules and relief from late GST payments, penalties and interest liabilities.
  • The Government is allowing individuals affected by the Coronavirus to access up to AUD 10,000 of their superannuation in 2019-20 and a further AUD 10,000 in 2020-21. Individuals will not need to pay tax on the amounts released.
  • Payment deferrals and varied instalment plans which include income tax statements, business activity statements, Pay As You Go (PAYG) instalments, Fringe Benefit Tax (FBT) up to 6 months can be negotiated with ATO.
  • Changes in reporting cycle from quarterly to monthly will facilitate quick GST refunds.
  • Changes in Pay As You Go (PAYG) instalments – Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.
  • Employers will need to meet their ongoing super guarantee obligations for their employees.
  • New South Wales relief package  has following measures:
  • AUD 450 million for the waiver of payroll tax for businesses with payrolls of up to AUD 10 million for 3 months (the rest of 2019-20). This means these businesses will save a quarter of their annual payroll tax bill in 2019-20. Employers whose total grouped Australian wages for the 2019-20 financial year are no more than $10 million will be entitled to defer their NSW payroll tax liabilities for the months of July to August 2020, inclusive. These employers are already entitled to a waiver of their payroll tax liabilities for the period March to May 2020 under the first stage of the economic package announced on 17 March 2020.
  • AUD 56 million to bring forward the next round of payroll tax cuts by raising the threshold limit to AUD 1 million in 2020-21
  • AUD 500 million to bring forward capital works and maintenance
  • Employers will be eligible to defer their payroll tax liabilities for periods up to six months. 

Australia has recently announced AUD 607 million stimulus package as a relief measure to help Western Australian small businesses and households in the wake of COVID-19. The key measures include:

  • Businesses affected by COVID-19 are given an option to defer payroll tax payments until July 21, 2020;
  • Small businesses paying payroll tax will be receiving a one-off grant of AUD 17,500;
  • AUD 1 million payroll tax threshold brought forward to July 1, 2020;
  • AUD 114 million provided as an additional measure to support small businesses;
  • AUD 760 million has been announced in the past few months to help the economy grow;
  • Employee Assistance Program (“EAP”) will be provided with AUD 91 million to double the EAP in 2020-21 to provide additional aid to Western Australians.
  • Businesses with regular GST credits / refunds are to be provided with an option to switch from quarterly to monthly filings for quick refunds.
  • Any businesses facing shortage of cash flow may co-ordinate with the ATO for deferred payment schedules and relief from late GST payments, penalties and interest liabilities.

 

Brazil

In order to help the small- and medium-sized companies soften the economic blow caused by of Corona Virus, the government is planning for the following:

  • The state-owned bank Caixa is going to reduce the interest rates and along with extension of deadlines for debt payments for 60 days. This measure may be extended for 120 days, if required.
  • Caixa will cut lower rates for small and medium sized companies by 45%
  • In order to give more working capital to companies, the government has suspended the Severance Pay Fund (FGTS) payable by companies for three months (8% of salary of the employee) and also the part referring to the portion of the Union in the Simples Nacional;
  • The Ministry of Economy will create the Anti-unemployment Program to avoid layoffs during this pandemic period. The objective of the initiative is to facilitate labor negotiations in order to reduce labor contract costs and preserve employment links, within the limits provided for in the Federal Constitution.
  • Effective from April 1, 2020, the contributions due to the S System will be reduced by 50% for 3 months (about 5-15% of salary of the employee depending up on the employer). The S System is a joint system of social contributions paid by companies. It includes contributions for National Service of Rural Apprenticeship (SENAR), National Service of Trade Apprenticeship (SENAC), National Trade Social Service (SESC), National Service of Cooperativism Apprenticeship (SESCOOP), National Service of Industrial Apprenticeship (SENAI), Industry Social Service (SESI), Social Service of Transportation (SEST), National Service of Transportation Apprenticeship (SENAT), Brazilian Service of Micro and Small Size Companies Support (SEBRAE).  
  • All workers who receive up to 2 minimum wages and have reduced wages and working hours will receive an advance of 25% of what they would receive monthly if they applied for the unemployment insurance benefit. This will benefit more than 11 million workers across Brazil.
  • Suspension of administrative requirements in relation to safety and health at work
  • Temporary cut to the IPI (Tax on Industrialized Products / produced goods) for goods produced domestically or imported, which are necessary to combat Covid-19.
  • Reduced in the import tariffs for medical and hospital products to 0 (Zero).
  • Simplification in customs clearance of products for medical and hospital use to combat Covid-19.
  • Adoption of a non-automatic license for the export of products necessary to combat Covid-19.
  • Creation of an emergency aid of amounting BRL 200, per person, for 3 months, to support informal workers, unemployed and individual micro entrepreneurs (MEIs) that integrate low-income families. This will benefit 15 to 20 million Brazilians.
  • Expansion of credit to micro, small and medium-sized companies (MSMEs).
  • The limited company whose fiscal year ends between December 31, 2019 and March 31, 2020 may, exceptionally, hold the shareholders' meeting within 7 months (instead of 4 months as of now), counting from the end of its fiscal year.
  • On April 1, 2020, to preserve employment and to guarantee the continuity of work and business activities federal government has introduced “the Emergency Employment and Income Maintenance Program”.https://www.nucleus-co.com/news/regulatory-updates/covid-19-updates-from-brazil

In order to help the small and medium-sized companies soften the economic blow caused by of Corona Virus, the government is planning for the following:

  • The state-owned bank Caixa is going to reduce the interest rates and along with extension of deadlines for debt payments for 60 days. This measure may be extended for 120 days, if required.
  • Caixa will cut lower rates for small and medium sized companies by 45%
  • In order to give more working capital to companies, the government has suspended the Severance Pay Fund (FGTS) payable by companies for three months and also the part referring to the portion of the Union in the Simples Nacional;
  • The Ministry of Economy will create the Anti-unemployment Program to avoid layoffs during this pandemic period. The objective of the initiative is to facilitate labor negotiations in order to reduce labor contract costs and preserve employment links, within the limits provided for in the Federal Constitution

Canada

On March 18, 2020, the Prime Minister of Canada announced that the Government of Canada’s COVID-19 Economic Response Plan will provide up to CAD 27 billion in direct support to Canadian workers and businesses. Government of Canada is announcing the new “Canada Emergency Business Account” (CEBA) - 

The brief list of measures / reliefs announced by Government of Canada is as follows:

  • small businesses will have access to capital they need to cope with the economic impact of the COVID-19. This program will provide interest free loans of up to CAD 40,000 to small businesses to cover operating costs that cannot be deferred (such as payroll, rent, utilities, insurance and property tax) during a period where their revenues have been temporarily reduced. To qualify for this scheme, organizations will need to demonstrate that they have paid between CAD 50,000 to CAD 1 million in total payroll in 2019. This program will roll out in mid-April
  • The Bank of Canada is cutting the interest rate to 0.75% to support the Canadian economy during this period of economic stress
  • The government is waiving-
  • 1 week waiting period for those individuals who claim Employment Insurance (EI) sickness benefits, effective from March 15, 2020.
  • the requirement to provide a medical certificate to access EI sickness benefits
  • Establishment of the Business Credit Availability Program (BCAP) to provide additional support to small and medium sized businesses.
  • The Government is proposing to increase the maximum annual Canada Child Benefit (CCB) payment amounts, only for the 2019-20 benefit year, by CAD 300 per child as part of their May payment.
  • Temporary wage subsidy for 3 months to eligible small employers to support businesses that are facing revenue losses and to help prevent lay-offs .The subsidy is equal to 10% of the remuneration the employer pays from March 18, 2020 to June 19, 2020, up to CAD 1,375 for each eligible employee and to a maximum of CAD 25,000 total per employer.
  • The Canada Revenue Agency will not contact any small or medium (SME) businesses to initiate any post assessment GST/HST or Income Tax audits for the next 4 weeks.
  • The Canada Revenue Agency will temporarily suspend audit interaction with taxpayers and representatives.
  • Individual income tax return filing due date deferred until June 1, 2020.
  • For all taxpayers, the payment of any income tax amounts owing on or after March 18, 2020 and before September 2020 will be deferred until after August 31, 2020. No interest or penalties will accumulate on these amounts during this period
  • Introduction of Emergency Care Benefit providing up to CAD 900 bi-weekly, for up to 15 weeks to quarantined or sick with COVID-19 workers or workers taking care of a family member who is sick with COVID-19. Application for the Benefit will be available in April 2020.
  • Implementation of EI work sharing program, announced on March 11, 2020.

