Peter Hann is a senior consultant with The M Group Inc., focusing on international tax research and advisory projects. He is based in the United Kingdom. Hafiz Choudhury is a principal with The M Group and is based in Washington. He serves in a personal capacity on the U.N. Extractive Industries Taxation and Transfer Pricing subcommittees and is general editor of the U.N. Transfer Pricing Manual. Daniel A. Witt is president of the International Tax and Investment Center and is based in Washington.
This article is based on a paper written for the Belt and Road Initiative Tax Administration Cooperation Mechanism.
In this article, the authors review tax measures to address the economic impact of the COVID-19 pandemic and identify the most effective steps, then compare the situation with that of the financial crisis of 2008-2009, focusing on China and key nations in China’s Belt and Road Initiative.
Copyright 2020 Peter Hann, Hafiz Choudhury, and Daniel A. Witt. All rights reserved.
The coronavirus rapidly escalated from a localized health emergency to a global pandemic, with a global footprint expanding at an exponential rate.1 The public health measures to prevent further spread of the virus have resulted in an economic shock that threatens grave consequences, rivaling or even exceeding the Great Depression. Governments worldwide, including many countries involved in China’s Belt and Road Initiative (BRI),2 have been considering, or have already announced, a range of both fiscal and monetary policy measures to combat the economic effects of the crisis.
Many governments have also announced expenditure measures, and there is discussion at the G-7 level of how to protect the global economy. Further, many developing and middle-income countries, including those in the BRI, urgently require billions of dollars to scale up their public health response. BRI could play a role in fostering an insurance-based mechanism that could raise funds for pandemic responses in low-income countries by issuing catastrophe bonds and derivatives in a manner similar to the World Bank Pandemic Emergency Financing Facility.
This article, based on a paper written at the request of Belt and Road Initiative Tax Administration Cooperation Mechanism (BRITACOM),3 reviews tax measures taken and seeks to identify the most effective steps. It briefly looks at measures taken in the financial crisis of 2008-2009, then narrows the comparison to tax policy measures, with emphasis on China and key BRI nations.
I. Global Financial Crisis Measures
The 2008 financial crisis was preceded by a squeeze on credit and precipitated by a banking crisis as financial assets held by banks lost their value after a fall in the prices of assets they were based on. Economic measures focused first on saving the banks and financial system. In some countries, including some OECD countries and China, there was also increased spending on infrastructure.4
The measures were primarily meant to stimulate demand in the short term by providing cash where needed and protecting employment. Steps were also taken to promote medium- to long-term growth by means of investments and incentives to stimulate research and development and innovation.
Responses by OECD countries fell into the following categories:
rescuing the banks and financial system;
supporting business though tax cuts, short-term credit guarantees, reduction of labor costs, and incentives to retain staff;
supporting particular industrial sectors, such as the automobile and construction industries;
assisting individuals and households, including via tax cuts, cash payouts, unemployment benefits, or reduced healthcare costs;
promoting innovation and long-term growth via incentives and investment; and
spending on longer-term growth devoted to investments in infrastructure, education, and training and developing innovative areas such as green technology.
Table 1 provides a more detailed look at the tax measures taken during that time.
II. Coronavirus Crisis Measures
Many countries expect the current economic crisis resulting from the coronavirus pandemic to be relatively short compared with the effects of the 2008 financial crisis, and they are attempting to take targeted steps to immediately help businesses and individuals in hardship.
That view may change, given that the OECD has warned that the economic effects of COVID-19 may continue for some time. Economic forecasts are being revised, and it is possible that many countries will fall back into a recession. If that is the case, countries should be looking at measures to stimulate the economy, such as support for R&D, innovation, and training, rather than merely stopgap measures to keep businesses going in the short term.
The economic responses to the coronavirus have tended to focus less on helping banks and more on ensuring the survival of businesses that have severe cash flow and other problems through no fault of their own. They also try to protect employees and self-employed individuals from the consequences of a temporary halt in production in many industries.
The measures taken by 23 key OECD and BRI countries to combat the economic effects of the coronavirus crisis have been analyzed; Annex 1 shows their details. The countries were selected for the sample based on their relative impact in the global economy or their representation of different categories of BRI states.5
A. Measures Taken by OECD Countries
OECD countries have introduced emergency packages to help businesses and individuals through government loans or guarantees or through the tax and welfare systems, respectively. Examples of responses include deferral of income tax and VAT filing deadlines and payment dates for businesses and individuals, combined in many cases with the provision of government loans, guarantees, or grants to businesses and deferral of mortgage payments for individuals.
