The FINANCIAL - UPDTEL: COVID TAX RELIEF

UPDTEL: COVID TAX RELIEF

UPDTEL: COVID TAX RELIEF

The FINANCIAL -- Poland: Withholding tax collection system again postponed, 30 June 2021 (COVID-19). The Ministry of Finance again postponed the effective date for a withholding tax collection mechanism applicable for both corporate income tax and individual (personal) income tax purposes. The new effective date is 30 June 2021. An explanatory memorandum accompanying the decrees announcing the suspension explains the postponement is in response to the coronavirus (COVID-19) pandemic.

Bulgaria: 60/40 wage subsidy amended, extended 

The Council of Ministers adopted amendments to the “60/40 wage subsidy”—a response to the coronavirus (COVID-19) pandemic—concerning the conditions and procedures for paying funds to employers for the purpose of maintaining employment. The amendments were published in the official gazette (No. 2 dated 8 January 2021) and are effective 1 January 2021.

The 60/40 wage subsidy program allows Bulgarian authorities to finance 60% of the wage costs (including the employers' social security contributions) of businesses that, due to the COVID-19 pandemic, would otherwise lay off workers. The relief generally is available for businesses in sectors that have been most affected by the health crisis including retail, tourism, passenger transport, culture, sports activities, amusement and recreation activities, and others.

UAE: Temporary VAT rate of 0% for medical equipment (COVID-19)

The tax authority of the United Arab Emirates (UAE) issued a clarification (VATP023) concerning value added tax (VAT) and the temporary zero-rating of VAT for certain medical equipment.

The clarification prescribes that the supply or import of certain personal protective equipment during the period from 1 September 2020 to 28 February 2021 and used for protection from the coronavirus (COVID-19) disease is considered to be medical equipment subject to VAT at a zero-rate (0%). Eligible medical equipment is limited to the following items:

Medical face masks

Half-filtered face masks

Non-medical “community” face masks (made from textile)

Single-use gloves

Chemical disinfectants and antiseptics intended for use on the human body (but excluding detergents, cosmetics, and personal care products)

Switzerland: Interest relief for late payments of tax has ended (COVID-19)

Interest relief for late payments of tax, as provided in response to the economic impact of the coronavirus (COVID-19) pandemic, ended at the beginning of 2021.

The Swiss Federal Council in March 2020 temporarily reduced to 0% the rate of interest for late payments of several taxes. As a result, between 20 March 2020 and 31 December 2020, no default interest was due for late payments relating to Swiss direct federal tax and to indirect taxes including value added tax (VAT), excise taxes, and customs duties.

Since the relief measures have not been extended into 2021, the default interest rates for late payments revert to:

4% for late payments relating to VAT

3% for late payments relating direct federal tax

Canada: Regulations on wage, rent, and support subsidies (COVID-19)

Regulations concerning relief and support subsidies granted in response to the economic consequences of the coronavirus (COVID-19) pandemic provide the subsidy programs have been extended to 13 March 2021 (that is, for three additional four-week periods).

The regulations concern:

Canada emergency wage subsidy (CEWS)

Canada emergency rent subsidy (CERS)

The lockdown support subsidy for eligible businesses

These relief programs have been allowed until 13 March 2021, and according to the government, it will propose to extend these subsidies for periods beyond 13 March 2021.

CEWS extension: The regulations reflect an increase to the CEWS to a maximum of 75% (from 65%) of eligible wages for the qualifying periods from 20 December 2020 to 13 March 2021. The maximum base subsidy will remain at 40% and the maximum top-up wage subsidy rate will increase to 35%. These regulations also amend the weekly wage subsidy for a furloughed employee from 20 December 2020 to 13 March 2021 to be the lesser of:

The amount of eligible remuneration paid in respect of the week, and The greater of:

$500* and

55% of baseline remuneration in respect of the eligible employee determined for that week, up to a maximum subsidy amount of $595

Czech Republic: New and extended programs to support employers, employees (COVID-19)

The government has approved a series of compensatory measures with a total value of CZK 10 billion in response to the coronavirus (COVID-19) pandemic.

Some measures are new, while others extend existing support measures intended to help employers preserve jobs.

The government in January 2021 initiated a new program for certain businesses—in particular restaurants, retail outlets, and services that sell goods or services and that were at least partly closed or banned because of emergency measures—for the period from 14 October 2020 to 10 January 2021. The program allows a payment of CZK 400 for each day when the business activity was curtailed, for every full-time employee (and part-time employee whose entitlement will be recalculated using the appropriate coefficient) and/or for workers of sole-proprietorships (self-employed persons).

Employees in sectors that receive support under other program are not to be included in the calculation. Applications are to be submitted electronically via the Ministry of Industry and Trade’s agenda information system, and the maximum support cannot exceed €800,000 per enterprise.

Extended measures: The government in December 2020 extended an existing antivirus program until the end of February 2021, thereby extending all existing regimes. The parameters of the antivirus programme’s current settings have not been amended for 2021.

The antivirus program was extended in response to the deteriorating epidemic situation and to address and provide unemployment support. The kurzarbeit (short-time working) scheme was intended to replace the antivirus program beginning 1 January 2021. The bill on kurzarbeit is pending a second reading in the Chamber of Deputies.

Unlike the one-time support provided under the antivirus program, kurzarbeit would put into place a legal requirement for support at a time of partial unemployment that would be activated whenever the Czech economy suffers a crisis similar to the current one. The kurzarbeit scheme would therefore be activated whenever an increase in unemployment occurs at a rate set by law and based on a government decree in emergencies (such as natural disasters and pandemics). Similar to the antivirus program, kurzarbeit is designed to help companies that must partly curtail their operations in emergency situations. For the employees of such companies, the government would pay 70% of net wages, depending on the employee’s activity and time spent in kurzarbeit, over a maximum period of 12 months.

Hungary: VAT rate on takeaway meals temporarily reduced to 5% (COVID-19)

The Hungarian government has introduced a temporarily reduced rate of value added tax (VAT) of 5% on the supply of meals and non-alcoholic drinks prepared on site for takeaway. The measure aims to alleviate the economic losses of restaurants delivering meals as part of the economic protection measures to mitigate the economic effects of the coronavirus (COVID-19) pandemic. The reduced rate applies to all meals and non-alcoholic drinks that would be taxed as a supply of service at the 5% rate, which applies for on-site consumption.

Government Decree 498/2020. (XI. 13.), prescribing the VAT rate reduction, has an effective date of 14 November 2020 and applies to early February 2021.

Belgium: Temporary VAT relief measures; medical supplies and real estate and construction sectors (COVID-19)

The parliament on 17 December 2020 passed legislation providing temporary value added tax (VAT) relief measures in response to the coronavirus (COVID-19) pandemic.

The VAT measures specifically are intended to provide better and cheaper access to preventive medical supplies and to stimulate the real estate and construction sectors. The provisions include:

An extension of the reduced VAT rate of 6% through 31 March 2021 with respect to the supply, intra-Community acquisition, and import of certain types of mouth masks and hydroalcoholic gels.

Introduction of the reduced VAT rate of 0% to be applied to the supply, intra-Community acquisition, and import of COVID-19 vaccines and medical aid devices for in-vitro diagnostics of the COVID-19 disease, as well as to services closely related to these vaccines and devices. This measure will be applicable in the period between 1 January 2021 and 31 December 2022.

Broadened scope of application of the reduced VAT rate of 6% for the demolition and reconstruction of real estate for the period between 1 January 2021 and 31 December 2022.

Author: The FINANCIAL

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