Canada has announced proposal of stimulus package for COVID-19 but details are yet to be released.

However, a number of measures were announced by the government and the Bank of Canada to provide monetary stimulus and relief to employers, following are the highlights:

  • On March 4 Bank of Canada lowered interest rates by 0.50%;
  • Canada’s financial regulatory body, in order to help the affected businesses lowered bank reserve requirements. Further Canadian government announced CAD 7.1 billion package for providing loans to businesses to help soften the economic blow by the Corona Virus.
  • The Canada Revenue Agency (“CRA”) has offered Businesses facing difficulties related to COVID-19 to make flexible arrangements in meeting their payment obligations (further details are yet to be disclosed).
  • Employment Insurance (“EI”) sickness benefits is allowed to Workers who are either in quarantine or who have in self-isolation, without having to wait the mandatory one-week waiting period. Accordingly, their claim will be paid for in the first week of their claim;
  • Federal budget, economic package worth CAD 1 billion in response to COVID-19 will be unveiled while the Ottawa province already announced CAD 10 billion business credit line by establishing a Business Credit facility for the affected businesses.
  • Availability Program ("BCAP") is introduced to further support financing in the private sector through the Business Development Bank of Canada ("BDC") and Export Development Canada ("EDC") of Canada;
  • Lastly Canada’s 2020 federal budget on 30 March 2020 has been postponed the, Parliament is also suspended for five weeks, until 20 April 2020, due to the corona virus (COVID-19);

 

China

China, the worst affected country by the novel corona virus (COVID- 19) outbreak has introduced a slew of measures to help boost economic and affected business as follows:

  • Temporary relief from social security contribution for the period February to June 2020 in following manner:
  • For small and medium sized company – Full exemption from old age pension contribution, unemployment insurance contribution and work-related injury insurance contribution.
  • For Large Company – 50% exemption from Old age pension contribution, unemployment insurance contribution and work-related injury insurance contribution.
  • The value-added tax has been reduced from 3 % to 1 % under cash accounting scheme for small businesses till the end of May 2020. 
  • Small Scale Taxpayers in all sectors can issue Special VAT Invoices to its customer from February 1, 2020.
  • Tax Filing Date has been extended by 1 week (i.e. from March 16, 2020 to March 23, 2020) for filings due in the month of March. 
  • Tax filing declaration for April 2020 has been extended. The deadline will be extended from April 20, 2020 to April 24, 2020, nationwide. Further extension is possible if a company is severely hit by corona epidemic.
  • Donation by businesses or individuals in form of funds and goods for epidemic prevention will be allowed for deduction in income tax computation.
  • Companies affected by epidemic hit can now carry forward losses incurred in year 2020 for the period of 8 years.
  • Income earned in epidemic prevention and control period such as transportation of epidemic prevention related supplies, lifestyle services, necessity delivery services etc. will be exempted from VAT i.e. January 1, 2020.
  • Companies can apply for deferring payment related to Housing provident fund. Such companies will have a grace period for paying Housing provident fund contribution from February to June 2020 without affecting employee’s interest.
  • For Shanghai city following policies have been introduced by the local authorities
  • Deferring adjustment to social security contribution base i.e. social security contribution payment will be deferred for 3 months and will be adjusted on July 01, 2020 (instead of April 1, 2020)
  • Reduced rate of employer contribution to medical insurance temporarily by 0.5% for 2020
  • Refunding 50% of the total unemployment insurance premiums paid in the previous year to enterprises that do not lay off employees or minimize the layoffs.
  • For Beijing City
  • Refunding 100% of the total unemployment insurance premiums paid in the previous year to the Small and Medium Sized Enterprises that do not lay off employees or minimize the layoffs (i.e. for insured SMEs with less than 30 people, the layoff rate does not exceed 20% of the total number of insured employees,).
  • Postponement in Principal and Interest Repayment for Loans to Small and medium size company and Micro Enterprises
  • SMEs and micro firms can make applications to banks to defer repayment of principal and interest expenses payable from January 25 to June 30, 2020. Overdue loan repayments in the period will not be subject to penalties.

China, the worst affected country by the novel Corona Virus (COVID- 19) outbreak has introduced slew of measures to help boost economic and affected business as follows:

  • Temporary relief from social security contribution for the period February to June 2020 in following manner:
  • For Small and Medium Sized Company – Full exemption from Old age pension contribution, unemployment insurance contribution and work-related injury insurance contribution.
  • For Large Company – 50% exemption from Old age pension contribution, unemployment insurance contribution and work-related injury insurance contribution.
  • The value-added tax has been reduced from 3 % to 1 % under cash accounting scheme for small businesses till the end of May 2020.
  • Small Scale Tax Payers in all sectors can issue Special VAT Invoices to its customer from February 01, 2020.
  • Tax Filing Date has been extended by 1 week (i.e. from March 16, 2020 to March 23, 2020) for filings due in the month of March.
  • Donation by businesses or individuals in form of funds and goods for epidemic prevention will be allowed for deduction in income tax computation.
  • Companies affected by epidemic hit can now carry forward losses incurred in year 2020 for the period of 8 years.
  • Income earned in epidemic prevention and control period such as transportation of epidemic prevention related supplies, lifestyle services, necessity delivery services etc. will be exempted from VAT i.e. January 1, 2020.
  • Companies can apply for deferring payment related to Housing provident fund. Such companies will have a grace period for paying Housing provident fund contribution from February to June 2020 without affecting employee’s interest.

 

 

France

Economic aid package of EUR 45 billion has been announced to help companies and employees in response to Corona virus outbreak. The government will also prevent  organizations irrespective of their size from any kind of failure or suspension of its operations due to the Corona Virus outbreak. Following are the highlights:

  • The government will -
    • Provide guarantee for loans
    • Allow delay in tax payments 
    • Suspend rent and utility bills for smaller firms. 
  • Allocation of EUR 35 billion package along with reduction in Social Security Contribution.
  • From March 15, 2020, employers whose URSAFF (Union de recouvrement des cotisations de sécurité sociale et d’allocations familiales)contribution due date falls on 15th of the month, may postpone without penalty all or part of the payment of their employee and employer contributions. Payment of these contributions may be postponed up to 3 months. For employers whose contribution due date falls on 5th of the month, French tax authority will inform them accordingly.
  • Companies can postpone for 3 months without penalty payment of corporation income tax, payroll taxes, business tax and property taxes. No conditions need to be satisfied other than a request for postponement. The extension does not apply for Value Added Tax (VAT) or withholdings of employees’ individual income taxes by employers. Companies that have already settled their March installments may request reimbursement from their tax center once.
  • No new tax audits will be conducted during the COVID-19  lockdown period.
  • Companies may request speeding up the process of tax credit refunds such as VAT tax credit, Research tax credit, Innovation Tax credit and tax credit for employment and competitiveness.
  • Deadline for filing personal income tax returns has been extended. The deadline, which was set on May 14, 2020has been extended to 04 - 11 June 2020.

