The below highlights a country-by-country breakdown of the tax changes being made globally to ease the stress that the Coronavirus is putting on the global economy. Many governments are looking at VAT deferments, tax rate cuts and VAT refunds as a way to help SMEs and large companies alike get through these uncertain times.
No changes to 13th Directive VAT Deadlines
So far there have been no changes to the 13th Directive (businesses vat registered in a non-eu country claiming from an EU country) deadline for foreign VAT refunds. Claims will still need to be submitted by 30 June 2020 or September 30 2020 (depending on the existing deadline stipulated by each member state) for the January -December claiming period.
Global VAT changes due to Coronavirus:
Australia Tax payment deferrals: If you or your business has been affected by COVID-19, The Australian VAT Authorities will work with businesses to defer some payments and vary any due instalments. These include income tax, activity statement, pay as you go (PAYG) instalments, FBT and excise payments by up to six months. (source)
Low-interest payment plans: If your business has been affected by COVID-19 and you need help to pay your existing and ongoing tax liabilities, you will be able to discuss entering a low-interest payment plan with the Australian tax authorities.
Austria VAT Payment Deferment: The taxpayer can apply to his tax office for deferral of payment or payment in instalments if justified.
Low-interest payment plans: The taxpayer can apply to his tax office (e.g. in the application for a deferral or instalment payment) for a reduction of the late payment interest.
Update 30/03/2020: Output VAT Waived on Medical supplies by VAT registered businesses: the Belgian VAT authorities published a new circular letter (Dutch | French) clarifying that no VAT is due on medical and protective equipment donated to hospitals by VAT registered businesses. In principle, when supplying goods for free, VAT taxpayers who deduct VAT on purchases, or other production costs of those goods should make a correction and pay output VAT in the form of a so-called “self-supply.” This obligation is temporarily waived for supplies made between 1 March and 30 June 2020, provided specific conditions are met. (source)
Belgium VAT payment Deferment: The tax authorities have implemented an automatic deferral for 2 months, without administrative fines or late payment interest being imposed.
- Payment – February 2020 VAT return: until 20 May 2020
- Payment – March 2020 VAT return: until 20 June 2020
- Payment – Q1 2020 VAT return: until 20 June 2020
Postponed Tax Audits: The Belgian tax authorities also have postponed all non-essential/less urgent on-site tax audits. Remote tax audits could still be executed, as well as urgent on-site tax audits (to protect the financial interests of the Belgian state).
Bulgaria penalties and interest Waived: There are reports that the deadlines for filing the VAT returns or for paying monthly VAT liabilities will not be adjusted, but it may be that penalties and interest for late filings or payments could be waived.
Update 27/03/2020: Bolivia VAT Payment Deferment: VAT payments, submissions and obligations for Feb ad March deferred to May. Tax Refund Requests Submission extension: Submission of tax refund requests due in March deferred to April.
Canada payments of income tax deferment: Allow all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period. This measure will result in businesses having more money available during this period. (source)
China has cut VAT on medical services, catering and accommodation services, sundry personal services (e.g., hairdressing, laundry), and public transport. There is also a cut on masks and protective clothing. VAT has also been reduced from 3% to 1% on the cash accounting scheme for small businesses until the end of May.
For taxpayers engaged in hoteling services, passenger air travel services, theatrical activities and live show business activities, the VAT payment due for the March – April period (or for the January – April period, if they file the VAT return every four months) was extended to June 30, 2020 (previously from May 12 to May 26, 2020).
For taxpayers engaged in the provision of alcoholic beverages in situ, cafeterias and restaurants, as well as travel agencies and tour operators, the deadline to pay the VAT and national excise tax for the March — April period (or for the January – April period if they pay the VAT every four months) was extended to June 30, 2020 (previously from May 12 to May 26, 2020, depending on the last digit of the taxpayer’s tax identification number). These extensions are for the date of payment, not for filing VAT or the national excise tax returns. (source)
Costa Rica has provided a 3-month VAT payment deferment for taxpayers from March 15. Further, there is an exemption from VAT on commercial leases for the months of April, May, and June 2020 if both the lessee and the lessor are registered in the taxpayer registry. (source)
The Croatian government will allow taxpayers to defer payment or to arrange an instalment payment plan for their tax liabilities, social security contributions and certain non-tax levies without being subject to interest being imposed during the period of deferral of payment (payments in instalments). (source)
The Ministry of Finance in Cyprus announced on March 18 the approval of two VAT bills with which:
VAT Return Suspended: The obligation to submit the VAT return for the period 01/12/2019 – 29/02/2020 is suspended until 30 April 2020 where (a) the VAT payable for the said VAT period is settled not later than 10 November 2020, and (b) the total revenues for the period 01/03/2019 – 29/02/2020 does not exceed EUR 1 million.
