COVID-19 Threat: VAT Measures Introduced Around the World

March 27, 2020

Updated April 15, 2020

The COVID-19 virus is disturbing the daily lives of many and people are taking pre-emptive measures to help minimize the threat. To avoid contracting the virus, many must stay and work from home, if possible. This, for better or for worse, is impacting businesses around the globe. While some are growing in these rough times, many more are struggling to stay open. As the pandemic is affecting various economies, countries are now opting for emergency tax incentives to help support their businesses. New measures are applied to ensure that those affected could still operate as usual as possible.

The EU

 

The European Union is issuing immediate responses to mitigate the socio-economic impact of the outbreak. The EU Commission is suggesting its member countries to provide VAT payment holidays. State-aid rules are also being relaxed –Member States will be able to help its companies cope with liquidity shortages and provide them with urgent rescue aid. Some countries are taking extra steps themselves:

 

  • Albania. No measures proposed yet, deadlines for the taxes persist unaltered.
  • Austria. Various tax relief measures that concern tax payments and tax return filings were announced. These include reduction/non-assessment regarding income and corporate tax payments in 2020, suspension of tax audits, reduction/relief from late payments, ability to pay installments. Relief is available for those that can prove that their liquidity issues are linked to the pandemic situation. VAT return deadline postponed until 31 August 2020.
  • Belgium. Deadline for declaring VAT for February and March is postponed until 6th of April and 7th of may, accordingly, for paying – delayed for 2 months. VAT quick refund mechanism is also proposed for monthly VAT returns.Taxes can be paid in installments, penalties for not paying them in time will be waived. Application for the measures must be filed at the latest by 30th of June, 2020. These measures are available for the business pre-levy, corporate/personal income tax, VAT.
  • Bulgaria. Annual corporate income tax submission deadlines are extended until the 30th of June. Companies affected by the situation can be compensated up to 60% of the salary expenses for one month. The Bulgarian Development Bank is also providing support for small and medium-sized enterprises. VAT filling deadline is not postponed yet.
  • Croatia. Deferred VAT payments for three-months and announced long-term schedule for repayment. Only entrepreneur whose sales for the last year are less than HRK 7,5 million (without VAT) and whose tax base is set on the supplies made is able to appply for the VAT postponement.
  • Cyprus. Until May, there will be temporary VAT rate cuts from 19% to 17%. VAT payments are postponed until 10th of November, 2020. Contribution rates to the GHS that were applied for 1 March 2019 to 28 February 2020, will remain the same for the period 1 April 2020 to 30 June 2020. Additional tax on VAT payable amounts and any criminal sanctions due to the absence of VAT settlements and filings of tax returns will not be applicable for the above mentioned period. For additional information regarding contribution measures, click here.
  • The Czech Republic. As long as tax returns are filed by the 1st of July, no penalty/late-payment interest will be applied. All taxpayers will be exempt from the second penalty for the late filing of the control statement without the need to prove the connection to COVID-19.
  • Denmark. These measures still need to be approved by the government: postponing deadlines for remitting PAYE taxes, adjusting corporate income tax due. Filing and settlement of VAT postponed for one month for enterprises that apply monthly reporting basis. For those enterprises that apply quarterly VAT basis, Q1 and Q2 VAT filing and settlement is postponed until 1 September, 2020.
  • Estonia. The government is about to announce VAT payment postponement until 1 May 2020.
  • Finland. The government announced that extensions can be applied when filing the corporate income tax return, companies can apply for a payment arrangement for taxes, and that there will be no penalties for late filing of the VAT return. Enterprises are allowed to get VAT prolongation for additional three-month period once applications for deferrals are confirmed.
  • France. Tax payments due in March are suspended for businesses that are experiencing difficulties due to the pandemic. All taxpayers must apply for this relief. VAT returns are not delayed, nevertheless, it‘s credit repayments will be quicken. VAT payable discounts proposed for April and May. In case enterprises are not able to declare and pay VAT on time, they should get in touch with their EIS for any possible solutions.Moreover, paper invoices can be substituted for e-invoices.
  • Georgia. Doubling funding for business VAT refunds has been proposed.