Economic aid package of EUR 45 billion has been announced to help companies and employees in response to Corona Virus outbreak. The government will also prevent the organizations irrespective of its size from any kind of failure or suspension of its operations due to the Corona Virus outbreak. Following are the highlights:

  • The government will -
  • Provide guarantee for loans
  • Allow delay in tax payments
  • Suspend rent and utility bills for smaller firms.
  • Allocation of EUR 35 billion package along with reduction in Social Security Contribution.
  • Companies will be allowed to defer the payment of social security contributions and applicable taxes due in March 2020.
  • Companies are allowed to suspend payments of some social charges and taxes. The relief given for eligible payments would correspond to corporate income tax installments and social security contributions due in March 16, 2020. The applicability of these relief measures can be extended to all taxes and levies due in March.  This relief measures may be further extended after March 2020.

Germany

Germany – Up to 60-67% of reduced salary paid for by the State if COVID-19 has necessitated a reduction in working hours.

From March 1, 2020, Federal Ministry of Labor announced changes in "Act on the temporary crisis-related improvement of the regulations for short-time work compensation" ("Gesetz zur vorüberristeten krisenbedingten Verbesserung der Regelungenfür das Kurzarbeitgeld") will be applicable to employer as well as employee.

  • The Temporary reduction in normal working hours with subsequent reduction in wages of the concerned employee is termed as Short-time Work.
  • Loss of working Hours is considered due to economic reasons or an unavoidable event, temporary (a work stoppage is temporary) and unavoidable (loss of working hours cannot be avoided). At least 1/3 of the employees in an enterprise are affected by a loss of earnings of more than 10 percent of their monthly gross salary in each case.
  • Short-Time Allowance (KUG - Kurzarbeitergeld) is a benefit under the statutory unemployment insurance, which is provided by all companies located in Germany having minimum one employee.
  • Short-Time Allowance (KUG - Kurzarbeitergeld) paid by the Federal Employment Agency (BfA - Bundesagentur für Arbeit).
  • The employer can reduce regular working hours of specific areas/departments and can also be applied to varying extents with respect to specific employee categories.
  • The employer should submit the application in writing or electronically stating details of Short-Time (reduced) working hours to the Federal Employment Agency to coordinate short-time working issues between the employment agencies involved and the company's affected operations.
  • The Federal Employment Agency will pay Short-Time Allowance (KUG) up to 60 percent of the lost net remuneration. If there is at least one child living in the household, the Short-Time Allowance (KUG) amounts to be about 67 percent of the lost net salary.
  • To determine the amount of Short-Time Allowance (KUG) – the net pay difference between the flat-rate net pay from the target pay (without short-time work; up to the social security ceiling for unemployment insurance) and the flat-rate net pay from the actual pay (during short-time work).
  • Short-Time Allowance (KUG) calculation - if the employee earns above the social security ceiling - Short-Time Allowance covers the loss of earnings up to the level at which contributions are paid. During short-time work, the actual remuneration earned is above the income threshold, no Short-Time Allowance (KUG) is paid.

On March 13, 2020, Federal Finance Minister Scholz and Federal Economics Minister Altmaier announced stimulus package with funds worth EUR 550 billion to all companies, small and large, with offer of “unlimited credit” to cushion the economic impact of the Corona virus. The brief list of measures / reliefs is as follows  

  • Government had also planned to prepone the implementation of Tax reform 2021 to 2020 i.e., removal of 5.50% solidarity tax on high-income earners. 
  • Simplified application forms for “Tax relief due to the effects of the Corona virus” will be provided to apply for an interest-free deferral and a reduction of advance payments or the trade tax assessment amount without further information of reasons (only for Bavaria and North Rhine-Westphalia).
  • The Ministry of Finance has announced that businesses may apply for a delay on Value Added Tax payments until 31 December 2020. Tax deferrals will be granted without interest, but taxpayers must apply before December 31, 2020.

Germany – Up to 60-67% of reduced salary paid for by the State if COVID-19 has necessitated a reduction in working hours.

From March 1, 2020, Federal Ministry of Labor announced changes in "Act on the temporary crisis-related improvement of the regulations for short-time work compensation" ("Gesetz zur vorüberristeten krisenbedingten Verbesserung der Regelungenfür das Kurzarbeitgeld") will be applicable to employer as well as employee.

  • The Temporary reduction in normal working hours with subsequent reduction in wages of the concerned employee is termed as Short-time Work.
  • Loss of working Hours is considered due to economic reasons or an unavoidable event, temporary (a work stoppage is temporary) and unavoidable (loss of working hours cannot be avoided). At least 1/3 of the employees in an enterprise are affected by a loss of earnings of more than 10 percent of their monthly gross salary in each case.
  • Short-Time Allowance (KUG - Kurzarbeitergeld) is a benefit under the statutory unemployment insurance, which is provided by all companies located in Germany having minimum one employee.
  • Short-Time Allowance  (KUG - Kurzarbeitergeld) paid by the Federal Employment Agency (BfA - Bundesagentur für Arbeit).
  • The employer can reduce regular working hours of specific areas/departments and can also be applied to varying extents with respect to specific employee categories.
  • The employer should submit the application in writing or electronically stating details of Short-Time (reduced) working hours to the Federal Employment Agency to coordinate short-time working issues between the employment agencies involved and the company's affected operations.
  • The Federal Employment Agency will pay Short-Time Allowance (KUG) up to 60 percent of the lost net remuneration. If there is at least one child living in the household, the Short-Time Allowance (KUG) amounts to be about 67 percent of the lost net salary.
  • To determine the amount of Short-Time Allowance (KUG) – the net pay difference between the flat-rate net pay from the target pay (without short-time work; up to the social security ceiling for unemployment insurance) and the flat-rate net pay from the actual pay (during short-time work).
  • Short-Time Allowance (KUG) calculation - if the employee earns above the social security ceiling - Short-Time Allowance covers the loss of earnings up to the level at which contributions are paid. During short-time work, the actual remuneration earned is above the income threshold, no  Short-Time Allowance (KUG) is paid.

Germany has announced stimulus package worth EUR 550 billion to all companies, small and large, with offer of “unlimited credit” to keep the economy afloat.

  • Government is planning to postpone the implementation of Tax reform 2021 with the removal of a 5.50% solidarity tax on high-income earners.
  • Tax concession will be provided to taxpayers by Central Customs Authority.
  • The Federal Central Tax Office (BundeszentralamtfürSteuern) has planned to reduce insurance tax and value added tax.

 

Hong Kong

Hong Kong government has announced the following measures:

  • One-off reduction in profit tax by 100% capped at HKD 20,000;
  • Surcharge (interest) Waiver up to 1 year on approved tax deferred installment payments plan. The waiver is applicable for the 2018-19 year of assessment and is applicable on profit tax, salaries tax etc. Taxpayers should apply for requesting such waiver before tax payment due date.
  • Low interest loans for Small and Medium Sized Companies along with government guarantee;
  • One-time cash pay-out of HKD 10,000 to permanent residents aged 18 and above.

Hong Kong government has announced the following measures:

  • One-off reduction in profit tax by 100% capped at HKD 20,000;
  • Low interest loans for Small and Medium Sized Companies along with government guarantee;
  • One-time cash pay-out of HKD 10,000 to permanent residents aged 18 and above.

