Countries around the world are implementing emergency tax measures to support their debilitated economies under the coronavirus (COVID-19) threat.
Providing tax relief to the people and companies that are most affected, until the emergency abates, is welcome. Countries should consider tax relief measures because the health issue is creating a substantial economic shock. Taxes that require regular payments will impact the liquidity of businesses and households.
Therefore, governments should consider fiscal relief as a way of minimizing the economic impact from the health crisis.
As policymakers navigate this crisis, they should hue to the following principles:
- Tax relief should be broad-based.
- Tax relief should be in keeping with good long-term policy. Distorting markets today will undermine the long-term recovery.
- Using refundable tax credits today should be designed to bring forward future credits or deductions.
- Policymakers should also use this opportunity to fix distortive tax policies that could impede recovery efforts.
The countries in the table below implemented or plan to implement tax relief for businesses and households affected by this health crisis. Note that all monetary amounts in this post are national currencies.
|Country||Delays||Individual Taxes||Business Taxes||Consumption Taxes||Other|
Delayed payroll taxes in some states, case-by-case deferrals for GST
Temporary immediate and accelerated expensing for business investment
Faster refunds and credits for GST
Relief payments to unemployed and other eligible individuals and subsidized loans for some businesses
Case-by-case deferrals on VAT
VAT payment and deferment available by application; payment deadline of June 30 extended
Corporate, income, and VAT payment deadlines extended for two months
Payment deferrals for individuals and businesses; audits suspended for four weeks
Three-month wage subsidy of 10 percent to small businesses
Tax payment deferral for small businesses
VAT reduced from 3 percent to 1 percent for small businesses until the end of May; VAT cut on supplies related to the outbreak
Deferrals on a case-by-case basis
30-day delay on VAT payments and four-month delay on labor contributions
Workers sent home can receive a 90 percent wage subsidy for three months; expansion of sick leave coverage
VAT payment holiday until May 1
Interest penalties on late payments delayed for two months
Corporate tax payments delayed
€27 million in health-care spending and €73 million in liquidity to businesses as well as broader loan guarantee programs
Suspension of payments for some taxes; direct tax payments delayed for three months
Wage subsidy for affected workers and a €1 billion solidarity fund for affected businesses
Case-by-case deferral options for businesses that apply by the end of 2020; advance payments delayed
Tax base reduction for trade taxes
Wage subsidies for affected workers as well as €50 billion in support for businesses and €500 billion in liquidity measures for businesses
VAT payments suspended for four months; social security contribution payments suspended until June 30
VAT reduced (from 24 percent to 6 percent) for goods related to addressing the outbreak
Delay of social security contributions
Employees temporarily only liable for a reduced share of social security contributions
Employers temporarily not required to pay social security taxes
Taxes originally due March 16 delayed to April 15
Six-month delay for income tax payments; corporate and income tax on imports delayed
Hotel and restaurant tax temporarily suspended
Interest on late payments for VAT and “pay as you earn” (PAYE) suspended
Reimbursement program for payments to workers temporarily laid off of €203 per week
€3 billion aid package including loans and direct subsidies
VAT filing and payment delayed until March 26
Extended deadlines through May 31 for affected areas
50 percent tax credit for sanitation expenses; banks have option to convert some loss deductions to tax credits
Three-month deferral for employee tax payments
Cash subsidy to the 3 million poorest Iranians
Income, consumption, and gift tax deadlines delayed to April
VAT reclaim deadline extended to September 30 for non-EU countries
Corporate and personal income tax delays
Four-month deadline extension for all payments due after February 29 (corporate income, municipal business, and corporate net wealth taxes)
Case-by-case review of cancellation requests for first two quarterly tax payments for 2020
Exemptions from sales tax, services tax, and import duties
Tax lawsuit deadlines extended until April 19
Three-month delay for personal tax, corporate tax, and VAT
Late payment interest fees reduced to 0.01 percent