Table 2 shows a thematic analysis.
B. Measures Taken by China
The measures taken in China require detailed analysis, given its key leadership role within the BRI. Several cities and industries have been affected by the coronavirus crisis, particularly service sectors such as tourism, hotels, education, and training. Measures seem to address the immediate issues (see Table 3) but should be reviewed further in the context of developments in the BRI economies, given China’s role as the group’s engine of growth.
Tax Relief and Exemptions | Tax changes and other measures were taken to support businesses and individuals, including support for key industries. The emphasis was on measures that would provide fast relief, so a VAT reduction was implemented in some countries because the effect on prices would be immediate. |
Tax Administration Measures | Administrative measures such as deferred return filing deadlines and payment dates to help taxpayers with cash flow problems were implemented. Other measures attempted to lay the basis for longer-term growth by encouraging innovation and research and development in areas such as clean energy and other green technology. |
Special Measures for SMEs | Governments recognized the importance of small and medium-size enterprises in providing employment and promoting economic growth. One of the main problems for SMEs was the lack of access to credit, and governments therefore offered schemes involving guarantees to encourage banks to lend and to help SMEs access funds more easily. |
Use of Losses | If businesses have been making losses, their cash flow may be eased if they can offset the losses against profits of previous years and obtain a tax reduction or refund. U.S. measures to help businesses in the Phase Three legislation include a five-year net operating loss carryback for losses incurred in years beginning in 2018, 2019, or 2020. Italy is allowing banks in some cases to surrender carried forward losses to obtain tax credits. |
Additional Deductions | The United States has increased the maximum deduction for interest expenses from 30 percent to 50 percent of adjusted taxable income for tax years beginning in 2019 and 2020. Also, a new temporary refundable 50 percent employee retention credit is available to employers that have partially or fully suspended their businesses because of the coronavirus crisis, or whose gross receipts have significantly declined because of it. |
Accelerated Refunds | The United States has accelerated refunds of alternative minimum tax credits for tax years beginning in 2019. In March the Phase Two legislation introduced a business tax credit for some employers who have fewer than 500 employees to assist with paid sick leave and paid family and medical leave until the end of 2020. Refunds by the French government for R&D credits and the credit for competition and employment due in 2020 will be accelerated and paid as soon as possible after they become due. |
Deferral of Deadlines and Payments | The United Kingdom has provided tax deadline deferrals, loans, and grants for businesses unable to operate in the crisis and compensation for individual employees and self-employed people unable to work from home in the crisis. VAT return deadline deferrals have been introduced and businesses have been given more time to pay VAT liabilities. For self-employed individuals, the second installment of income tax for tax year 2019-2020 has been deferred from July 31, 2020, to January 31, 2021. France has deferred the corporate income tax installment due on March 15 until June 15 for all companies, and companies that have already paid the installment may claim a refund. For individuals there is a deferral of direct tax payments and social security contributions for up to three months without penalties. There is also deferral of some local taxes. In Germany taxable persons significantly affected by the crisis may until December 31 submit applications to defer some taxes due or that will become due up to that date, including income tax, corporation tax, solidarity surcharge, and VAT. Applications may also be made by affected businesses to adjust prepayments on income and corporation tax, and generally interest and late payment penalties on deferral can be waived. Further, applications may be made for deferral of personal income tax by individuals directly and significantly affected by the crisis up to December 31. Applications for deferral of VAT may also be made by significantly affected businesses. |
Converting Tax Losses Into Tax Credits | To help banks with cash flow, Italy has offered the chance to convert future deductions for tax losses and notional interest into tax credits. Banks that sell some onerous loans now have the opportunity to change future deductions into tax credits with a value up to 20 percent of the nominal value of the loans sold. It will then be possible to offset those credits against tax payments, and if the credits exceed the tax liability, it will be possible to claim a refund. |
