Global Tax Responses to COVID-19 for Multi-National Businesses
Cherry Bekaert is maintaining this information as things change on a regular basis. We are aggregating the information we are finding and updating regularly. We will help connect you with the right people to answer your questions and help with your International issues.
How the world is navigating the COVID-19 storm: View the full list of countries.
Argentina’s economy minister pledged a package of decisive measures, including tax breaks and higher state spending on infrastructure, to protect the country’s already vulnerable economy from the impact of the global coronavirus pandemic.
Martin Guzman told reporters in Buenos Aires the country would channel an additional 100 billion pesos ($1.58 billion) toward public works to help bolster an economy that has been mired in recession over the past two years.
The government earlier announced measures, including one-time payments for people on child and social support and for retirees, to help the most vulnerable groups in the face of the pandemic.
The latest measures involved tax relief for the hardest-hit sectors, bolstering employment guarantees and strengthening food supply in community soup kitchens for the poorest. The extra public works spending would target education and tourism.
The government will also launch a 350 billion peso ($5.55 billion) facility of low-cost credit “to guarantee the production and supply of food and basic supplies, boost activity and finance the operation of the economy.”
The Federal Government has announced a $17.6 billion stimulus package to counter any economic downfall that may be caused by COVID-19 (coronavirus).The measures have the potential to provide significant cash flow to business taxpayers in the short term, funded predominantly through the tax system. The package includes:
- an instant asset write-off extension;
- a 50% asset investment incentive;
- a cash payment to employers of between $2,000 to $25,000;
- a 50% wage subsidy for apprentice’s or trainee’s wages;
- support to regions and communities impacted by the coronavirus, including ATO payment support; and
- a one off $750 payment to certain concessional recipients.
Due to the limited time in which the package applies, taxpayers should immediately consider whether they qualify for these measures and the impact of each of the measures on their business and cash flow.
Additionally, on 22 March 2020, the Federal Government announced further economic stimulus measures for individuals, business and the banking sector to support Australia through the unprecedented societal and economic impact of COVID-19 (coronavirus).
The stimulus package is aimed to cushion the impact of coronavirus and provide a safety net for individuals most at risk, while also seeking to support a base level of economic activity that must be maintained to position Australia to return to ‘normal’ operations on the passing of the contagion.
According to a March 16 release issued by the Austrian Ministry of Finance, companies affected by the coronavirus may apply for tax relief that includes the reduction of advance payments, a waiver of arrears interest, payment facilitation, and a waiver or reduction of late payment surcharges.
Belgium has announced that corporate income tax, legal entities tax and non-resident corporate income tax returns with filing deadlines between 16 March 2020 and 30 April 2020 are subject to a postponement until midnight on Thursday, 30 April 2020. Additionally, a postponement will apply for the submission of periodical VAT returns and intra-Community declarations until 6 April 2020 for February 2020 declarations or 7 May 2020 for March 2020 and subsequent Q1 declarations. For start-ups and enterprises licensed to receive monthly refunds, and wanting a monthly refund of the VAT credit, a postponement until the 24th of the month following the reporting period applies. The deadline for the annual customer listing is extended until 30 April 2020. If you cease your activity which is subject to VAT, the deadline is the end of the 4th month following the cessation.
Based on several principles in the double taxation treaties Belgium has with foreign countries, a person is in principle taxable in his home country, but can also be taxable in the working country if some conditions are fulfilled. The measures taken to force people to work from home will have a very important impact from a tax perspective. A person that is normally spending a lot of days in his working country and is taxable in such country will at once become taxable in his residency state on all days spent at home. Until now, the Belgian tax authorities are of the opinion that no tolerance will be applied in this respect. Considering the taxation right is based on double tax treaties, both countries should agree with some special measures, before these could be applicable. In this regard, Belgium has created special agreements with both France and Luxembourg.
With the Canada-U.S. border closed to nonessential travel because of the coronavirus, the Canadian government has announced an C $82 billion economic support package that includes tens of billions of dollars in temporary tax relief.