Late payment interest fees reduced to 0.01 percent
Late payment interest fees reduced to 0.01 percent
Subsidies for 90 percent of wages for distressed businesses
Reintroduction of depreciation deductions for commercial and industrial buildings; threshold for provisional tax increased
VAT and advanced tax payments delayed
Employee payroll tax rate reduced by 4 percentage points for two months; net wealth tax reductions
Two-year loss carryback introduced
Reduced VAT rate (12 percent lowered to 8 percent) retroactive to January 1; air passenger flight tax suspended from January 1 to October 31
Personal income tax declaration delayed by one month; ability to defer social security contributions for three months
Delay of SAF-T guidelines for VAT from April 1 to July 1
Suspension of social security contributions for affected businesses; certain corporate tax deadlines extended three months
Annual profits tax deadline delayed from March 25 to April 25
VAT refunds process sped up
Automatic deadline extensions for up to three months
Delay in income tax, deferral options
Tax deduction for personal credit card spending
VAT cut for small businesses
Tax preferences for replacing cars
Tax deferrals for six months
Ability to reclaim tax payments made from January to March
VAT payment holiday through the end of 2020
Income withholding tax cut from 3 percent to 1.5 percent for six months; doubled tax benefit for investing in long-term mutual funds
Six-month tax deferral for retail and transportation sectors
VAT on domestic air travel cut from 18 percent to 1 percent
Relief for pensioners
Wave business property taxes for 12 months for retail, leisure, and tourism sectors; delaying £30 billion in VAT payments
Expanding Universal Credit and working tax credit by £1,000
VAT exemptions for imports connected to addressing the outbreak
Tax payments delayed to July 15
Short-term expansion of paid sick leave; total fiscal relief under negotiation could exceed $1 trillion
Australia Coronavirus Tax Relief
Australia has announced federal relief proposals that total around $189 billion (AUD). State governments have also announced relief packages and in some cases deferrals of payroll tax payments (Australian Capital Territory, Queensland, Victoria, Western Australia).
The federal relief package includes direct payments to citizens. For job seekers impacted by the downturn, there will be payments of $550 every two weeks in addition to current income support payments. The government expects these payments to cost $14.1 billion. There is also a broad-based, $750 one-time payment to eligible recipients—this is expected to cost $4 billion. Individuals will also be able to temporarily access up to $10,000 from certain retirement accounts.
The aid packages provide relief to businesses through subsidized loans and central bank lending, and temporary relief from insolvency laws, immediate expensing (instant asset write-off), and accelerated depreciation.
Immediate expensing will now be available for assets costing less than $150,000 on a per-asset class basis. Eligibility is expanded to include businesses with annual revenues of less than $500 million (the current cap is $50 million). This measure applies until the end of June.
Accelerated depreciation will be provided temporarily for businesses with less than $500 million in revenues. In addition to current depreciation deductions, the policy allows an additional 50 percent deduction but only applies to assets purchased after March 12 and put into service by June 30, 2021.
Businesses subject to the Goods and Services Tax (GST) can apply for deferred payments if they are facing cash-flow challenges. Also, businesses that receive credits or refunds under the GST can switch from quarterly to monthly filings to speed up their refunds.
Austria Coronavirus Tax Relief
Austria is reducing income and corporate tax prepayments, deferring tax payments, allowing taxes to be paid in installments, reducing or providing relief from late tax payments, and suspending tax audits. For businesses that need to reduce working hours, labor subsidies are being provided. There is also direct aid being provided to sole proprietorships and family-owned businesses in addition to the tourism and cultural sectors.
For corporate tax payments, taxpayers can apply to have their advance payments reduced to zero or to receive a payment deferral or an installment plan. Applications can be submitted until October 31, 2020.
Value-added tax (VAT) payments can also be deferred on a case-by-case basis, and payments are not necessary while an application for deferral is pending with the tax authorities. The VAT payment due on June 30, 2020, is expected to be delayed.