Enterprises Supplying Relevant Goods and Services | Tax incentives for VAT and enterprise income tax were announced for enterprises engaged in the production of supplies important for containing and protecting personnel from the coronavirus outbreak, including masks and protective clothing. A 100 percent deduction was introduced for investments in equipment as part of an expansion of production capacity. To help with cash flow, enterprises producing supplies for coronavirus protection and containment may obtain a full refund of excess input VAT balances. Monthly applications may be made for the refunds. Enterprises transporting the protective items are also eligible for a VAT exemption. An exemption from VAT has been introduced for micro, small, and medium-size enterprises in Hubei province, and the VAT rate has been reduced from 3 percent to 1 percent for those enterprises in other areas, effective March 1 to May 31. |
Affected Enterprises | Enterprises will be able to carry forward tax losses incurred in 2020 for eight years, instead of the normal period of five years, if they are in the transportation, catering, accommodation, and tourism sectors. |
Service Sector | A range of consumer services have been exempted from VAT, including medical services, catering, accommodation, and personal services such as hairdressing and laundry that would normally pay VAT of 6 percent. Public transportation and express delivery services provided to residents are also exempt, with the exemption to remain in place until the crisis is under control. |
Individuals | There are individual income tax exemptions for bonuses and subsidies paid to medical staff working to combat the coronavirus outbreak. Donations of money and goods by individuals or enterprises to help combat the outbreak have been exempted from VAT and consumption tax, with a deduction available against income or corporate income tax. Exemptions from import tax on donations apply from January 1 to March 31. |
Tax Administration | The tax filing deadline for February 2020 was extended until February 28, 2020, with further extensions possible if agreed by local tax authorities in areas especially affected, such as Hubei province. Taxpayers and withholding agents hit by the crisis may apply for a further extension of tax payment deadlines if necessary and have been encouraged to settle their tax affairs remotely rather than using methods involving personal contact. |
Local Measures | Some provincial and local governments introduced other relief measures, including deferral of social security contributions and reductions in real estate tax and urban land use tax for enterprises with cash flow problems or for SMEs. |
C. Measures Taken by Key BRI Countries
BRI nations have also recognized the profound economic risks caused by the crisis. Table 4 summarizes the types of measures being implemented.
III. Tax Reform Trends and Considerations
The major trends observed across the world are:
deferral of tax liabilities and other liquidity measures;
extension of deadlines and relaxations of sanctions for late payment;
measures to protect employment, such as reductions of payroll tax and relaxations on the requirements for employee withholding taxes;
assistance for small and medium-size enterprises, especially those that protect their employees;
measures to support industries that help combat the effects of the virus;
responses to support food, hospitality, and travel businesses;
measures to encourage investment in particular sectors, including recognizing the need to relax some antiabuse measures if they might hinder that investment;
reductions of corporate and personal income tax rates; and
indirect tax measures to support key sectors of the economy.
Tax Cuts | There have been tax cuts in response to the coronavirus, but on a much smaller scale and for a shorter time than those implemented during the financial crisis. Kenya has cut the VAT rate from 16 percent to 14 percent and accelerated VAT refund claims. Turkey has cut the VAT rate by 1 percent for domestic airline services. Kazakhstan has exempted agribusiness from VAT on the import of biological assets. A fast effect can also be produced by reducing excise taxes, fees, or local taxes. For example, in Indonesia, local hotel and restaurant taxes will be relieved for six months. Egypt has reduced stamp duty on transactions on the stock exchange. Uzbekistan has suspended the tourist duty from April 1 to July 1; reduced the special duty on wholesalers for alcohol products from 5 percent to 3 percent from April 1 to October 1; and reduced fees for sale of alcohol by catering establishments by 25 percent from April 1 to October 1. Some direct tax measures have been taken, either in the form of rate cuts or increased deductions or credits. Singapore is helping companies with cash flow by allowing a corporate income tax rebate of 25 percent of tax payable for fiscal 2020, capped at SGD 15,000. In addition to an enhancement of the loss carryback relief scheme, Singapore is allowing taxpayers to accelerate capital allowance claims for fixed assets acquired in fiscal 2020 and permitting deductions for renovation and refurbishment expenses incurred in fiscal 2020. Kazakhstan is allowing a credit equal to 50 percent of expenses for sanitizing the environment and for some work tools and is offering a credit for shops and stores equal to 60 percent of the monthly rental for real estate properties. |
Trade Taxes | Some countries have also relaxed customs duties and related administration charges. For example, Dubai has implemented a refund of 20 percent of customs duties paid on imported goods that are sold locally, canceled a requirement for bank guarantees to clear goods, and implemented a 90 percent reduction of customs clearance fees. |
