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Countries enact tax & fiscal measures to mitigate COVID-19 impact

Countries have implemented rules and regulations to ease the burden of COVID-19 on taxpayers, with regulatory activity happening in Argentina, Guatemala, Israel, Italy, Japan, Mozambique, Norway, Turkey, and Uzbekistan.

The blog post was compiled by Jessica Silbering-Meyer, the Executive Editor of International Tax for Thomson Reuters

Measures enacted include tax deferrals for individuals and companies, government-backed business loans, tax cuts, restrictions on tax audits, customs duty exemptions, and expanded employee benefits.

Some of the highlights of this activity included:

Argentina — The government implemented emergency measures on taxation, social security, customs, and labor issues to mitigate the effects of COVID-19. The Federal Tax Authority suspended time limits for responding to inquiries related to tax audits and also limited and rescheduled on-site meetings with taxpayers. At-risk individuals including workers over 60, pregnant women, and people with certain health conditions were exempt from going to their workplace, and medical supplies were exempted from import duties.

In addition, the Argentinian Ministries of Treasury and Production:

  • authorized a social security tax exemption for certain industries hard-hit by COVID-19 including tourism, entertainment, dining, and transportation;
  • subsidized salaries for some private-sector employees;
  • financed working capital at reduced interest rates for food, personal care, cleaning, medical supplies, and equipment for teleworking industries;
  • renewed a program that enabled consumers to buy local products from small and midsize enterprises (SMEs) for a fixed monthly payment;
  • promoted the production of medical equipment; and
  • increased unemployment, childcare, and retiree benefits.

Guatemala — The country extended tax filing and payment deadlines, including income, transfer pricing, and value-added tax (VAT) payments. Tax authorities also suspended audits, closed tax offices, and restricted communication to e-mail. Other fiscal measures set minimum and maximum prices for certain goods, supplies, and services used to prevent, contain, or treat COVID-19.

Israel — Eighty percent of a NIS10 billion (US $2.8 billion) stimulus package was allocated for government-backed loans for SMEs. The government also designated grants for self-employed individuals earning NIS150,000 (US $42,000) or less in 2018, and for research & development initiatives that address the challenges of coronavirus. The country also extended tax filing and payment deadlines.

Italy — The government is providing support for corporate liquidity and facilitating access to credit up to 200 billion Euros (US $220 billion) — with at least 30 billion Euros (US $33.7 billion) committed to SMEs.

Japan — Tax deferrals are available for up to a year for taxpayers whose gross income decreased in at least one month on or after February 1, 2020 and who are having difficulty making timely payments.

Corporate income tax and social security contributions also are available for the deferral, and SMEs are eligible for relief from property tax and city planning tax for 2021.

Mozambique — New rules allow goods used for the prevention and treatment of COVID-19 to be released from customs before the clearance process is completed. Corporate income taxpayers are released from advance payment installments that were due in May, July, and September and they can postpone the installment of special advance payments due in June, August, and October. In addition, taxpayers may be allowed to cover VAT obligations, as well as fines and interest, with VAT credits.

Norway — To bolster the economy, the Norwegian government proposed loan and guarantee programs, tax deadline extensions, temporary changes to direct and indirect tax legislation, and new rules related to government benefits.

Measures designed to address workforce reductions include the following:

  • temporarily laid-off workers receive full salary payments for the first 20 days of their furlough, after which they can apply for unemployment benefits;
  • the period for which employers are required to pay sick leave benefits for COVID-19 patients was reduced to three days; and
  • the benefit period for people receiving homecare benefits was doubled to 20 days.

Turkey — The country postponed the deadline for 2019 corporate tax returns and payments, capped some dividend distributions, and liberalized tax rules in order to promote research & development.

Withholding and value-added tax return deadlines also were extended for taxpayers who work in sectors directly affected by the pandemic including retail, commercial real estate, health services, mining, construction, travel, transportation and logistics, restaurants, events, and manufacturing.

Uzbekistan — Tax deferrals were made available to small businesses and solo entrepreneurs who suspended business activities or whose revenues declined more than 50%. Local authorities were empowered to set the time period for deferred tax payments, up to two years.

A moratorium was placed on tax audits, a tourism duty was rescinded for six months, and property and land tax payment deadlines for individuals were extended for six months. In addition, the individual income filing deadline was postponed from April 1 to August 1.

This blog post is based on highlights from the June and July issues of the Journal of International Taxation (JOIT), published by Thomson Reuters.

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