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More Tax Measures Introduced to Curb Global COVID-19 Fallout

Posted on Mar. 17, 2020

Governments around the world continue to roll out tax measures to help mitigate the economic effects of the coronavirus pandemic, as G-7 leaders pledged to do “whatever is necessary” to respond to the crisis together.

The Czech government published an update March 16 announcing the adoption of a tax package in response to the coronavirus crisis that includes extending the income tax filing deadline without penalties until July 1.

The package also includes penalty forgiveness for late tax payments and interest for all tax entities that are directly affected by the crisis, according to the announcement. A business whose accountants or other employees that are essential to its tax function are sick or in quarantine would be eligible for penalty forgiveness, the government said.

Sweden on March 16 announced additional measures to buoy Swedish businesses, including allowing companies to defer payment of employers’ social security contributions, employees’ preliminary tax, and VAT that is reported either monthly or quarterly.

The relief would apply to tax payments for three months and would be granted for up to 12 months, replacing a previous proposal announced March 11, according to the announcement. The proposals will be presented to the Riksdag as part of an amending budget that the government expects to adopt on March 19. The government would like the new regulations to take effect April 7 and to be retroactive to January 1, the announcement says.

Italy’s Council of Ministers approved a €25 billion (about $27.9 billion) package of measures on March 15. The package includes giving allowances of €600 to freelancers that are VAT registered as of February 23 for the month of March, and suspending payment of withholding taxes, VAT, and other taxes until May 31, according to a March 15 Corriere della Sera report. After that deadline, the suspended tax payments can be paid either all at once or in five monthly installments without penalties or interest, the report adds.

Indonesia confirmed plans March 13 to introduce a six-month income tax exemption starting in April for manufacturing workers earning up to IDR 200 million (about $13,403) per year; a six-month relaxation of import taxes for companies in the manufacturing sector, including importers of raw materials; and a six-month corporate income tax break for manufacturers.

Russian Prime Minister Mikhail Mishustin on March 16 confirmed plans to give tax payment deferrals to companies in the tourism and airline industries as part of a $4 billion package of measures in response to the crisis. These breaks could also be extended to other affected sectors in the future, Mishustin said, according to a March 16 transcript of a meeting with vice premiers.

The Lithuanian government approved a €5 billion economic package on March 16, which allows more flexibility for taxpayers. It exempts taxpayers from fines and penalties, allows personal income tax payment deferral, and ceases tax recovery operations if businesses meet the tax authority’s reasonableness criteria, according to a March 16 release.

The raft of announcements come hot on the heels of other government actions from such countries as Denmark, China, and Australia, as well as the European Union.

The announcements coincide with an emergency G-7 leaders summit on March 16, held via videoconference. According to a G-7 leaders' statement published after the summit, the group promised to “forcefully address the economic impact of the outbreak” in a coordinated way using monetary and fiscal actions, including targeted measures, to prop up businesses and their workers.

“We ask our finance ministers to coordinate on a weekly basis on the implementation of those measures and to develop further timely and effective actions,” the group said, adding that it called on the IMF, World Bank, and other international organizations “to further support countries worldwide as part of a coordinated global response, focused on this specific challenge.”

The IMF on March 16 published a paper outlining policy steps to address the coronavirus crisis, including fiscal measures. In a blog post, IMF Executive Director Kristalina Georgieva recommended that governments introduce targeted fiscal measures, including tax reliefs targeting individuals and businesses that are hardest hit by the crisis.

The OECD is also working on identifying tax measures that governments can take in response to the coronavirus crisis, OECD tax chief Pascal Saint-Amans told Tax Notes March 13.

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