Deferral of Tax Filing | Deferring filing deadlines is the most common procedure to relieve the administrative burden for taxpayers during the crisis. That is important for taxpayers who are unable to go to work and are not in a position to do the compliance work associated with corporate or individual income tax or VAT. For example, Malaysia has granted taxpayers an extension of two months for submissions due; Kazakhstan extended the deadline for submission of some 2019 tax returns to April 30; and Saudi Arabia is extending corporate tax, zakat, and VAT filing deadlines. |
Deferral of Tax Payments | Deferral of various types of direct tax or VAT payments without interest or penalties is another common way to help taxpayers through the crisis. Several countries have extended relief to other direct taxes and fees, as well as to local taxes. Taxpayer cash flow can also be helped by speeding up VAT refunds, as China has done in some cases. Indonesia is permitting taxpayers to delay payments of corporate and income tax on the sale of imported goods effective from April 1. Singapore is allowing a two-month delay for some tax installments without incurring interest. Oman has announced some exemptions from municipal taxes until August 31. |
Local Taxes | Reducing the burden of local taxes can help cash flow, especially for small businesses for which local taxes can be an important cost, and can help keep them afloat during difficult periods. Oman, for example, has announced effective immediately an exemption from tourist and municipal tax for restaurants until August 31 and an exemption from municipal tax for commercial establishments until August 31. |
Tax Administration | Many BRI countries have asked taxpayers to file their returns electronically or to use the post rather than going in person to the tax office. An example is Nigeria, where taxpayers have been asked to use online platforms for filing various tax returns and have been given tax administration contact numbers for telephone and e-mail. The platforms existed before the crisis, but Nigeria can now extend their use by publicizing them. Another example is Turkey, which is encouraging taxpayers to make their disclosures, returns, and applications by electronic means or post. That exercise in taxpayer education should increase the efficiency of tax administration when the crisis is over. Similar administrative measures can help BRI countries continue implementing that aspect of the Astana agreement. |
BRI countries cannot easily give up tax revenue. In many cases, they already have a low tax-to-GDP ratio that needs to be improved if they are to obtain the desired level of development. At the same time, they need to help businesses that may struggle during the coronavirus crisis, especially from March to June or July.
Most initial responses have been short-term measures to support businesses and individuals and shield them from the worst effects of shutdowns and restrictive measures to combat the coronavirus. As the dangers of recession grow, countries will need to consider ways to stimulate the economy and promote longer-term growth. As in the financial crisis of 2008-2009, that will require additional government support for loans and other forms of credit, especially for SMEs; more incentives for innovation and R&D; and support for education and training.
IV. Recommendations for BRI Countries
Policy interventions in BRI countries, while primarily focused on urgent domestic priorities, should also bear in mind the need to foster increased connectivity among BRI nations and to keep open the channels of trade and investment. Policymakers must resist the temptation to close borders and focus on recovery in their own countries; lessons from the Great Depression and the impact of 1920s protectionist policies should not be forgotten.
The rise of nationalist governments and the backlash against globalization in the backdrop of the global financial crisis is well documented. Many nationalist movements are seizing on the COVID-19 crisis as an opportunity to argue against globalization and the movement of ideas, people, goods, services, and investment. While some restrictions are absolutely necessary under current conditions, policymakers in BRI countries have an opportunity to demonstrate their commitment to open trade and investment in their tax policy responses to the crisis.
The most effective tax measures at this stage are those that can help companies improve their cash flow and stay in business. It may be necessary later to introduce further ways to stimulate economies. One of the best steps that can be taken to relieve the burden on companies (and, in turn, on the individuals working for them) is to defer tax payments until later in the year.
To ease cash flow problems, businesses could be given the opportunity to convert unused tax losses or other unused deductions into tax credits so they can be used in the current period to offset other tax liabilities or obtain refunds. Italy has introduced that type of measure for banks, which would also be suitable for other types of businesses. The ability to convert deferred tax assets into current credits helps the cash flow of businesses in a period when they may be making losses and unable to offset losses or deductions in any other way.