India

India announced 3rd, 4th and 5th tranche of economic measures

The Union Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman announced an economic stimulus package in a phased manner to support the Indian economy in the fight against COVID-19. Recently, the 3rd, 4th and 5th tranches of measures were announced. They are as follows -

  • The 3rd tranche is mainly for the agriculture sector.
  • The 4th tranche includes policy reforms to fast track investments. The fast track investment clearance will be made through the Empowerment Group of Secretaries (EGoS). In addition, it also includes schemes for upgrading the industrial infrastructure.
  • The 5th and final tranche is announced on May 17, 2020. The focus is on MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act), healthcare and education, businesses, decriminalization of the Companies Act, ease of doing business, public sector undertakings, and resources related to state government. Below is the summary of final tranche:
  • Globally, potential investors look at a country’s Doing Business Report (DBR) ranking. India’s position in the World Bank’s Doing Business Report rank was 142 in 2014 and 63 in 2019.
  • The government is working on an easy registration of property, fast disposal of commercial disputes and a simpler tax regime for making India one of the easiest places to do business.
  • Recent corporate law measures to boost Measures for Ease of Doing Business includes:
  • Decriminalization of company law defaults in 2018,
  • Integrated web-based Incorporation Form SPICe + (Simplified Proforma for Incorporating Company Electronically Plus),
  • Launch of a databank of independent directors,
  • Withdrawal of more than 14,000 prosecutions under the Companies Act, 2013,
  • Rationalization of related party transaction related provisions,
  • Timely action during the COVID–19 crisis to reduce compliance burden under various provisions of the Companies Act,2013 as well as enabling companies to conduct board meetings, EGMs & AGMs, and rights issues by leveraging the strengths of digital India.
  • Further ease of doing business reforms announced includes:
  • Decriminalization of Companies Act violations involving minor technical and procedural defaults (shortcomings in CSR reporting, inadequacies in board report, filing defaults, delay in holding AGM).
  • Lower penalties for all defaults for small companies, one person companies, etc.
  • The minimum threshold to initiate insolvency proceedings is raised to INR 10 million (from INR 100,000 which largely insulates MSMEs). Also, a special insolvency resolution framework for MSMEs was announced.

India: Economic measures announced as on May 14, 2020

On May 14, 2020, the Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman presented details of a second tranche of the stimulus package to support the Indian economy in the fight against COVID-19. The main focus is on providing support to farmers and the rural economy, and support for migrants and the urban poor.  Some of the labor code-related announcements are as follows:

  • Universalization of the right to minimum wages and timely payment of wages to all workers including unorganized workers. Presently minimum wages are applicable to only 30% of workers.
  • A statutory concept of the National Floor Wage was introduced.
  • Fixation of simplified, minimum wages leading to fewer rates of minimum wages and better compliance.
  • Appointment letter for all workers to promote formalization.
  • Annual health check-ups for employees.
  • Extension of ESIC coverage pan-India to all districts and all establishments employing 10 or more employees as opposed to those in notified districts/areas only.
  • Allowing extension of ESIC coverage to employees working in establishments with less than 10 employees.

India declared a massive stimulus package yesterday comprising 10% of GDP.  Additional information will be unveiled over next few days. The initial information is below:

India: Economic measures announced on May 13, 2020

The Prime Minister of India announced a special economic and comprehensive package of INR 20 trillion, which is equivalent to 10% of India’s GDP. Following are some of the measures announced by the Union Finance & Corporate Affairs Minister Nirmala Sitharaman to support the Indian economy in the fight against COVID-19:

An Emergency Credit Line is available to Businesses/MSMEs from Banks and NBFCs of up to 20% of the entire outstanding credit as on February 29, 2020.  In addition:

  • Borrowers with up to INR 250 million outstanding and INR 1 billion turnover are eligible
  • Loans have a four-year tenure with a moratorium of 12 months on the principal repayment
  • Interest is to be capped
  • There is a 100% credit guarantee to cover banks and NBFCs on principal and interest

The above is available until October 31, 2020

The definition of MSME will be revised as follows:

Existing MSME Classification

Criteria : Investment in Plant & Machinery or Equipment

Classification

Micro

Small

Medium

Manufacturing Enterprises

Investment < INR 2.5 Million

Investment < INR 50 Million

Investment < INR 100 Million

Service Enterprises

Investment < INR 1 Million

Investment < INR 20 Million

Investment < INR 50 Million

Revised MSME Classification

Composite Criteria : Investment and Annual Turnover

Classification

Micro

Small

Medium

Manufacturing and Service

Investment < INR 10 Million and

Turnover < INR 50 Million

Investment < INR 100 Million and

Turnover < INR 500 Million

Investment < INR 200 Million and

Turnover < INR 1 Billion

  • Under Pradhan Mantri Garib Kalyan Yojana’, to help low wage earners earning below INR 15,000 per month in businesses with less than 100 workers, government has provided payment of 24% (i.e. 12% of employer and 12% of employee) of employee’s monthly wages into their PF accounts for March, April and May 2020. This support will be extended by another three months to salary months of June, July and August 2020.
  • The Statutory Provident Fund (PF) contribution of both employer and employee will be reduced to 10% each (from the existing 12% each) for all establishments covered by EPFO for next three months. This will be applicable for workers who are not eligible for 24% EPF support under PM Garib Kalyan Package and its extension.
  • Effective from May 14, 2020 to March 31, 2021, the rates of Tax Deduction at Source (TDS) for non-salaried specified payments (such as Payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc.) made to residents and rates of Tax Collection at Source (TCS) for the specified receipts shall be reduced by 25% of the existing rates.
  • The due date of all income-tax returns for FY 2019-20 will be extended from July 31, 2020 and October 31, 2020 to November 30, 2020 and tax audits from September 30, 2020 to October 31,2020.

The Period of Vivad se Vishwas scheme (i.e. scheme announced in budget 2020 for settling the tax dispute between individuals and tax department) for making payment without additional amounts will be extended to December 31, 2020.


India – A new Companies Fresh Start scheme introduced wiping out many prior year defaults – see details at https://www.nucleus-co.com/news/regulatory-updates/covid-19-updates-from-india.

Ireland

The Government has made EUR 3 billion stimulus package available to combat the effects of COVID-19 which includes relief measures totaling to EUR 2.4 billion to fund sick pay workers affected by COVID-19 and EUR 435 million contingency fund.  The key features are as below - 

  • An eligible employer will be supported by up to 70% of an employee’s take home income up to a maximum weekly tax-free payment of Euro 410 (i.e. 70% of take-home weekly income of Euro 38,000 per annum).
  • In this case employers must self-declare to the Revenue authority that they have experienced significant negative economic disruption due to epidemic situation, with a minimum of 25% decline in turnover, and an inability to pay normal wages and other outgoings, in accordance with guidance to be issued by Revenue authority.
  • E-working allowances to employees - In cases where the government recommends that employers allow employees to work from home to support national public health objectives, as in the case of COVID-19, the employer may pay the employee up to EUR 3.20 per day to cover the additional costs of working from home.
  • Extension of due date for Employer Share Scheme filings - The reporting of share schemes involving submission returns such as the RSS1, ESS1, and KEEP1 has been extended from March 31, 2020 to June 30, 2020 due to COVID-19 crisis.
  • Enhanced protections for employees facing difficulties with their mortgages (for payment break up to 3 months), rent or utility bills.
  • For small and medium sized Companies, the Government has suspended interest/penalties for the month of January and February 2020 on late payments of VAT and Pay As You Earn (PAYE). All the debt enforcement measures necessary are suspended till further notice.
  • Extension of due date for Income tax return filing - The income tax returns will have to be filed by October 31, 2020 which was originally March 31, 2020 due to COVID-19 crisis.
  • Increase in illness payment to the affected employees to EUR 350 per week. This scheme will be in place for 12 weeks
  • Workers who have lost jobs due to epidemic situation will be receiving an enhanced emergency Covid-19 Pandemic Unemployment Payment of EUR 350 per week (increased from EUR 203)
  • A deferral of up to 3-months on loan repayments will be available to many businesses.