“Today we’ve announced C $27 billion dollars in direct support to Canadian workers and businesses, plus C $55 billion to meet [the] liquidity needs of Canadian businesses and households to help stabilize the economy through tax deferrals,” Prime Minister Justin Trudeau said during a March 18 address.To support workers, the government will provide low-income families with “a special top-up payment under the goods and services tax (GST) credit,” which will infuse the economy with C $5.5 billion, according to a March 18 release. The average individual beneficiary will receive C $400 and the average couple will receive C $600, according to the Canada Revenue Agency.
China’s Ministry of Finance said it will increase export tax rebates for almost 1,500 items, including agricultural and processed goods, to relieve pressure on domestic businesses and encourage foreign trade. In a brief statement March 17, the government said rebates will be increased to 13 percent for 1,084 products, including “porcelain sanitary appliances,” and to 9 percent for another 380 products, including plant growth regulators. The MOF didn’t provide details on the current rates for the products covered by the decree, which goes into effect March 20. China’s State Taxation Administration said in a March 3 release that it will extend its monthly tax filing deadline from March 16 to March 23. China has already provided small and medium-size businesses with tax and fee incentives. According to a March 3 release from the Chinese government, the country’s top economic planner said there will be “more targeted tax and fee cuts to aid smaller businesses as they were among the hardest hit by the novel coronavirus outbreak.”
In response to the growing threat of COVID-19, the Colombian government has passed several decrees in effort to provide relief to taxpayers. In particular, Decree 438 extends Colombia’s annual deadline to carry out a non-profit taxpayer’s confirmation process to qualify for its special income tax regime to June 30, 2020. Additionally, Decree 438 provides a temporary suspension of its VAT regime to certain medical equipment sales in Colombia. Additional decrees passed by the Colombian president allocate special powers to regional authorities and provide economic relief to certain industries.
The President of the Republic of Cyprus and the Ministers of Finance, Labor, Welfare and Social Security and Health announced at a press conference on Sunday 15 March 2020, a series of measures to address the effects of coronavirus. The President announced temporary suspension for two months of the obligation to pay VAT in order to provide businesses with liquidity. Additionally, the standard VAT rateis being temporarily reduced from 19% to 17% for a two-month period, and the reduced VAT rate is reduced from 9% to 7% for a period of three and a half months. The obligation for the submission of the tax returns by companies which were required to submit them by 31 March 2020 has been extended for two months i.e. until 31 May 2020. This relates to the submission of the tax return for the tax year 2018 by businesses.
The government has previously launched measures to ease the liquidity pressure on the Danish business community and at the same time tried to mitigate the risk of layoffs by providing wage compensation to the companies. Today, real compensation opportunities have been presented for the Danish business community, including self-employed and owner-managers. Exposed companies can receive support to continue operating the business, with the government covering up to 100% of the company’s fixed costs. The compensation can be given to all companies across industries, but is targeted at the most vulnerable companies defined by; companies with more than 40% decrease in revenue during the period March 9 to June 9, 2020.
Fixed costs cover, among other things. rent, interest expenses and other contract-related expenses (eg leasing agreements, etc.) during a period when the companies are exposed to a large decline in revenue.
The temporary compensation will be valid for up to 3 months. No compensation can be applied for if the fixed costs amount to less than DKK 25,000 for the period.
On April 9th, EU finance ministers agreed to a 500-billion-euro ($550-billion) rescue for European countries hit hard by the coronavirus epidemic, but sidelined a demand by Italy and France for pooled borrowing. The statement reads that the rescue would be specifically earmarked for costs related to the COVID-19 crisis, which has killed more than 65,000 people in Europe. The package agreed is worth about 500 billion euros ($546 billion), short of what many observers believe is necessary to restart the European economy when the health crisis recedes.