Belgium Coronavirus Tax Relief
Belgium has adopted several measures to delay tax payments. Corporate and income tax payments deadlines are extended for an additional two months. There is also relief for late payments for tax liabilities prior to March 12. For businesses that demonstrate that payment difficulties are linked to the coronavirus outbreak, the government is providing a VAT payment plan that gives relief from penalties. A similar payment plan is available for payroll tax liabilities.
VAT filings have been delayed by two weeks and payments have been delayed by two months.
Bulgaria Coronavirus Tax Relief
Bulgaria has extended deadlines for business taxes from March 31 to June 30. Personal income tax returns will get an extension from April 30 to June 30.
Canada Coronavirus Tax Relief
Canada’s federal government is deferring tax payments for individuals and businesses. Any income tax amounts owed on or after March 18 and before September can be deferred until after August 31. In addition, post-assessment sales tax or income tax audits for small and medium businesses will be suspended for the next four weeks. The finance ministry will also provide a temporary wage subsidy to eligible small businesses worth 10 percent of remuneration over three months.
Chile Coronavirus Tax Relief
In Chile, the government has introduced a program that defers tax payments for businesses with annual sales of less than $12 million.
China Coronavirus Tax Relief
China has reduced its VAT from 3 percent to 1 percent for the cash accounting program for small businesses until the end of May. It also cut VAT on medical, catering, accommodation, hairdressing, and laundry services as well as on masks and protective clothing.
Czech Republic Coronavirus Tax Relief
The Czech Republic is waiving penalties and default interest for income tax payments. Late filing waivers for all taxes will be case-by-case. There is also a general waiver of penalties with respect to VAT statements.
Applications will also be considered for businesses that wish to cancel income tax prepayments, defer tax payments (for VAT or income tax), or extend their filing deadline for corporate income tax returns.
Denmark Coronavirus Tax Relief
Denmark announced three tax measures to boost business liquidity. Large companies will have 30 additional days to pay VAT, while all companies will be granted four additional months to pay their labor contributions. The government is also lifting the ceiling on businesses’ tax accounts so that corporations won’t have to pay negative interest rates when placing cash in the bank. That limit is rising from the current level of DKK 200,000 to DKK 10 million until the end of November 2020.
Workers who are sent home will receive 90 percent wage support for three months. The government is also covering sick leave costs from the first day of leave.
Estonia Coronavirus Tax Relief
Finland Coronavirus Tax Relief
Finland is delaying corporate income tax payments. Additionally, the government is providing an extra €27 million in health-care spending and €73 million in liquidity to businesses. The government is also supporting loan guarantees for small and medium-sized businesses.
France Coronavirus Tax Relief
In France, the government is allowing companies to suspend payments of some social charges and taxes and is activating state-subsidized short-time work schemes. The next installment of direct tax payments is being delayed for three months. Additionally, no new tax audits will be started during the “lockdown period.”
France has also bankrolled a €1 billion solidarity fund for affected businesses.
Germany Coronavirus Tax Relief
Germany will make it easier for companies to claim subsidies to support workers on reduced schedules to counter the effects of the pandemic. This is the same measure which was used to help prevent large-scale layoffs during the 2008 financial crisis.
Tax relief measures include broad deferral options and tax base reduction for trade taxes. Tax deferrals will be granted without interest, but taxpayers must apply before December 31, 2020. Late payment penalties are waived through the end of 2020. Advance payments for income tax and corporate tax are delayed until June 10. Trade tax advance payments are delayed until May 15.
The government has also discussed implementing a reform to the solidarity tax (a 5.5 percent surcharge on high-income earners) in 2020 rather than in 2021 as previously planned.
Germany is also providing up to €50 billion in support for self-employed and small and medium-sized businesses, and up to €500 billion in liquidity measures for affected businesses.
Greece Coronavirus Tax Relief
Greece will suspend VAT payments due at the end of March for four months and companies’ social security contributions will be suspended until June 30. VAT reduction will be 6 percent from 24 percent for products related to preventing spread of coronavirus.