If there is fiscal room to reduce taxes, cuts in indirect taxation are likely to have the most impact. The advantage of a VAT rate reduction is that it has an immediate effect on prices, whereas the effect of an income tax cut filters through over a longer time depending on filing and payment dates. In the coronavirus crisis, which many countries expect to be of limited duration, the emphasis is on reductions that will have an immediate effect.
Measures to help business could include:
deferring filing deadlines and payment dates and deferring social security contributions, combined with government loans with favorable terms, guarantees, and grants if necessary;
supporting SMEs through and beyond the crisis, recognizing that they have lower reserves and limited access to capital;
relieving or exempting smaller businesses from local taxes; and
enhancing ways to enable VAT repayments from governments, such as refunds for exporters, and allowing businesses to opt for a shorter VAT reporting period, so a refund can be obtained more quickly.
Measures to help individuals could include:
encouraging companies to retain employees and continue paying them by providing government loans or grants to businesses that may be dependent on retaining staff;
relaxing or deferring payroll taxes to help maintain jobs for companies that may be under severe financial pressure or have to suspend trading;
deferring tax payment deadlines and deferring mortgage payments or helping with rent payments for self-employed individuals, or using government transfers to compensate those individuals for a reduction in income.
Temporary relief or exemption from local taxes, combined with deferral of local tax payment dates, is also important in supporting SMEs during the crisis. Targeted steps may also be taken to relieve the financial burden on healthcare workers and to facilitate the import, production, and transport of essential medical equipment.
Further tax administrative measures could include introducing e-filing where it is not yet available to all taxpayers and offering education to ensure that all taxpayers know of the tax relief available and how to access it.
V. Conclusion
BRITACOM has an important role in coordinating BRI tax policy responses to the COVID-19 crisis. That is particularly true for steps that seek to address longer-term and second-order effects of the immediate policy measures taken. BRITACOM should also consider remotely convening policymaker meetings to raise awareness of the risks of protectionist policies and the need for tax measures to continue to foster open trade and investment. The same forum could also coordinate BRI responses to the complex international tax policy ideas being discussed by the Platform for Cooperation on Taxation level, which includes the World Bank, the OECD, the IMF, and the United Nations.
Tax administration resources, especially in developing countries, are stretched by the need to develop responses to the the crisis while also protecting staff. There are various measures in the OECD pipeline, particularly in connection with transparency and antiavoidance — but tax administrations are not well placed to increase supervision and compliance. It might therefore be best for the OECD to put some initiatives on hold until countries and their taxpayers are better able to cope with the administrative burdens that will be involved.
Finally, BRITACOM can help Chinese policymakers understand the fiscal and economic policy drivers in important BRI nations, as well as the highest priorities for those countries in seeking foreign investment to meet coronavirus-related challenges. China, with its substantial investable surpluses, is well positioned to be the engine of growth to help many BRI countries overcome the economic dislocation caused by the crisis. It is therefore important that BRI nations be more aware of the role BRITACOM can play in that regard, including by facilitating dialogue among BRI countries to reduce economic harm and return to a path to growth and prosperity.
Country | Corporate/Business Tax | Individual Tax | Indirect Tax | Tax Administration |
|---|---|---|---|---|
Azerbaijan | Considering proposals to support businesses directly affected by the crisis in the retail, wholesale, restaurant, and transport sectors. Temporary tax measures have not been announced or enacted. | Considering proposals to extend deadlines for filing tax reports. | Indirect tax relief may be introduced for some industries directly affected by the crisis but measures have not been announced. | Considering proposals to extend deadlines for tax reports. |
Canada | Has deferred payments of income tax until after August 31, including balances and installments due, and no interest or penalties will be charged on the deferred amounts in that period. | Is to defer the filing due date for 2019 individual tax returns until June 1, and all taxpayers may defer the payment of any income tax amounts until after August 31 with no interest or penalties becoming due. Eligible small employers are to be granted a temporary wage subsidy for three months. | Plans to make a one-time special payment of a goods and services tax credit by early May to increase the maximum annual payments for the year 2019-2020. | Electronic signatures will be accepted temporarily for forms T183 or T183CORP that authorize the filing of tax returns by preparers. The CRA announced March 20 that it will not conduct any post-assessment GST, HST, or income tax audits of SMEs for four weeks, and for all businesses will temporarily postpone audit contact with taxpayers and their representatives. |