  • Germany. For those directly affected by COVID-19, the collection of tax payment will be postponed if it will hurt the company. Enforcement measures and late-payment penalties for enterprises that faced losses by the pandemic will also be waived until the 31st of December. Deadline for the annual VAT return for 2019 is delayed until the end of May 2020.
  • Greece. In April, 25% payable discount proposed for VAT. The government has announced a four-month extension to pay VAT that falls due at the end of March in the most affected regions. Reduced 6% VAT rate applied to the goods that are indispensable for protecting against pandemic – masks, gloves, wipes and other antiseptic liquids. Reduced rate will remain until the end of 2020.  
  • Hungary. Postponed VAT payments and live invoice reporting schema until 1 July 2020. All enterprises must apply for these measures.
  • Ireland. There will be no late interest penalties on unpaid VAT remittances from small and mid-sized businesses experiencing cash flow payments for Jan and Feb 2020 payments. Tax returns are required to be submitted on time.
  • Israel. VAT filings due 16 March may now be filed by 26 March.
  • Italy. The Italian Ministry will be suspending most tax audits, verification, inspections, collections and disputes. VAT remitting postponed to 16 April 2020. Deadlines postponed until 30 June 2020 for smaller companies. Payment deadlines are postponed for resident taxpayers, however, no delays for non-residents.
  • Latvia. The government will allow businesses to apply to defer tax payments until June 30. VAT reclaim deadline extended to September 30 for non-EU countries.
  • Lithuania. VAT rate cut on hospitality services. Moreover, VAT payment delays are proposed up to one year. The filing deadline for corporate income tax returns is extended until the 30th of March.
  • Luxembourg. No fines for late VAT submission, refunds will also be accelerated. Applications for VAT payment postponement are available.
  • Malta. The government announced VAT payment holiday for businesses and self-employed for March and April. VAT credit refunds will also be accelerated.
  • Moldova. VAT rate cut are applied for accommodation, restaurant and catering services.
  • The Netherlands. The Dutch government is granting deferred payments of individual income tax, turnover tax, income tax, tax on wages and corporation tax if the entrepreneur proves the business’s troubles are caused by COVID-19. There’s also no default penalty for non-payment or late payment of tax, the provisional assessment has been decreased, and under certain conditions, VAT can be reclaimed. Business that were affected by Covid-19 are allowed to apply for three or more month VAT postponement. Request for payment delays for VAT, income or payroll taxes can be made on the website of the Dutch tax authorities via online form. 
  • Norway. Reduced VAT rate cut to 6% from April 1 to October 31, 2020. Loss-making companies can re-allocate their loss towards last year’s taxed surplus. Owners of loss-making businesses can also postpone the payment of wealth tax. VAT payments are postponed, moreover, reduced VAT rate is being cut from April 2020.
  • Switzerland. VAT payment holiday is announced through the end of 2020.
  • Poland. VAT payment holiday has been introduced and the SAF-T VAT reporting has been delayed.
  • Portugal. Vat payment has been deferred for smaller taxpayers.
  • Romania. The first payment deadline for taxes on buildings, lands, and transportation means has been extended until the 30th of June.
  • Slovakia. The government has delayed the commitment to file the corporate income tax return.
  • Slovenia. Affected companies are able to apply for VAT payment defferals. Thus, no panalties or interests on late payments. Nevertheless, VAT must be filed on time.
  • Spain. VAT payments postponed. Import VAT and tariffs are currently under review to be dalayed. VAT returns will be delayed in Canary Island. Small businesses can apply for relief and get VAT and other Tax payment holidays. This measure is only available for companies with a turnover that was less than €6 million in 2019.
  • Sweden. The government is providing late penalty and interest fine easement for VAT payments for up to one year.
  • The United Kingdom. The Business Rate retail discount will increase to 100% for one year.All VAT payments postponed until June 2020, thus, VAT is due by 31 March, 2021. Returns are still required to be filed. MOSS VAT is excluded from VAT measures. Payment holidays will apply for foreign enterprises. For the VAT holiday, taxpayers have to cancel direct debits. HMRC provided guidance on VAT errors.
  • Turkey. The government has announced VAT cuts on domestic flights and hotel accommodation from 18 percent to 1 percent. Moreover, VAT returns are delayed for April – June until June 27 for several sectors.
  • Ukraine. No penalties for late VAT payments are proposed until May 2020.

Some EU countries are yet to announce tax incentives to help its businesses stay afloat during the COVID-19 outbreak.