A package of relief measures in Ireland totaling to EUR 2.4 billion is as under:

  • Ireland suspend late VAT penalties on corona virus crisis;
  • The EUR 2.4 billion package includes sick pay, illness benefit and supplementary benefit which will help people to self-isolate where appropriate, while having their income protected to a far greater degree than under the current social welfare system;
  • Requirement for 6 waiting days for sick pay in respect of medically certified cases of self-isolation in accordance with public health guidelines has been waived off;
  • The personal rate of Illness Benefit will be increased from EUR 203 per week to EUR 305 per week for a maximum period of 2 weeks of medically certified self-isolation, or for the duration of a person’s medically-certified absence from work due to Covid-19;
  • A provision of EUR 200 million liquidity support fund for impacted firms is being made.
  • The existing systematic short - time working scheme is being used for employees who may work on reduced working arrangement.

Israel

Following measures are announced by Israel government in order to cope with losses suffered due to corona virus outbreak:
  • NIS 40.7 billion package for struggling businesses which includes cheap loans to businesses, cancellation of municipal tax, deferrals for VAT, tax rebates etc.
  • Emergency funding financial assistance for companies which are vital for Israel’s economy.
  • Extensions of tax filing deadlines:
    • Annual corporate income tax return - Filing due date of May 31, 2020 postponed to July 31, 2020 (further extension possible).
    • Individual income tax return — Filing due date of April 30, 2020 postponed to June 30, 2020 (further extension possible).
    • Monthly VAT reporting and payment—Filing due date of March 16, 2020 postponed to March 26, 2020.
    • Bi-monthly VAT reporting and payment— Filing due date of April 15, 2020 postponed to April 27, 2020.
    • Renewing annual withholding tax certificates—Filing due date of Mar 31, 2020 postponed to April 30, 2020.
  • Input VAT deduction can be claimed by submitting the scanned copy of invoice to the tax authority, the invoice must have been issued in the period from March 01, 2020 to May 31,2020 .
  • Companies hit severely by corona epidemic may request for reduction in social security payments

Following measures are announced by Israel government in order to cope with losses suffered due to Corona Virus outbreak:

  • NIS 8 billion funding for providing cheap loans to businesses.
  • Emergency funding financial assistance for companies which are vital for Israel’s economy.

 

Italy

The Government has announced EUR 25 billion stimulus package to combat the effects of COVID-19 by helping the businesses. The “Heal Italy” decree extends EUR 10 billion to support workers and employees facing job risks. EUR 3.5 billion will be diverted to the heath care sector. Along with these measures the Government will inject liquidity into the market by leveraging EUR 340 billion of investments. To add to this, Italian Government has announced a new stimulus package of EUR 400 billion . 

  • The Government has extended parental leave to 15 days
  • The employees who face quarantine can avail this period as a Sick leave.
  • The government is providing one off contribution of EUR 600 for self-employed people and seasonal workers.
  • The deadline for VAT payment is extended to May 31, 2020 for businesses having turnover below EUR 2 million. For the companies having turnover up to EUR 2 million, the payments can be done till March 20, 2020.
  • The deadline for submission of VAT returns is extended to June 30, 2020. Quarterly 1 VAT returns filing deadline is extended to June 1, 2020. Kindly note that the non-resident businesses must file the returns by April 30, 2020. ‘’Businesses can opt for 5-month payment plan in wake of COVID 19 crisis.

Italy’s government issued a EUR 25 billion stimulus package as a relief measure.

  • Italy to inject EUR 10 billion into the economy for employment subsidies to support employment and workers while EUR 3.5 billion will be allocated to the healthcare system.
  • Moratorium is being announced on debt payments such as mortgages during the outbreak
  • The government has also announced EUR 350 billion of investment by way of the ‘cura-Italia’decree – literally ‘heal Italy’, decree.
  • Parental leave is extended to 15 days.
  • Employees can claim time under quarantine as sick leave.
  • In Italy, tax deadlines have been extended/relaxed for residents and companies in the so-called “red areas “of Italy. Also, all tax payments due in the period between February 23 and April 30 are given an extended deadline till May 31.
  • Tax credits will be granted to companies whose revenues decline by 25%.
  • Extensions have been given for VAT filings due by the March 16 until March 20 for businesses with a turnover about EUR 2 million per annum. For small businesses below this threshold, payments are postponed until May 31. Businesses can apply for a 5-month payment plan.

Japan

 

Japan is considering the following measures for stimulating the economy affected due to the corona virus. On March 10, 2020, the government of Japan announced incentive packages of JPY 1 Trillion to small and medium sized enterprises including self-employed workers. The brief list of measures / reliefs is as follows  -

  • The Tokyo tax authorities announced an extension of business tax (local tax) due between February 27, 2020 and  April 15, 2020 will be extended to April 16, 2020.
  • Government may temporary reduce Consumption tax rate from 10% to 5%.
  • The Tax Authority extended due date until May 15 of filing and payment of Individual income and May 19 for consumption and gift tax return.
  • Additional package of JPY 430.8 billion announced to small firms.
  • The government will offer loan at less than 1% annual rate of interest up to JPY 300 million to SMEs whose sales reduced to 5% or more.
  • SMEs and self-employed workers whose sales reduced by 10% to 20%, government will waive off interest of bank borrowing.

Japan is considering the following measures for stimulating the economy affected due to the Corona Virus:

  • The Tax Authority extended due date by one month (to April 16) of filing and payment of Individual income, consumption and gift tax return.
  • Announced temporary reduction in Consumption tax rate from 10% to 5%.
  • Government announced incentive packages of JPY 1 Trillion to small and medium sized enterprises include self-employed workers. Additional package of JPY 430.8 billion announced to small firms.
  • The government will offer loan at less than 1% annual rate of interest up to JPY 300 million to SMEs whose sales reduced to 5% or more.
  • SMEs and self-employed workers whose sales reduced by 10% to 20%, government will waive off interest of bank borrowing.

Netherlands

The Netherlands has announced certain additional measures to help cope with the impact of the COVID pandemic. They are as follows:

The government is widening the scope of work-related cost scheme (Wkr scheme): For the year 2020, the government has expanded the discretionary scope under the scheme. Benefits can now be provided up to 3% (instead of the previous 1.7%) of up to EUR 400,000 of the wage costs of the employee without the Wkr tax implications. In addition:

The discretionary scope of 1.2% for amounts above EUR 400,000 remains unchanged, the excess is taxed at a rate of 80%, which is payable by the employer.

The Dutch Government has introduced a bill on temporary provisions in connection with the  Corona Virus (the Emergency Act) along with an explanatory memorandum for facilitation of electronic communication by legal entities, extension for preparation of annual accounts, etc. It provides for the following:

  • A general meeting can be convened through electronic means; the shareholders will be allowed to ask written or electronic questions for the items on the agenda at least 72 hours before the meeting. The electronic means should have provision for shareholders to ask questions, unless this is not required owing to the circumstances.
     
  • The holding of Annual General Meeting of a (Naamloze vennootschap - N.V.) public company can be postponed by a maximum of 4 months.
     
  • Similarly, board meetings can be held by electronic means as well, if all directors agree to it.
  • The annual accounts of companies other than Listed companies may be made within 10 months after the end of the financial year. The annual accounts will still have to be published on the website within 12 months from the end of the financial year except in the case of bankruptcy.