Chinaa | Tax deductions for cost of relevant equipment purchased. Extension of loss carryforward period for companies in industries seriously affected by the crisis. | Introduced tax measures to support medical workers. Tax relief is also available for donations to the medical effort. | Indirect tax relief for production and transport of essential medical supplies. For micro and small enterprises, the VAT rate of 3 percent is reduced to 1 percent (and exempted in Hubei province) from March 1 to May 31. | Extension of tax return filing dates and increase in “non-contract” methods of tax administration. |
Egyptb | The exemption from the taxation of capital gains of Egyptian residents on securities listed on the Egyptian stock exchange will be extended to January 1, 2022, in place of the original expiry date of May 17, 2020. |
| Stamp duty on transactions on the Egyptian stock exchange will be reduced from 0.15 percent to 0.125 percent for nonresidents. Stamp duty on transactions on the stock exchange will be reduced from 0.15 percent to 0.05 percent for Egyptian residents. Spot transactions on the stock exchange will be exempt from stamp duty. | Three-month extension for the payment of property taxes for companies in the industrial and tourism sector. The property taxes will be payable in monthly installments over the following six months. |
Francec | Deferred the corporate income tax installment due March 15 until June 15 for all companies, and those companies that have already paid the installment may claim a refund. Refunds for R&D credits and the credit for competition and employment that are due in 2020 are to be made as soon as possible after they become due for payment. | Deferral of direct tax payments and deferral of social security contributions for up to three months. No penalties will be charged on the deferred payments. | For some local taxes, the monthly payments can be suspended, with the deferred amounts to be remitted when the balance of the tax is due by the end of 2020. |
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Germanyd | Taxable persons significantly affected by the crisis may until December 31 submit applications to defer some taxes that are due or will become due up to that date, including payments of corporation and income tax, and payments of the solidarity surcharge and VAT. Applications may also be made by affected businesses for the adjustment of prepayments on corporation and income tax, and generally interest and late payment penalties on deferral can be waived. | Applications may be made for deferral of personal income tax by persons directly and significantly affected by the crisis up to December 31. | Until December 31, applications for the deferral of VAT may be made by taxpayers who are significantly and directly affected by the coronavirus crisis. |
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Indonesiae | An exemption from income tax payments has been given to manufacturers. Businesses will be permitted to delay payments of corporate and income tax on the sale of imported goods, effective from April 1. | Considering a proposal to waive income tax for individuals for six months. | Local hotel and restaurant taxes will be relieved for six months. | Acceleration of VAT refunds and delays to import tax payments. |
Italy | Provision for bank conversion of deferred tax assets for tax losses and notional interest deductions carrying forward into a tax credit for transfers by December 31 of receivables claimed against defaulting debtors. Also, tax relief for donating equipment. | Compensation for professionals and workers with a coordinated and continuous relationship of collaboration. Compensation for self-employed persons enrolled in the General Compulsory Insurance scheme. Allowances and compensations for seasonal workers in the tourism, agricultural, sport, cinema, and the performing arts sectors. Ordinary allowance for employers with ongoing solidarity allowance treatments. Allowance of 50 percent of salary for parental leave. | Some indirect tax relief for persons, industries, and businesses directly affected by the crisis. | Set up a home loan fund to help individuals. An employee monthly bonus amounting to €100 in total for the number of days worked at the place of work for employees whose total annual income does not exceed €40,000 per year and are unable to work from home. |
Kazakhstanf | Tax credit equal to 50 percent of expenses for sanitizing environment and work tools. Tax credit for shops and stores of 60 percent of the monthly rental for real estate properties. | Entrepreneurs working under special tax regimes are exempt from tax from the beginning of 2020. Increased facilities are available for loans to entrepreneurs. | Agribusinesses are exempt from VAT on the import of biological assets. | Deadline for submitting some 2019 tax returns was extended to April 30. Onsite visits by tax officials minimized. Consideration given to mitigation of tax penalties. |