VAT Rate Decrease: The standard VAT rate and one of the reduced VAT rates are temporary reduced: – from 19% to 17% for the period 01/04/2020 – 31/05/2020 – from 9% to 7% for the period 01/04/2020 – 15/07/2020.
VAT Return Deadline Extended: The deadline for filing tax returns for annual taxable periods shall be automatically extended to four months if tax returns are filed electronically.
VAT reductions: Advances for VAT deduction will allow the tax authority to refund parts of excess deductions not subject to review. The deadline for refunding excess deductions (typically relating to VAT) will be extended from 30 to 45 days; under transitory provisions, the new deadline will apply to taxable periods for which the deadline for filing tax statements expires after the amendment’s effective date.
Czech penalties and interest Waived: The Czech Republic will lift fines for coronavirus-related late filing of corporate income tax returns and value-added tax reporting.
VAT Payment Deferral: Deadline for reporting and payment of VAT for companies who report on a monthly basis as well as companies who report on a quarterly and semi-annual basis. (source)
For small businesses: For small and medium-sized businesses, the tax periods for the first and second quarters and the first and second half years must be added together. This reduces the payment deadline for medium-sized companies for the first quarter of 2020 by 3 months, and for small businesses, the payment deadline for the first half of 2020 is reduced by 6 months. The periods are collected so that you pay as a result of reporting the second period. However, you can still report to the original deadlines and, for example, get negative VAT paid.
For large businesses:
- The deadline of April 27 will be moved to May 25, 2020
- The deadline of 25 May will be moved to 25 June 2020
- The deadline of 25 June will be moved to 27 July 2020
No announcement has been made on Indirect Tax Measures. (source)
The Estonian Tax and Customs Board (ETCB) has introduced a VAT payment delay for taxpayers until 1 May 2020. VAT will not have to be paid, but returns must be submitted as normal. Companies in difficulties need to apply for the payment of tax arrears in instalments through the ETCB’s e-service environment. In addition, all VAT audits and assessments are suspended.
Finland penalties and interest Waived: Penalties related to late filing of VAT returns will not be collected.
No VAT Payment Deferments in Finland: There is no possibility to apply for an extension for the filing of the VAT return.
Although France has allowed some deferrals with regards to direct taxes such as corporate taxes and payroll taxes, they have made it clear in their regulation that they will not be granting any deferments or changes to value added tax.
Germany VAT Payment Deferment: businesses may apply for VAT payment postponement until 31 Dec 2020.
VAT Rate Decrease: VAT rate reduction from 24% to 6% for products needed to protect against Coronavirus.
VAT Payment Deferment: There will be a four-month VAT payment delay. By decision of the Minister of Finance, upon recommendation by the Governor of the Independent Public Revenue Authority (AADE), the affected enterprises by sector and by region are specified, the period of extension of the deadline for payment and suspension of VAT collection, as well as any other details necessary for the implementation of this Agreement.
Update 30/03/2020: Guatemala Tax Payment deferment: Feb VAT returns that were in due in March have been deferred to April and March VAT return has been postponed to May .
Update 25/03/2020: VAT Rate Exemptions: VAT exempted for all medical Supplies for testing, prevention and treatment of COVID-19 virus. Exemption valid until 30 June 2020.
Waiving of tax payment for transport service Companies: Small taxpayers carrying passenger transport services (e.g. taxis) under the KATA taxation regime are exempted from their tax liability for the months March, April, May and June 2020.
The Hungarian Authorities have made no mention of VAT payment deferments for companies.
Although the Icelandic tax authorities have passed legislation providing tax provisions for individuals, they are yet to provide VAT provisions or payment deferments for companies.
The Ministry of Finance has extended the deadlines for filing returns of goods and services tax (GST) in view of the coronavirus crisis and difficulties faced by taxpayers in meeting the compliance norms. (source)
Relaxation of Import Taxes: Relaxation of ITA 22 (PPh Pasal 22) for importers in three months
Speedy VAT Refunds: for businesses Speeding up the refund of Value Added Tax for three months.
Irish penalties and interest Waived: Interest on late payments of January and February VAT are to be suspended. This is designed to help small and medium businesses experiencing cash-flow and trading difficulties as a result of the coronavirus.
Israel VAT Payment Deferments: The Israeli tax authorities allowed a 10-day deferment of VAT filings and payments. The tax authorities have also stated that they will be open to any request for further delays or assistance from businesses experiencing difficulties.
VAT Payment Deferments for certain sectors: The aim of this provision is to grant assistance to entities operating in sectors more heavily affected by COVID-19. In particular, the decree postpones the VAT payment deadline for entities that have their legal seat or center of operations in Italy and that operate in sectors including sports, theatres, cinemas, conventions and exhibitions, restaurants, bars or pubs, assistance for the elderly or disabled, childcare, thermal sites (hot springs), and tour guides. For these entities, the deadline for VAT payments due in the month of March 2020 is postponed to 31 May 2020; payment may be made in up to five equal monthly installments if the first installment is paid by 31 May 2020. The deadline is 30 June 2020 for payments by entities in the sports sector.