The business is grappling with the economic impact of the corona virus and to help the economy the Dutch government has announced numerous measures to help business affected due to the corona Virus, following are the measures:

  • Tax payment deferral - The government has deferred payments of value added tax (“VAT”), income tax, individual income tax, wages and corporation tax provided the entrepreneur provides a written statement reporting the challenges and issues that it has encountered due to the corona virus crisis.  Upon receipt of the request, tax authorities, the tax authorities are to stop the collection, with an assessment to take place later. The request is to be sent with a 3rd party statement who can be VAT advisor or accountant within 4 weeks of application.
  • No default penalty – No default penalty will be imposed for non-payment of tax or late payment of tax.
  • Decrease provisional assessment –The government has announced allowing reduction where it appears that the taxable profit is lower than estimated profit then a reduction of the provisional assessment during the financial year will be granted for improving cash-flow with less tax that will have to be paid.
  • Reclaiming value added tax (“VAT”) –VAT can be reclaimed from the government where the taxpayer’s/organizations customers are not able to pay their debts due to the corona virus under certain conditions.
  • Insourcing personnel - If the party from which an organization insources personnel fails to pay payroll tax and social security contributions the organization availing such service will be liable for it along with the insourcing party.
  • The government has guaranteed scheme for loans to small and medium-sized enterprises (VerruimingBorgstelling MKB-kredieten; BMKB). The businesses themselves can agree with their creditors for suspension of repayments and interest payments etc.
  • Provisional loss set-off - The business expecting to realize a loss for the financial year 2020, the loss whether or not due to the corona can be set off with the tax return filled end of the financial year with request to   provisionally set off the loss against the profit for 2019 also known as the “provisional carry-back”. The tax paid for year 2019 will be accordingly partly or fully reduced or refunded.
  • The Temporary Emergency Bridging Measure for Sustained Employment (TijdelijkeNoodmaatregelOverbruggingvoorWerkbehoud) i.e. the NOW-scheme (applicable w.e.f. – March 1, 2020) The NOW scheme is a scheme for granting compensation towards wages of employees (up to 90% of total wages) for a period of 3 months with a possible extension of another 3 months from March 1, 2020. It is applicable for those employers who are expecting a reduced turnover by at least 20% due to the COVID-19 crisis. It is applicable for making payment to both types of employees with permanent as well as temporary contracts. The NOW scheme has replaced the earlier reduced working hour's scheme (regelingwerktijdverkorting).
  • The Employee Insurance Agency (“UWV”) will pay an advance (of 80% of the expected compensation) for up to 3 months. A statement from an accountant is required to be submitted for claims that exceeding a certain threshold (amount not yet declared).
  • The Dutch Tax Administration has put on hold any measures in place to collect Income tax, corporate tax, payroll tax, and turnover tax (VAT) payment immediately upon application by the organization.  
  • Deferment in reporting obligation of permanent employees under new Balance Employment Market Act -  The obligation for employers to report permanent employees' under employment contracts under the new Balance Employment Market Act, prior to April 01, 2020, has been extended to July 01, 2020.
  • The organizations hardest hit by the coronavirus will receive a compensation of EUR 4,000 from the Netherlands Enterprise Agency. The list of worst affected sectors is yet to be announced.
  • SME credit guarantee scheme (BMKB)- (applicable w.e.f. March 16, 2020) – In order to increase the liquidity of the smaller entrepreneurs the Dutch government has infused another EUR 300 million for Small and Medium size Enterprise’s (“SME”). Under the SME credit guarantee scheme an organization with up to 250 workers is and which is an Small and Medium size Enterprise’s (“SME”) can apply to bridge credit or increase the limit of the amount that can be overdrawn with a term of up to 2 years  The guarantee of up to 90% of this guarantee credit will be provided by the government from March 16, 2020.

The Netherlands has announced numerous measures to help business affected due to the Corona Virus, following are the measures:

  • Tax payment deferral - The government has deferred payments of value added tax (“VAT”), income tax, individual income tax, wages and corporation tax provided the entrepreneur provides a written statement reporting the challenges and issues that it has encountered due to the Corona virus crisis.  Upon receipt of the request, tax authorities, the tax authorities are to stop the collection, with an assessment to take place later. The request is to be sent with a 3rd party statement who can be VAT advisor or accountant within 4 weeks of application.
  • No default penalty – No default penalty will be imposed for non-payment of tax or late payment of tax.
  • Decrease provisional assessment –The government has announced allowing reduction where it appears that the taxable profit is lower than estimated profit then a reduction of the provisional assessment during the financial year will be granted for improving cash-flow with less tax that will have to be paid.
  • Reclaiming value added tax (“VAT”) –VAT can be reclaimed from the government where the taxpayer’s/organizations customers are not able to pay their debts due to the corona virus under certain conditions.
  • Insourcing personnel - If the party from which an organization insources personnel fails to pay payroll tax and social security contributions the organization availing such service will be liable for it along with the insourcing party.
  • The Ministry of Social Affairs and Employment (SZW) in the Netherlands has introduced a Temporary Emergency Bridging Measure for Sustained Employment (Tijdelijke Noodmaatregel Overbrugging voor Werkbehoud) i.e. the NOW-scheme. The NOW scheme will replace the reduced working hour's scheme (regelingwerktijdverkorting) for employees and organizations affected by the corona virus. The NOW scheme will provide support to employers dealing with a decline in sales (at least a 20% loss of turnover). It will, on an application by the employer, provide a 'substantial contribution towards labor costs'. The compensation towards wages of employees will be up to 90% of total wages depending up on the loss of revenue. It will be paid in advance (of 80% of the expected compensation) and will be paid by the Employee Insurance Agency (“UWV”). The support period is of 3 months with a possible extension of another 3 months. 
  • The government has guaranteed scheme for loans to small and medium-sized enterprises (VerruimingBorgstelling MKB-kredieten; BMKB). The businesses themselves can agree with their creditors for suspension of repayments and interest payments etc.
  • Provisional loss set-off - The business expecting to realize a loss for the financial year 2020, the loss whether or not due to the corona can be set off with the tax return filled end of the financial year with request to   provisionally set off the loss against the profit for 2019 also known as the “provisional carry-back”. The tax paid for year 2019 will be accordingly partly or fully reduced or refunded.

Singapore

 
  • Significant benefit for employers in Singapore – about SGD 1,150 per employee per month for 9 months click http://nucleus-co.com/news/regulatory-updates/covid-19-updates-from-singapore for more.
  • Automatic Deferment of Corporate Income Tax (CIT) Payments
  • All companies with CIT payments due in the months of April, May and June 2020 will be granted an automatic 3-month deferment of these payments. The CIT payments that are deferred from April, May and June 2020 will be collected in July, August and September 2020 respectively.
  • Deferring Tax Payment for employees/taxpayers
  • Employees/taxpayer may opt to defer their income tax payments due in the month of May, June and July 2020. If employees are paying by GIRO (General Interbank Recurring Order) there will be no GIRO deduction in the month of May, June and July 2020. Such tax deduction will resume in the month of August, September or October 2020. End date on installment plan will also be extended by 3 months.
  • Employee/taxpayer making lump sum tax payment may opt to defer payment by 3 months.

 
Significant benefit for employers in Singapore – about SGD 1,150 per employee per month for  9 months click http://nucleus-co.com/news/regulatory-updates/covid-19-updates-from-singapore for more.

South Korea

South Korean government has announced to inject KRW 11.7 trillion extra budget of emergency funds to help support economy to take has taken the following measures to help the small businesses. Further the government declared another stimulus package of KRW 50 trillion on March 19, 2020 to help businesses affected by the COVID-19.