Kenya |
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| To improve the cash flow for businesses, the VAT rate is being reduced from 16 percent to 14 percent effective from April 1. The Kenya Revenue Authority will accelerate the payment of claims for VAT refunds amounting to KES 10 billion or allow offset of VAT withheld. |
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Malaysiag | Taxpayers have been granted an extension of two months for tax-related submissions. | Individual taxpayers have been granted an extension of two months for tax-related submissions. | Taxpayers were granted an extension to April 15 for submissions due by March 31. | The March 31 deadline for Forms CP204 (tax estimates) and CP204A was extended to April 30 with no penalties. Also, some extension permitted for tax payments. |
Nigeriah |
| Although there are no new measures, some Nigerian states have implemented online platforms for filing personal income tax and Pay-As-You-Earn returns. | Taxpayers have been asked to use existing platforms to e-file VAT returns. | Taxpayers have been asked to use existing platforms to file tax returns and have been given contact telephone numbers and email addresses. |
Omani | Exemptions from municipal taxes have been announced. There is an exemption from the tourist and municipal tax for restaurants until August 31, and an exemption from the municipal tax for commercial establishments until August 31. | Exemptions from municipal taxes. |
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Pakistan | No emergency tax relief reported. Obtaining funds from international organizations to address the crisis. | Measures to provide relief have not been reported. |
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Saudi Arabiaj | Three-month extension for the payment and filing of returns for corporate income tax and zakat that are due between March 19 and June 30. The GAZT will approve installment payment requests for Zakat and corporate income tax purposes if no advance payment was made. | Three-month postponement of income tax and zakat payments. | Temporary extension for return filing for excise tax and VAT and for the payment of those taxes. Deferred collection of import duties for three months, subject to provision of a bank guarantee. | No levy for expatriate residence permits expiring between March 20 and June 30; they are extended for three months without further payment. Made some concessions for work visas for employees that were not used as a result of restrictions imposed in the crisis. |
Singaporek | A corporate tax rebate of 25 percent of tax payable is allowed for 2020, capped at SGD 15,000. Allowed a two-month interest-free extension of tax installment payments on estimated income. Enhanced the loss carryback relief scheme, and taxpayers may accelerate capital allowance claims for fixed assets acquired in fiscal 2020, as well as deductions for renovation and refurbishment expenses incurred in fiscal 2020. | Will enhance the wage credit scheme for employees by increasing the monthly wage ceiling for qualifying wage increases granted in 2019 and 2020 from SGD 4,000 to SGD 5,000. | The GST rate increase from 7 percent to 9 percent, planned to be implemented between 2021 to 2025, will not take effect in 2021. |
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South Africa | Will accelerate the payment of employment tax incentive reimbursements, so they are paid monthly rather than twice a year. Tax-compliant businesses whose turnover is ZAR 50 million or less may delay payment of 20 percent of their employees’ tax liabilities from April 1 for four months and also delay part of the provisional corporate income tax payment for six months without incurring interest or penalties. | Will introduce a tax subsidy to employers up to ZAR 500 per month from April 1 for four months for employees in the private sector who are earning less than ZAR 6,500 under the Employment Tax Incentive. |
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Spain | Deferral of direct tax payments with an option to make tax payments by installments for up to six months. | Deferral of direct tax payments with an option to make tax payments by installments for up to six months. |
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Turkeyl | Payments of withholding taxes and of social security premiums that are payable between April and June will be postponed for six months for businesses in some industries including iron and steel, automotive, retail, transportation, and textiles. | The deadline for submitting the Annual Individual Income Tax Return was postponed to April 30. | VAT payments from April to June will be postponed for six months for businesses operating in some industries, including iron and steel, automotive, retail, transportation, and textiles. The VAT rate will be decreased by 1 percent for services of domestic airlines. | Taxpayers could make disclosures to the tax authority electronically until April 10 through the interactive tax office system or by post. Tax filings for income from moveable assets, immovable property, salary income, and other types of income could be submitted electronically, through mobile applications, or delivered to the tax authority by post until April 10. Applications to obtain a tax number by non-citizens can be made online through the interactive tax office system. Tax and penalty payments could be made online until April 10. |