 

Asia-Pacific

 

A few Asia-Pacific countries are also taking measures to keep their economy from tanking:

 

  • Australia. Taxpayers affected by the pandemic can apply for a deferral of payment of tax liability. Small and medium-sized businesses may claim an immediate deduction for purchases of fixed assets of up to AUD 30,000.
  • China. VAT is being cut from 13% to 10%. Tax relief for corporate/retail customers, SMEs, insurance companies. VAT exemption on various customer services. Enterprises that are producing medical supplies to meet the demand generated during the pandemic, will face inducements related to VAT and CIT. VAT cuts on medical, catering, sundry personal and accomodation services, public transport. VAt cuts to 1% on the cash accounting scheme for small enterprises until 30 May 2020.
  • Indonesia. Advanced VAT refunds proposed to for the tax period from April to September. The government will waive 10% consumption taxes on hotels and restaurants in most tourist destinations. Businesses will be granted import VAT payment postponements.
  • Japan. The individual income and consumption tax deadlines have been delayed until the 16th of April. The Consumption Tax rate may also be temporarily reduced from 10% to 5%.
  • Malaysia. Accommodation services are being exempt from service tax.
  • New-Zealand. The government is applying deductions for low-value assets and writing off interest on late payment of tax.
  • Pakistan. Sales tax filing and settlements are postponed – January and February returns must be filed until 15 April 2020.
  • Philippines. The government has announced a delay for filing March VAT until 30 April 2020.
  • South-Korea. Filing deadlines for tax returns are extended for 9 months. This measure is available for small businesses. Moreover, small businesses that do not exceed KRW 60 million in annual sales will get the allowance of reduced VAT payable until the end of 2021.
  • Sri Lanka. The government has postponed the VAT payments for February and March.
  • Taiwan. Taiwanese president announced 200% salaries and wages tax deductions for the companies regarding to the tax expenses that occurred due to both employee’s incapacity and isolation during the quarantine. VAT remitting for March is delayed until May 2020.
  • Thailand. Tax measures announced by the Ministry of Finance includes acceleration of the VAT refund, 300% deduction on salary period starting from April to July. Face masks are exempt from import VAT. VAT refunds accelerated.
  • Vietnam. VAT cuts for tourism and transport services. Monthly and quarterly VAT payments postponed for five-months. Nevertheless, VAT must be declared on time. VAT payments delayed until 15 December 2020 for non-incorporated VAT payers. Commitment to issue e-invoices is delayed. 

 

Other countries, like Colombia, are delaying VAT payment terms. VAT payments are postponed until 2021 in Iceland. Russia has announced that there will be no deferrals for VAT payments, nevertheless, the government has announced deferrals on other tax payments for small enterprises. India has announced a delay of GST filings for the years of 2018/2019 until 30th of June, 2020. The government in Tunisia has hastened VAT credit.  In Bolivia, transaction Tax has been decreased for three months. Uganda has delayed VAT fillings until 30 April 2020. Other tax returns are also postponed. No penalties for returns that had to be filed on 15 March (postponed until 31 March). VAT returns deadline is postponed in Nigeria. Kenya proposed VAT cuts from 16% to 14%, starting on 1 April 2020. The US is extending filing deadlines and federal tax payments regardless of the amount. Uruguay postponed VAT submissions and settlements. Guatemala postponed VAT returns: February return is now due 15 April 2020, March return – delayed until 5 May 2020. Tax audits, including VAT, are delayed until 15 April 2020, too. Chile announced VAT payment holiday until 30 June 2020 for small businesses. Jersey is proposing late Good&Sales tax payments. Canada will be providing federal tax reliefs from a new relief fund announced on 12 March; Sales tax return delayed until 30 June 2020, moreover, Saskatchewan has delayed sales tax payments. Federal government postponed GST, audits are suspended (for more information about Canada Federal tax measures, click here). Jamaica is about to cut its General Consumption tax to 15%.  Costa Rica has provided a 3-month VAT payment deferment for taxpayers from 15th March. The IRS, along with the Treasury and Labor, is also planning to implement Corona-virus-related paid leave for workers and tax credits for small/midsize businesses to help them tackle this pandemic. As the pandemic continues, many more will probably join in taking measures to protect their businesses and the economy in general.

 

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