Governments Seek To Mitigate Coronavirus Impact With Tax Measures
Kitty Miv, Editor
13 March, 2020
Well, this week we'll be tackling the one topic that's impossible to ignore, whilst at the same time representing something of a moving target for governments, the media, and worried individuals and organizations seeking – with varying degrees of success – to keep ahead of it.
Our remit in this column is tax, however, and there have been a number of attempts by national authorities to support their populations via the use of economic measures.
First of all, on February 28, at a specially convened ministerial meeting to discuss the situation, South Korea's Deputy Prime Minister, Hong Nam-ki unveiled a package of tax measures to buoy the economy amid the spread of COVID-19, with KRW7 trillion (USD5.9bn) of the KRW20 trillion stimulus package containing tax measures.
Landlords will be given a 50 percent tax credit if they agree to discount their commercial rents for affected businesses, and consumption taxes will be reduced by 70 percent for car purchases to boost consumption, the Government said.
The Government has also said that it will provide value-added tax relief for businesses with annual turnover of less than KRW60m without disclosing further details.
Then on February 29, ahead of the escalation of infections and countrywide lockdown which occurred this week, Italy's Council of Ministers approved a decree law postponing certain tax filing and payment deadlines in areas affected by the outbreak of coronavirus.
Under the measures, deadlines for certain payments due in the period from February 23 to April 30, 2020, will be extended to May 31, 2020. These include payments related to social security, income and wealth taxes at local level, and those due to the customs authorities.
This relief applies to taxpayers resident in municipalities in the government-designated "red zones," (principally in northern Italy) which at the time included Bertonico, Casalpusterlengo, Castelgerundo, Castiglione d'Adda, Codogno, Fombio, Maleo, San Fiorano, Somaglia, Terranova dei Passerini and Vo.
Additionally, the decree provides for the suspension of social security contributions and withholding taxes for taxpayers in the tourism sector until April 30, 2020. These taxpayers include accommodation providers, tour operators, and travel agencies.
Economy Minister Roberto Gualtieri also announced that Government is seeking to approve measures that will allow companies experiencing falls in revenue of at least 25 percent to claim tax credits. The Government is also considering additional tax cuts to boost the economy in the wake of the outbreak.
In Vietnam, meanwhile, on March 6, the authorities announced their intention to provide fiscal support to businesses impacted by the COVID-19 coronavirus outbreak.
Prime Minister Nguyen Xuan Phuc revealed that the Government planned to release a package of tax relief measures, including tax breaks for industries heavily affected by COVID-19.
The Government is expected to allow companies more time to pay about VND30 trillion (USD1.3bn) in taxes and business property tax dues. The Government is expected to further support businesses' access to credit and improve their cash flows by ensuring access for small and medium businesses to low-interest loans and potentially freezing interest on debts.
It is expected that in the UK, newly appointed Chancellor Rishi Sunak will include a number of COVID-19 related measures in his debut Budget (what a time to be in a new job!), being prepared for delivery at the time of writing, with the hospitality and aviation industries, smaller companies (which are likely to be disproportionately affected by staff absences and cashflow interruptions), and individual taxpayers all desperate for financial support.
Whether the self-employed, including gig economy workers, will see any benefits in the Budget to compensate them if they are forced to self-isolate or quarantine themselves remains to be seen, although commentators have suggested that the sheer weight of the logistics involved in such a move means that this may have to wait.
Until next week!
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