Data indicates that the economy across the continent is already in a historic meltdown, with everyday life paralyzed to fight the spread of the virus. The main component of the rescue plan involves the European Stability Mechanism, the EU’s bailout fund which would make 240 billion euros available to guarantee spending by indebted countries under pressure. In addition to the Eurozone rescue fund, the EU ministers agreed 200 billion euros in guarantees from the European Investment Bank (EIB) and a European Commission project for national short-time working schemes.
France will reduce direct taxes on businesses on a case-by-case basis to mitigate the effects of the coronavirus outbreak on the French economy, Finance Minister Bruno Le Maire has announced.
The Minister Gérald Darmanin, in his press release of 03/18/2020, specifies that there is no postponement of deadline for the filing of the VAT declarations, nor for the payment of the latter (for the declarations of the month of February 2020).
In the event of a cash flow difficulty and without automatic delay extension, the usual procedure for requesting a delay in payment should be applied. Concretely:
Process your company’s VAT returns as usual
Concerning the regulations, only two decisions can be retained:
- proceed to the payment of the VAT as declared
- or make a partial or zero payment by imperatively establishing a request by email
On March 27, 2020, the Prime Minister announced the renewal of the confinement for two more weeks, until Wednesday April 15. The same rules as those currently in force will continue to apply. This confinement period may be extended if the sanitary situation requires it.
Germany announced March 8 a plan to provide liquidity assistance for businesses — a conversation that the government will have with German organizations shortly — and to expand its short-time work program. The bill will be adopted March 11 and enter into force in April, according to the announcement. The German government included in its plans proposals to increase annual federal investments by €3.1 billion from 2021 to 2024, which will total €12.4 billion. Germany said the effects of the coronavirus on German businesses are unforeseeable, but that the government would like to respond quickly should the circumstances worsen.
Loss of earnings of families resulting from daycare or school closures are largely absorbed. This also applies to the self-employed and freelancers.
Families with lower incomes due to short-time work have easier access to the child supplement.
Small businesses, the self-employed and freelancers receive very extensive and rapid support:
- The federal government is providing 50 billion euros to provide unbureaucratic emergency aid for small businesses, the self-employed and freelancers. This provides a one-time, three-month grant for operating costs that does not have to be repaid.
- Emergency aid supplements the programs of the federal states. The applications should therefore be processed from a single source in the federal states. The countries will still announce which authority is responsible in the respective country.
The emergency aid provides for the following grants:
- Self-employed persons and companies with up to 5 employees receive up to 9,000 euros.
- The self-employed and companies with up to 10 employees receive up to 15,000 euros.
The self-employed have easier access to basic security so that their livelihood and accommodation are secured. The asset review is suspended for six months, benefits should be paid out very quickly.
The federal government is establishing an economic stabilization fund that is aimed particularly at large companies and can provide large-scale aid. It supplements the liquidity aid already decided on through the KfW special programs. The fund receives:
- 100 billion euros for corporate actions
- 400 billion euros for guarantees
The fund can refinance KfW programs that have already been approved with up to EUR 100 billion.
A billion-dollar aid program is made available through the state-owned KfW to provide companies, the self-employed and freelancers with liquidity. To this end, KfW provides various loan programs in unlimited volume. This alleviates financial difficulties that are not the fault of small and medium-sized companies in particular. Affected companies have access to KfW loans through their house bank. If necessary, they can also use the instrument of guarantees there.
Companies of all sizes receive tax aid to improve their liquidity. For companies directly affected by the corona virus, the following applies until the end of 2020:
- Tax authorities grant deferrals of tax liabilities.
- Tax prepayments can be adjusted.
- Enforcement measures are waived.
The government of Hong Kong is proposing one-time waivers of personal and corporate income taxes to deal with a recession brought on by international trade tensions and the coronavirus epidemic.
On 26 February 2020, Mr. Paul Chan, Financial Secretary, delivered his fourth budget speech. He forecasts economic growth of -1.5% to 0.5% in 2020.
Facing the threat posed by the novel coronavirus outbreak and the tough economic environment, the Financial Secretary proposes a number of measures that will help supporting enterprises, safeguarding jobs, stimulating the economy and partly relieving financial burden of people living in Hong Kong.