  • For the small and medium-sized businesses, facing difficulties in paying wages to their workers and for the purposes of childcare subsidies the government has allocated an amount of KRW  3.0 trillion; 
  • South Korea has decided to cut VAT rates for small businesses, introduction of spending coupons and granting additional tax deductions on personal credit card spend will be announced; South Korea has granted Corporate tax deductions for SME's operating in areas of Daegu, Gyeongsan, Bonghwa and Cheongdo by a certain percentage (but up to a maximum amount of KRW 200 million) as follows :
  • reduction for small enterprise is 60%,
  • reduction rate for medium enterprise is 30%, 
  • Corporate tax reductions for expansion of existing domestic operations in Korea are granted. In case of downsizing or closing overseas operations and returning to Korea the companies get 100% tax deduction for the first 5 or 3 years, and 50% for additional 2 years.
  • The VAT exemption threshold for simplified taxpayers has been increased from KRW 30 million to KRW  48 million for the year 2020.
  • Small businesses are granted an extension of 9 months for filing the tax returns and of 12 months for paying and filing all the local taxes in South Korea.
  • Businesses with annual turnover below KRW 80 million will have to pay reduced VAT for the year 2020
  • In order to provide liquidity for small businesses an amount of KRW 12 trillion won is allocated towards emergency funding for business operations and a low interest rate loan (1.5%, lower than ordinary rates by an average of 2.3% points).
  • Deferred loan repayment for SMEs and small businesses (W.e.f. April 1, 2020) - 6 months deferment in repayment of loans will be offered by Korean banks and nonbanking financial institutions.
  • Suspension of loan interest payments for SMEs and small businesses (w.e.f. April 01, 2020):  The interest on loans will also be suspended for 6 months beginning from on April 01, 2020)
  • Debt workout programs:  In order to provide for Debt relief, programs at Credit Counselling and Recovery Service, and outstanding debt purchases by Korea Asset Management Corporation will be held.
  • In order to avoid credit crunch Bond Market Stabilization Funds will be allocated to provide liquidity to corporations.

South Korean government has announced to inject KRW 11.7 trillion extra budget of emergency funds to help support economy to take has taken the following measures to help the small businesses:

  • For the small and medium-sized businesses, facing difficulties in paying wages to their workers, and for the purposes of childcare subsidies the government has allocated an amount of KRW 3.0 trillion; 
  • South Korea has decided to cut VAT rates for small businesses, introduction of spending coupons and granting additional tax deductions on personal credit card spend will be announced; the details are still awaited.

Spain

Some additional measures announced by Spain includes:

Corporate tax (CIT) -  an extraordinary option is given for instalment payments for which only SMEs are eligible. Businesses with tax periods commencing from January 1, 2020 with business volume below EUR 600,000 in the year 2019 may make tax payment in instalments by  May 20, 2020. Businesses with tax periods commencing from January 1, 2020 whose net revenues are from EUR 600,000 and EUR 6,000,000 in the 12 preceding months can exercise the option for instalment payment of tax can which have to be filed by October 20, 2020. Instalment payments made in the first 20 calendar days of the month of April 2020 are not eligible for these measures.

Unemployment benefits will be granted to workers whose employment contracts have been terminated during probation (on or after March 9, 2020) and workers who have resigned since March 1, relying on a definitive offer of employment that was later withdrawn.

Employers are required to give priority for employees to work from home for a further two months, employee will have right to adapt and reduce working hours and times.

If an SMEs is unable to pay rent due to COVID on the premises due to impact on revenue then such SME’s can request the landlord  to grant a moratorium on the payment of rent, which must be accepted by him, in cases where the landlord is a public housing company or entity, or a major property owner. This is applicable for one month starting April 23, 2020.


The government of Spain declared a relief package of EUR 200 billion to fight the economic fallout in addition to the existing EUR 14 billion package for the economy. Following are the measures declared by the Spain government:

  • The government will be exempting social security contribution requirements for SME’s who do not lay off workers. For employers having up to 50 employees and maintaining same employment levels in the previous 6 months, there will be social security exemption in the case of suspension of employment contracts or reduction of working hours because of the corona virus. It will be up to75% for larger employers.
  • Companies may implement the suspension of employment contracts and reduction in working hours only due to force majeure (corona related) causes for which organizations must submit application to the competent Labor Authority together with a report which contains the explanation of the correlation. 
  • Spain has announced tax relief for small and medium businesses it will allow the businesses to defer their tax obligations for six months without interest.
  • Spain has provided facility for suspension VAT filing deadlines from March 13, to May 30, 2020 upon request to the tax authority. The scheme is not available for large businesses (above EUR 6m turnover) or if the VAT due is above EUR 30 million.
  • In order to help business, maintain liquidity, the government has announced creating a line of public guarantees of up to EUR 100 billion;
  • Reduced working hours – The government has asked the workers to adapt and reduce their working hours by 100% if necessary, especially for those employees with children whose schools have been closed. 
  • The workers working in non-essentials services will be granted paid leave between March 30 to April 9. The recovery of working hours can be made from after the state ends the "state alarm" until December 31, 2020. Companies applying for recovering paid leave must establish a minimum number of staff for essential work shifts
  • The government has approved a credit line to cover the financing provided by the financial institutions. The Ministry of foreign Affairs and Digital Transformation is going to provide guarantee up to EUR 100,000 million for funding provided by credit institutions. 
  • To maintain liquidity in companies for covering immediate expenses due to COVID-19, the government has allocated EUR 10 billion package. The company should apply before September 30, 2020 and have less than 250 workers and for freelance employees. The government will provide guarantees for Up to 80% of the loans that SMEs apply to banks. and up to 70% in large companies. Further for loan renewals up to 60% guarantee will be provided for the government and in any case Pre-COVID loans cannot be cancelled by banks. 

Following are the measures declared by the Spain government:

  • Spain has announced tax relief for small and medium businesses it will allow the businesses to defer their tax obligations for six months without interest.
  • Spain has provided facility for suspension VAT filing deadlines from March 13, to May 30, 2020 upon request to the tax authority. The scheme is not available for large businesses (above EUR 6m turnover) or if the VAT due is above EUR 30million.

Sweden

Sweden has announced following measurers for aiding businesses cope with the economic impact caused due to the corona virus crisis. 

  • The government has announced a SEK 300 billion support package.
  • Deferment of payment of value added taxes worth 3 months of dues for up to one year. It is proposed that this regulation will take effect on April 8, 2020. The deferment can be granted retroactively as of December 27, 2019. This means that value added tax reported annually from December 27, 2019 until January 17, 2021 will also be covered by the proposal.  Companies would have to apply for an extension from the tax agency and will have a small fee (0.3% per month) and interest (1.25% per year)
  • Deferment of payment of employers’ social security contributions, preliminary tax on salaries worth 3 months of dues for up to one year. It is proposed that this regulation will take effect on April 07, 2020 but can be retroactively applied from January 1, 2020. Companies would have to apply for an extension from the tax agency and will have a small fee (0.3% per month) and interest (1.25% per year).
  • The Swedish government is proposing to temporarily suspend the medical certificate requirement from the 8th calendar day of a sick pay period. This applies from March 13, 2020 until further notice.
  • Companies can reclaim tax payments paid into their tax account for January 2020 to March 2020 from the Swedish Tax Agency. 
  • Increased Loan facilities and credit guarantees for small- and medium-sized businesses.
  • A new system for short-term layoffs introduced as of March 16, 2020.
  • The Riksbank will be providing loan facility up to SEK 500 to Swedish companies via banks to safeguard credit supply
  • Effective from April 06, 2020, there will be temporary reduction of employers’ social security contributions for the period starting from March 1, 2020 to June 30, 2020. Only the old age pension contribution is to be paid for such period. The reduction applies to up to 30 employees per company and up to a salary sum of SEK 25,000 per employee per month. This entails tax relief of up to SEK 5,300 per employee per month, which makes it easier for companies that are hit by a sudden loss of income while wage costs remain.

Note that, the company can choose for itself that for which 30 employees the reduced social security contributions should apply. If the monthly salary for the employee is higher than SEK 25,000 then the employer must pay the contribution on part of salary that exceeds SEK 25,000.