Tax Rate reduction: Jamaica has lowered its consumption tax rate from 16.5% to 15%.
Japan local tax late payments: The Tokyo tax authorities announced an extension of business tax (local tax) due between 27 February 2020 and 15 April 2020 will be extended to 16 April 2020 (except for when a taxpayer closed the business in the middle of the year).
Consumption tax rate: Japan is considering lowering or temporarily abolishing the 10% consumption tax rate in order to support the economy. But they are yet to make a decision.
Update 30/03/2020: Excise Duties exemption: Excise duties will be exempted on exported petrol and diesel fuel until 31 December 2020. VAT Rate Decrease: sale and import of socially significant alimentary goods will be subject to VAT at the rate of 8% until 1 October 2020.
South Korea VAT Cuts: South Korea has cut vat for small businesses.
Starting this week, the Indirect Tax Administration will reimburse VAT credit balances below €10,000, which should help to improve cash positions of approximately 20,000 enterprises established in Luxembourg.
Luxembourg penalties and interest Waived: The Indirect Tax Administration announced that due to COVID-19, a possible failure to file VAT returns within the normally applicable deadlines will not be fined. This measure will apply until further notice.
Malaysia has waived service tax on tourism-related expenses.
Malta VAT Payment Deferment: VAT payments due by 15 March 2020 and 15 April 2020 to be settled in two equal instalments with the two quarterly returns immediately following the quarter in relation to which the VAT was deferred. The deadlines for submission of statutory tax documents and notifications will, however, remain unchanged.
Malta penalties and interest Waived: No interest of penalties will be charged on tax payments that are postponed in terms of this measure.
Accelerated VAT refunds: The Commissioner for Revenue has also committed to accelerating pending tax refunds.
VAT Waived on certain expenses: VAT on hotels and accommodation has been waived.
VAT waived on certain expenses: VAT on hotels and accommodation, restaurants and catering have been waived.
VAT Audits postponed: Any VAT investigations or assessments will be paused.
Input VAT returns can be made earlier: VAT-registered businesses that are typically in a VAT recovery position may adjust quarterly VAT filing to monthly.
Netherlands VAT payment Deferments: VAT-registered businesses that are typically in a VAT remittance position may adjust VAT filing from monthly to quarterly. It may also be requested to credit VAT recovery rights with other tax liabilities (such as wage tax).
Netherlands penalties and interest Waived: The Dutch tax authorities will temporarily impose no administrative penalties on businesses for late tax filing or payment. This will apply to personal income tax, corporate income tax, wage tax and VAT.
New Zealand penalties and interest Waived: Inland Revenue will be given the authority to write off interest on late payments for those adversely, financially, affected by COVID-19 for tax payments due after 14 February 2020.
Update 30/03/2020 : VAT Rate Cuts: The Norwegian VAT Authorities have cut the reduced VAT rate from 12% to 7%. This is for VAT Rate applies to expenses such as cinema admission, public transport, hotel accommodation services, museums and amusement parks. The cut VAT Rate will be in effect from 1 April to October 2020.
Norway VAT Payment Deferment: VAt payments that were due on 10th April deadline have been deferred to the 10th June 2020.
Although Norway has allowed deferred payments of wealth tax on business assets for the 2020 financial year, they have not made any changes to their VAT scheme.
The Omani government announced it has taken measures to help small businesses in the sultanate, including tourism and municipality tax breaks.
Philippines VAT payment Deferment: The Philippine Bureau of Internal Revenue March 19 issued a circular extending the filing deadlines for various taxes, including VAT. Businesses will be allowed to extend their monthly VAT declarations for February and March.
Postponed VAT deadlines: Postponed deadlines—the effective date of new SAF-T-V7M would be postponed to 1 July 2020 (from 1 April 2020), and value added tax (VAT) settlements would be facilitated.
Portugal VAT Payment Deferment: Postponement of the deadline regarding the first instalment of the special payment on account (due in March) to 30 June 2020, without being subject to any penalty. This is automatic for businesses with less than €10 million turnovers per annum. Businesses that exceed the threshold will have to apply.
Although the General Tax Authority has extended the tax filing period for individual taxpayers, they have not implemented any changes to business-related taxes.
VAT reimbursements brought forward: The reimbursement of VAT tax during the month of March for all the accounts that are settled and for which decisions of reimbursement were issued.
Faster VAT refunds going forward: The implementation of a new mechanism for VAT reimbursement which aims to rapidly solve the VAT reimbursements starting with April 1st, 2020.