On March 24, the Irish government announced that it will operate a Temporary Wage Subsidy Scheme, enabling employees whose employers are affected by the pandemic to receive support directly from their employer through its payroll system. The Temporary Wage Subsidy Scheme will be available to employers who keep employees on the payroll throughout the COVID-19 pandemic, meaning employers can retain links with employees for when business picks up after the crisis. Employers are encouraged to facilitate employees by operating the scheme, retaining employees on their books, and by making best efforts to maintain a significant, or 100%, income for the period of the scheme. After the employer has paid the subsidy to its employee, they will then be reimbursed by the government for amounts paid to employees and notified to Revenue via the payroll process. The subsidy scheme will refund employers up to a maximum of €410 per each qualifying employee, however employers should pay no more than the normal weekly net pay of the employee. The reimbursement will, in general, be made within two working days after receipt of the payroll submission. Income tax will not be applied to the subsidy payment through the payroll. Additionally, beginning in April the scheme will be altered to a subsidy payment based on up to 70% of the normal net weekly pay for each employee to a maximum of €410. The Scheme is available to employers from all sectors, excluding the public service and non-commercial semi-state sector, whose business activities are being adversely impacted by the COVID-19 pandemic and is expected to last 12 weeks from March 26th.
Italy has taken steps to mitigate the economic impact of the coronavirus with a March 1 announcement of plans to introduce tax cuts and tax credits. Previously, the government suspended tax payments due between February 21 and March 31 for individuals and businesses in 11 municipalities affected by the virus, according to a February 24 release.
The Italian Government is going to introduce several benefit to help Italian companies, entrepreneurs and professionals during this hard time due to Covid-19 pandemic flu.
It’ll allocate resources for 25 mld euros to provide benefit in the areas of tax, financial, labour.
Within this evening, at the latest tomorrow, the Government will pass a new law with many measures.
The Luxembourg Ministry of Finance announced measures to assist companies and self-employed individuals affected by the coronavirus, which include an application for the cancellation of the first two quarterly advance tax payments of 2020 and a payment extension of four months for taxes due after February 29.
The Government has announced a RM20 billion fiscal stimulus package as a ‘stop-gap’ measure to aid the economy and Malaysians in this time of stress and uncertainty. Some of these measures are short-term but there are also some that could assist in the medium term. As much as it is a welcome move by the Government, it is left to be seen in the next 6 months to a year whether the package was sufficient to avoid potential further shrinkage of the economy and job-loss. The question of how these measures will be financed is inevitable, given the current fiscal deficit of 3.2%. This deficit is expected to increase by a modest 0.2% to 3.4% as a result of this stimulus package, and to my mind is worthwhile given the anticipated boost to GDP growth of something closer to 4.2% expected to be achieved by virtue of the stimulus. The thrust of this lies in the fact that the RM20 billion will mainly be contributed by the reduction in the EPF employee contribution rate and Bank Negara soft-loans funding to SME’s and targeted sectors.
On 18th March 2020, the Prime Minister announced the first three cases of COVID-19 in Mauritius. In addition to mandatory shutdowns and curfews, the government has passed various schemes to help its taxpayers including: (1) the suspension of penalties and fees to late returns filed in March 2020, (2) the establishment of employee wage suspension and self-employed assistance programs, (3) the implementation of various economic development plans, (4) the removal of VAT requirements for masks and hand sanitization products, and (5) the implementation of various tax incentives and schemes aimed to provide relief for taxpayers working from home.
In its announcement of the adoption of a package of new measures to save jobs and the economy, the government of Netherlands noted new rules to tax payments will make sure that when a deferral is requested, the collection of taxes will be halted by the Dutch Tax and Customs Administration and stated that no payment is required for any fines imposed because of late tax payments.
New Zealand is exploring tax policy options. At a March 9 press conference, Finance Minister Grant Robertson said Treasury and the Inland Revenue Department are developing options to reduce the impact of the coronavirus on affected businesses and “maintain operational continuity.” He highlighted the government’s plans to provide flexibility to small businesses to meet their tax requirements.