Hungary Coronavirus Tax Relief
Hungary is providing relief for social security contributions. Employers will not be required to pay the employer side of social security contributions (17.5 percent + 1 percent) from March through June. Employees will only be liable for their 4 percent health-care contribution rather than the total 18.5 percent social security contribution.
Iceland Coronavirus Tax Relief
Iceland is postponing payment deadlines for social security taxes and public levies. Taxes that were originally due on March 16 are delayed until April 15. No penalty or surcharge will apply if the payments are made by April 15.
Indonesia Coronavirus Tax Relief
Indonesia plans to waive income tax for individuals for six months as it seeks to boost purchasing power. A second stimulus package will allow firms to delay payments of corporate and income tax on the sale of imported goods. These measures will go into effect April 1st and last for six months. Also, to encourage tourism to certain destinations, a 10 percent hotel and restaurant local tax will be lifted for six months, with the central government compensating local governments for the expense.
Ireland Coronavirus Tax Relief
Ireland has instituted a broad relief program amounting to €3 billion. Relief includes waiving interest on late tax payments and a suspension of the relevant contracts tax. Broad lending authority and specific relief for temporary layoffs is also included. Employers who temporarily lay off their employees due to the crisis will be eligible to get a refund from the tax authority for €203 per week for payments to those laid off workers.
Israel Coronavirus Tax Relief
Israel has delayed VAT payments for 10 days, from the scheduled March 16 date to March 26.
Italy Coronavirus Tax Relief
In Italy, tax deadlines have been extended for residents and companies in the so-called “red areas” of Italy. Also, all tax payments due between February 23 and April 30 were extended until May 31, and tax credits will be granted to companies that suffer a 25 percent drop in revenues. In addition, businesses will receive a 50 percent tax credit for sanitation expenses, such as daily cleaning services, masks, and other precautions that help stop the spread of new coronavirus.
Banks have been given options to take some loss deductions and convert them to tax credits.
Iran Coronavirus Tax Relief
In Iran, employees can defer tax payments for the next three months, and the 3 million poorest Iranians will receive an additional cash subsidy. There will be additional tax relief for small to medium-sized enterprises.
Japan Coronavirus Tax Relief
Japan has delayed income, consumption, and gift tax filing deadlines and payments by one month, until April. Further measures will be considered depending on the severity of the outbreak.
Latvia Coronavirus Tax Relief
Latvia has extended the VAT reclaim deadline for non-EU countries, from June 30 to the end of September.
Lithuania Coronavirus Tax Relief
Lithuania has delayed the corporate tax and filing deadline until March 30. Businesses can revise their corporate income tax calculations based on projections for 2020 rather than the previous year’s results. Personal taxes have also been delayed from May 4 to July 1.
Luxembourg Coronavirus Tax Relief
Luxembourg is allowing businesses to file requests for cancellation of the first two quarterly tax payments for 2020 (for corporate income and municipal business taxes), and there is a four-month deadline extension (for corporate income, municipal business, and corporate net wealth taxes) for all payments due after February 29, 2020.
Malaysia Coronavirus Tax Relief
Malaysia is exempting accommodation services from services tax and providing sales tax exemptions and lifting import duties on equipment and machinery.
Mexico Coronavirus Tax Relief
Mexico has delayed deadlines for lawsuits in tax courts until April 19.
Netherlands Coronavirus Tax Relief
The Netherlands has created a blanket three-month delay for payroll, income, and corporate tax payments along with VAT. Late payments will face a reduced interest cost of 0.01 percent.
The government is also providing support for businesses that see a 20 percent reduction in revenues, at 90 percent of wage costs. There is also a €4,000 compensation payment available to businesses that were forced to close temporarily, and an expansion of government guarantees for loans to small and medium-sized businesses.
