The sectors affected by the spread of the coronavirus are entitled to a 25% tax deduction.
In order to offset the loss of tax revenue due to the coronavirus crisis, the financial staff has provided a 25% discount to employees and businesses who, despite being entitled to suspend tax liabilities, will pay them within the deadline.
The relevant incentive was announced by the financial executives and is still under development. Its final form will be clarified by the next Government Decisions which will include the next tranche of economic support measures. The adoption of this measure, however, contains some crucial details that businesses and taxpayers should note:
- The deduction measure for late payment of tax liabilities only applies to businesses and employees of firms in the approximately 700 Codes of activities that have either been shut down by government decisions or have been particularly affected by the coronavirus crisis. For business workers in affected sectors, the deduction measure applies only to those who have been suspended. Businesses that are active and are not included in the above lists should pay their tax liabilities regularly and on time as they are not entitled to either a 4-month suspension or a 25% discount on the timely payment.
- Freelancers and sole proprietors involved in sectors that are closed by government decisions or are affected by and employ one to five employees are entitled to deduction only for the February and March insurance contributions.
- The government’s plan to be finalized and reflected in the next law provides for the deduction of the timely payment of tax liabilities for tax liabilities that expire on April 30.
- VAT is not deductible for late payment of tax liabilities, which will either be paid in full on time or will be paid in full by 31 August 2020 without interest and surcharges.
- The deduction for the timely payment of tax liabilities does not include Employee Taxes, withholding taxes, installments of regulated debts, etc.
The updated list of activities affected by the spread of coronavirus is including 700 codes. Private businesses that have one of the main codes listed are included in the support measures. It is noted that this list is dynamic and will change with the corresponding Ministerial Decisions as the crisis progresses. It is estimated to include some 600,000 private companies with 1,200,000 employees and a monthly turnover of about 8.3 billion euros, as well as 550,000 freelancers, self-employed and individual business owners. Thus, for March, a significant portion of the country’s working population is affected, especially in the last two weeks. To have a sense of size, tax liabilities exceed € 2 billion. In addition, special-purpose compensation and insurance contributions for employees and freelancers are also set at EUR 2 billion. The total cash burden of these measures amounts to € 6 billion in March and April alone. The financial cost of these measures exceeds EUR 3.5 billion. Costs, which, together with reimbursements for enhancing business liquidity, additional public health and Easter spending for hospital workers, now stand at € 4.7 billion, which stands at 2.5%. of GDP. Higher than the average European average yesterday, according to European officials presented to Ecofin, was at 2% of GDP.
Obviously, the situation in the real economy has deteriorated rapidly in recent days. And it keeps getting worse. That is why the protection framework will be significantly expanded from next week.
Vassilis Korkidis – President, Piraeus Chamber of Commerce and Industry