Around 4.3 million businesses in the UK can apply to Companies House for a three-month extension to file their accounts.
The joint initiative between the Government and Companies House aims to give firms time to focus on negating the economic impacts of COVID-19.
Companies must submit their accounts and reports each year, with automatic penalties in place for non-compliance.
Firms that apply and cite coronavirus-related disruption will automatically be granted the three-month extension.
Applications can be made online and should take around 15 minutes to complete.
The Norweigan Ministry of Finance noted the government’s work toward measures to alleviate the economic effects of the coronavirus outbreak include changing tax regulations so owners of lossmaking companies are allowed to postpone wealth tax payments and temporarily suspending tax on air passengers for flights.
In the current context, of Covid-19 Pandemic, the Government created a package of measures to support companies and families, resulting from the Council of Ministers of March 12, 2020, with the objective of mitigating the negative effects of the new coronavirus in Portugal.
On 21 March a series of measures aimed at supporting the business community during the state of emergency declared due to Covid-19 were published in the Romanian Official Gazette.
The Ministry of Finance is to guarantee up to 80% of the value of financing granted to SMEs (or 90% in the case of small businesses and micro-enterprises).
Corporate taxpayers who apply the annual calculation system, and hence perform quarterly advance payments based on the previous year’s profits, will now be able to pay corporate tax based on the taxable profits actually calculated for each quarter of 2020. This applies irrespective of whether the taxpayer’s fiscal year matches the calendar year. Additionally, an extension of the payment deadline for local taxes on buildings, land and vehicles from 31 March to 30 June 2020 (n.b. the bonuses awarded by the authorities remain in place).
The government of Scotland noted in a March 18 release that measures to support businesses in the economic emergency in a coronavirus include a 100 percent non-domestic rates relief for one full year for retail, hospital, and tourism and a “1.6 percent relief for all properties, effectively freezing the poundage rate next year.
South Africa is providing a tax subsidy for lower-income individuals, and small businesses can delay 20 percent of payroll taxes for four months.
Per Royal Decree-Law 7/2020 of March 12th, an article has been published in relation to a series of transitional financial measures, with a special mention to a tax deferral regime of tax debts concerning state taxation. With regard to the tax debt deferrals established in article 65 of General Taxation Law (hereinafter, GTL), a deferral of the payment of tax debts will be approved when it comes to declarations and self-assessments whose deadline for presentation and payment ends in the period between March 13th and May 30th 2020, both included.To be eligible for this postponement, the declarations and self-assessments submitted must meet the requirements established in art. 82.2 GLT (i.e. tax debts under 30.000€ may be postponed with a total or partial waiver of guarantees). These deferrals will also be available for those tax debts that are not usually eligible for postponement: withholdings and payments on account, taxes charged and CIT instalments. This measure will only be available to the companies or entities whose net turnover does not exceed 6.010.121,04 Euros in 2019.
A proposed crisis package to alleviate the economic impact of the coronavirus could “encompass more than SEK 300 billion if the entire liquidity reinforcement through tax accounts is used” according to a March 16 release issued by the Swedish Ministry of Finance.
Trinidad and Tobago
In a release issued March 18, the Trinidad and Tobago Ministry of Finance noted, as part of its economic response to the coronavirus outbreak, accelerated cash flows for goods and services and refunds will be given to businesses within the next 30-60 days in order to put them in funds and keep people in jobs.
The U.K. government is “looking at all potential measures” to provide cash flow support to businesses and preserve employment and the productive capacity of the economy, U.K. Chancellor of the Exchequer Rishi Sunak said. Sunak sought to reassure Treasury Select Committee members over his government’s budget and coronavirus measures at a March 18 hearing during which he said the government is looking at delivery mechanisms that could be targeted as well as and as quickly as possible. The hearing took place the day after the chancellor announced a £330 billion package to soften the blow of the COVID-19 pandemic to U.K. businesses.
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