United Arab Emiratesm |
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| Dubai has issued a stimulus package with a refund of 20 percent of customs duties paid on imported goods that are sold locally, the cancellation of bank guarantees required to clear goods, and a 90 percent reduction of customs clearance fees. Dubai Customs have suspended audits. |
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United Kingdomn | Tax deadline deferrals, loans, and grants for businesses unable to operate in the crisis and compensation for their employees who are unable to attend work or work from home. | Compensating individual employees and self-employed individuals who are unable to work from home and therefore suffer loss of income. | VAT return deadline deferrals and more time to pay the tax. | Deferral of tax payments. For self-employed, second installment of income tax for tax year 2019-2020 deferred from July 31, 2020, to January 31, 2021. |
United Stateso | Phase Three legislation (CARES Act) provided a five-year net operating loss carryback for losses incurred in years beginning in 2018, 2019, or 2020; a change in interest deduction limitations; accelerated refunds of AMT credits for tax years beginning in 2019; and payroll tax relief. Created a temporary refundable 50 percent employee retention credit for employers subject to full or partial suspension of business in the coronavirus crisis, or whose gross receipts have significantly declined because of the crisis. Phase Two legislation introduced a business tax credit for some employers who have fewer than 500 employees to assist with paid sick leave and paid family and medical leave until the end of 2020. | Recovery rebate checks, special rules for the use of retirement accounts, and charitable giving provisions. |
| $340 billion in emergency funding to support healthcare agencies and hospitals that will be available to assist states and local governments. $500 billion will support a Treasury Department Exchange Stabilization Fund to provide loans, loan guarantees, and other investments to eligible businesses. $349 billion to pay for a small business administration paycheck protection program. |
Uzbekistanp | Moratorium on most tax audits of business entities until January 1, 2021. | Postponed deadline for filing annual personal income tax declaration for 2019 from April 1 to August 1. | Suspended tourist duty from April 1 to July 1. Reduced the special duty on wholesalers for alcohol products from 5 percent to 3 percent from April 1 to October 1. Reduced the fees for sale of alcohol by catering establishments by 25 percent from April 1 to October 1. | Suspended tax audits of business entities until January 1, 2021, except for criminal cases and insolvencies. Extended deadline for filing personal tax return to August 1. No fines for late payment of land tax, property tax, and water use tax until October 1. |
aBRITACOM, “The State Taxation Administration of China Takes Effective Measures to Support the Containing of COVID-19 and Economic and Social Development” (Mar. 15, 2020). bPwC, “Middle East Tax and Other Measures in Response to COVID-19” (2020). cCMS Francis Lefebvre Avocats, “Exceptional Tax Measures to Support Businesses Affected by Coronavirus (COVID-19)” (Mar. 16, 2020). dRegFollower, “COVID-19: Germany Releases a Decree on Tax Relief Measure” (Mar. 24, 2020). eRegFollower, “COVID-19: Indonesia Provides Relaxation of Import Taxes for Companies in the Manufacturing Sector” (Mar. 23, 2020). fPwC, “Tax Measures in Response to COVID-19” (Mar. 2020). gRegFollower, “COVID-19: Malaysia Extends Income Tax Filing Deadline” (Mar. 29, 2020). hRegFollower, “Nigeria: FIRS Announces Tax Relief Measures During COVID-19 Pandemic” (Mar. 29, 2020). i“Coronavirus: Govt Announces Loan Exemptions,” Oman Observer, Mar. 19, 2020. jPwC, supra note f. kRegFollower, “Singapore: Supportive Tax Measures in Response to COVID-19 Pandemic” (Mar. 31, 2020). lRegFollower, “Turkey: Tax Measures Due to COVID-19 Pandemic” (Mar. 31, 2020). mKPMG, “UAE: Customs Duty Refunds, Customs Relief in Dubai (COVID-19)” (Mar. 26, 2020). nICAEW, “COVID-19: VAT and Self-Assessment Payment Deferral” (Mar. 31, 2020). oCoronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136). pPwC, supra note f. | ||||
FOOTNOTES
1 As of April 22, 2020, there were more than 2.52 million confirmed cases and more than 176,000 fatalities in over 210 countries.
2 China’s Belt and Road Initiative is a program to invest in infrastructure and other sectors in countries along several land and sea corridors to promote regional integration, trade, and growth.
3 BRITACOM was established by the Astana agreement in May 2018 with participation from more than 50 countries, regions, and international organizations. BRITACOM aims to facilitate cross-border trade by improving tax dispute resolution, increasing transparency, streamlining tax compliance, and promoting electronic return filing.
4 See OECD, “Policy Responses to the Economic Crisis: Investing in Innovation for Long-Term Growth” (2009).
5 A more detailed list covering measures taken by 96 jurisdictions is available at www.regfollower.com.
END FOOTNOTES