Sweden has announced Value Added Tax easement measurers for aiding businesses cope with the economic impact caused due to the Corona virus crisis.

  • The government has announced a SEK 300 billion support package.
  • The government has allowed the organizations to delay VAT payments and other tax settlements by a year. The measure will be retrospectively applicable from January 2020.

Taiwan

In order to alleviate the economic pressure on individuals and businesses the Taiwan government has issued the following guidelines:

On April 23 the government announced that companies in the manufacturing and technical service industry whose turnover has declined by 50% will receive salary and working capital subsidies subject to certain conditions for 3 months.

On April 13, 2020 the government extended the tax return filing due date of Corporate income tax returns (along with payment) and Individual income tax returns (along with payments)] to June 30, 2020 without any conditions. The returns and payments for income tax and for corporate tax were originally due on May 31, 2020. Those needing more time can file for extension until December 31, 2020. There will be no late payment of interest and penalties during the extended time. Furthermore, organizations using another fiscal year which ends before June 1, 2020, rather than the calendar year (i.e. January to December) may also be allowed 30 days’ extension.

On March 16, it was announced by the government that tax payers affected by COVID-19 will be allowed to make tax payments in installments over the period of 2 to 36 months for business profit tax, personal income tax and local tax subject to prescribed conditions. This facility is available for payments due between January 15, 2020 and June 30, 2021

Retroactively from January 15, 2020 up to June 30, 2020, the government has allowed the employer to deduct 200% from business tax of the related salary expense of employees having to undergo a 14-day quarantine or leave for taking care of family members under quarantine or had to take leave due to COVID-19 as per the prescribed conditions.

The withholding tax deadline which is the 10th of the following month is extended for March 10, 2020, to March 31, 2020, for April 10, 2020, to April 30, 2020, and May 10, 2020, to June 1, 2020.

The declaration and payment periods for VAT are extended for March 15 to March 31, 2020, April 15 to April 30, 2020, and May 15 to June 1, 2020.

The Labor Insurance Bureau of Taiwan has deferred labor insurance payments. The payment of Employment insurance and labor pension payments are permitted to be be postponed for 6 months for companies who have implemented reduced working hours and have notified this to the government.

The government subsidies, rewards, allowances or any other benefits received by affected companies in Taiwan from the government will be exempt from corporate income tax.

United Kingdom

United Kingdom: Corona Virus Job Retention Scheme

The U.K. government has introduced a Corona Virus Job Retention Scheme to help employers retain their employees during the period in which their operations have been severally affected by COVID-19. This is a temporary scheme in place for three months beginning March 1, 2020. It may be extended if necessary.

Please see below additional information:

Employer Eligibility Criteria – 

  • All employers are eligible to claim under the scheme. However, they must have: 
  • created and started a PAYE payroll scheme on or before March 19, 2020
  • enrolled for PAYE online
  • a U.K. bank account

Employee Eligibility Criteria - 

  • The claim can only be made for employees that were employed as of March 19, 2020 and were on PAYE payroll on or before March 19, 2020 i.e. notified to HMRC on RTI submission on or before March 19, 2020. 
  • Also, employees that were employed on February 28, 2020 and notified to HMRC on RTI submission on or before February 28, 2020, and were made redundant or stopped working prior to March 19, 2020, can also qualify for the scheme if the employer re-employs them and puts them on furlough (temporary leave). 

Other requirements for making claim - 

  • Any employees placed on furlough must be furloughed for a minimum period of three consecutive weeks. When they return to work, they must be taken off furlough. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of three consecutive weeks.
  • Employers should discuss with their employees and make any changes to the employment contract by agreement. Employers must confirm in writing with their employees that they have been furloughed. 

The Claim -

  • Through this scheme, employers can apply for grants covering 80% of employees’ usual monthly wage* costs, up to maximum of GBP 2,500 per month, plus the associated Employer National Insurance contributions and pension contributions subject to the minimum automatic enrolment threshold. Employees will still have to pay the taxes as they normally pay for their wages including pension contributions.

*The usual wage cost includes wages, past overtime, fees and compulsory commission payments but does not include discretionary bonus (including tips), non-cash payments, other commission payments and non-monetary benefits in kind. 

  • The claim can be made through an online claim system to be launched on April 20, 2020.
  • The agents can make claims on behalf of employers using their ID and Password. 
  • The claim will be paid within six working days.

Information required for making claim – 

  • The information for furloughed employee will be required such as Name, National Insurance Number, claim period, claim amount, PAYE/employee number (optional) etc. and; 
  • Company’s information such as employer PAYE number, number of employees being furloughed, Employer’s Self-Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number, bank account number, sort code, contact person and phone number, etc.

Record keeping – 

  • A record of the communication between employer and employee confirming the employee has been furloughed must be kept for five years.
  • Employer should also retain all other records and calculations in respect of the claim.

After end of the scheme - 

  • When the government ends the scheme, employer must make a decision, depending on the circumstances, as to whether employees can return to their duties. If not, it may be necessary to consider termination of employment (redundancy).

UK’s Chancellor of the Exchequer, Rishi Sunak unveils GBP 330 billion package to combat COVID-19.The brief list of measures / reliefs is as follows  

  • For those who follow advice to stay at home will be eligible for statutory sick pay (SSP) from the 1st day(rather than 4thday) of their absence from work.
  • Small-and medium-sized businesses and employers (having less than 250 employees) can reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19 subject to fulfillment of certain conditions.
  • Employees are entitled to time off work to help someone who depends on them (a ‘dependant’) in an unexpected event or emergency. Pay for this time off will be at the discretion of employer.
  • For all UK businesses, Value Added Tax (VAT) Payment from March 20, 2020 until June 30, 2020 deferred until the end of the 2020 to 2021 tax year.
  • Reforms to off-payroll working rules (IR35) have been delayed by 12 months i.e. from April 6, 2020 to April 6, 2021 as part of the government’s Covid-19 economic response package.
  • For Income Tax Self-Assessment, payments due on the July 31, 2020 will be deferred until the January 31, 2021.
  • The Corona virus Job Retention Scheme enables all UK employers to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. Under job retention scheme HMRC grant will cover up to 80% of employee’s salary to maximum of GBP 2,500 per employee per calendar month. Employer can claim this grant and this scheme will run for at least 3 months from March 1, 2020.
  • The temporary Corona virus Business Interruption Loan Scheme supports SMEs with access to loans, overdrafts, invoice finance and asset finance of up to GBP 5 million and for up to 6 years.
  • All commercial tenants in England, Wales and Northern Ireland who cannot pay their rent because of COVID-19 will be protected from eviction and automatic forfeiture of lease if they miss a payment up until June 30, 2020. 
  • Support will be given through HMRC’s Time to Pay service to businesses paying tax.
  • The provision determining residency status for tax purpose is relaxed by allowing the Individuals prevented leaving the UK due to sealed border to discount days of presence if they qualify as 'exceptional circumstances'.

UK announced a budget of GBP 30 billion pounds to aid businesses and employees affected by the Corona Virus.

  • The small businesses will be allowed temporary tax breaks and sick pay guarantees.
  • The government will grant the local councils an amount of up to GBP 500 million as a "hardship fund;" whereas the National Health Service will be granted GBP 5 billion of emergency cash.
  • The provision determining residency status for tax purpose is relaxed by allowing the Individuals prevented leaving the UK due to sealed border to discount days of presence if they qualify as 'exceptional circumstances'.
  • Property tax reduction for retail and other affected sectors was announced as well.
  • UK will open call centers for taking requests for VAT payment delays as announced on March 11.
  • Further businesses having any outstanding tax liabilities will get agree additional time to settle their tax dues with the HMRC’s ‘Time to Pay’ scheme.
 
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