New Zealand Coronavirus Tax Relief
New Zealand has announced the reintroduction of depreciation deductions for commercial and industrial buildings to encourage investment. In addition, the threshold for payment of provisional tax will be increased to NZ $5,000 to reduce cash-flow pressure on small firms.
Norway Coronavirus Tax Relief
Norway has reduced the employee tax rate by 4 points for two months. Corporations will be allowed to deduct losses in 2020 to reduce tax payments in the two previous years. The reduced VAT rate (12 percent) will be temporarily lowered to 8 percent, and this change is retroactive to January 1. Tax payments for VAT and advanced tax payments for other businesses will be postponed. Net wealth tax payments will be reduced for those who own stock in loss-making companies. The tax on air passenger flights is suspended from January 1 to October 31.
Poland Coronavirus Tax Relief
Poland has extended the deadline for the new SAF-T VAT regime from April 1 to July 1. The government is also allowing accelerated VAT refunds. The personal income tax deadline is extended by one month, and businesses can apply to defer social security contributions for three months.
In addition to these changes, there is a roughly PLN 212 billion relief package aimed at supporting the economy and the health-care system.
Portugal Coronavirus Tax Relief
Portugal has suspended social security contribution payments for companies affected by the coronavirus outbreak. VAT and withholding tax payment schedules can be adjusted for businesses with less than €10 million in revenues in 2018 or a 20 percent reduction in revenues.
Romania Coronavirus Tax Relief
Romania will suspend most tax audits, extend the deadline for an annual profits tax from March 25 to April 25, and speed up VAT refunds to help businesses.
Slovakia Coronavirus Tax Relief
In Slovakia, companies and individuals will receive an automatic tax payment deadline extension of up to three months.
Slovenia Coronavirus Tax Relief
Slovenia has adopted measures to delay tax filings and payments for businesses. Businesses can apply for a tax deferral of up to two years or for a 24-month installment plan.
South Korea Coronavirus Tax Relief
South Korea is cutting its VAT for small businesses, giving tax boosts for consumers replacing their cars early, and providing a new tax deduction on personal credit card spending.
Spain Coronavirus Tax Relief
Spain approved tax relief for small and medium-sized businesses and self-employed persons. Those businesses will be able to defer income, corporate, and VAT tax obligations for six months without interest.
Sweden Coronavirus Tax Relief
Sweden is allowing businesses to reclaim tax payments that were made from January to March.
Switzerland Coronavirus Tax Relief
Switzerland has adopted an aid package of CHF 10 billion for funding reduced work schedules and targeted loan programs. The late penalty and interest fees associated with VAT will be waived through the end of 2020, although taxpayers must apply to have their payments deferred.
Thailand Coronavirus Tax Relief
Thailand‘s cabinet approved cutting the income withholding tax from 3 percent to 1.5 percent for six months, from April to September. It also doubled the tax benefit for investment in long-term mutual funds to THB 412,000.
Turkey Coronavirus Tax Relief
Turkey will give a six-month deferral on some tax and insurance premium payments to certain sectors, including retail and transportation. The VAT on domestic air travel will be cut from 18 percent to 1 percent. Minimum payouts for pensioners will be increased and the government will make an early annual bonus payment to pensioners.
United Kingdom Coronavirus Tax Relief
The UK waives business property taxes for retail, leisure, and tourism for 12 months to reduce the economic impact of the coronavirus outbreak. It also paused plans to expand rules on the employment status of contractors in the private sector. These so-called “off-payroll” rules aim to ensure that contract workers pay about the same tax and social security contributions as regular private sector employees. The UK is also expanding the Universal Credit and working tax credit by £1,000 and delaying £30 billion in VAT payments.
Ukraine Coronavirus Tax Relief
Ukraine is exempting imported medicine and medical devices and equipment needed to prevent the spread of coronavirus from its VAT.
United States Coronavirus Tax Relief
The United States has adopted a short-term expansion of paid sick leave. Tax payments have also been delayed from April 15 to July 15 without interest or penalties. Total fiscal relief under negotiation could exceed $1 trillion.