Romanian penalties and interest Waived: The Romanian tax authorities will temporarily impose no administrative penalties on businesses for late tax filing or payment. This will apply to personal income tax, corporate income tax, wage tax and VAT.
Russia VAT deferment: The tourism and airline industries have been given tax deferrals from 1 May 2020. Although the Russian government has given assurances that there will be tax payment reliefs for some distressed sectors of the economy during the coronavirus pandemic, it has still not clarified if this extends to VAT.
Saudi Arabia VAT Payment deferment: The tax authority has allowed businesses to have a VAT payment deferment for 3 months. Monthly returns due for February to May will all be delayed to the last days of June to September, respectively. Quarterly returns for Q1 are delayed until 31 July 2020.
Serbia Tax Payment deferment: For taxpayers granted a deferral for paying taxes during the state of emergency, effective for the instalment due in March 2020, the tax authorities will not cancel a “decision” for a delay of a tax payment or will not initiate a forced collection procedure. During this period, no default interest will be charged on the tax debt. (source) The source is unclear on whether this is in relation to individual taxpayers only or includes businesses.
Several financial support packages have been approved by the authorities. However, up to now it appears there are no deferments or postponements of taxation due dates.
Slovakia VAT Payment deferment: The Slovak Ministry of Finance has published a proposed relaxation of Value Added Tax and other tax rules. This includes an extension of the VAT payment date, currently the 25th of the month, following the reporting month or quarter. There will also be no interest or penalties on late filings.
Update 23/03/2020: VAT Exemption and import VAT refunds on certain goods: A VAT exemption on “essential goods” and full import duty rebate on importation during the COVID-19 pandemic if the goods are imported for the relief of distress of persons impacted by COVID-19. “Essential goods” are broadly goods that may be manufactured or traded with during the COVID-19 pandemic.
VAT Refunds: SARS (South African Revenue Service) is considering allowing businesses and workers to reclaim the VAT put on goods that have been purchased specifically for their trade. If it’s an essential tool to facilitate work, businesses may soon be able to apply for a refund on each item. However, this has not been confirmed yet by the government.
Indications from the South African Revenue Service are that taxpayers need to continue to comply with their tax obligations, but that there may be several unusual value-added tax (VAT) consequences to be considered (source). The details of the actual temporary relief measures are not known at this time.
Spain VAT deferment: Earlier in March, Spain had already announced VAT and other tax payment holidays for small businesses. The scheme is not available for large businesses (above €6m turnover) or if the Value Added Tax due is above €30m.
Update 30/03/2020: Sri Lanka VAT Payment Deferment: February and March VAT payments (previously due on 20 March and 20 April) are delayed to 30 April. Penalties and interest waived: There will be no late payments or interest charges.
Sweden Update to VAT deferments 26 March 2020:
The previously presented proposal on new opportunities to defer tax payments will be expanded. This means that Value Added Tax reported annually from 27 December 2019 until 17 January 2021 will also be covered by the proposal. In this way, many sole proprietors can defer their VAT payments that otherwise should be paid during the spring, such as on 12 May. Depending on how the situation develops, the proposal can encompass more than SEK 7 billion if the entire liquidity reinforcement is used.
Sweden penalties and interest waived: Sweden is providing late penalty and interest easements on VAT payments for up to one year.
Switzerland penalties and interest waived: The Swiss tax authorities have granted late penalty interest relief for VAT payments until the end of December 2020. Taxpayers must apply for the deferral to their VAT payments. There will be 0% interest charge. VAT returns must be filed as normal to report the unpaid Value Added Tax.
Taiwan tax payment deferment: Taiwan will allow tax payment delays of up to one year due to the pandemic (source).
Faster VAT refunds: VAT refunds will be granted within 15 days, compared to a normal 30-day period, if VAT returns are filed via an e-filing system. For paper filings, refunds will be granted within 45 days, compared to a normal 60-day period. (source)
Faster VAT refunds: A reduction in the time for VAT credit refunds as well as extra flexibility even if all the requirements are not met, which will be provided to enterprises as soon as possible but in any case within 1 month.
Tunisia VAT Payment Deferment: for businesses heavily affected by the outbreak, the spreading of tax debts and payments in instalments over a period of 7 years.
Tunisia Penalties and interest Payments delay: Companies are allowed to pay any owing penalties and interest later than usual. Payment has been postponed from April to June
Turkey VAT payment deferment: Several sectors will have their VAT returns for April, May and June delayed until 27 June 2020. VAT payments for April to June are delayed six months out to October to December. The sectors include Automotive; Accommodation; Cinema; Health; Publishing; Public exercise facilities; and Professional services.
Other VAT measures in place until November include:
VAT Rate Reductions: The VAT rate on airline travel is to be cut on domestic flights from 18% to 1%. Hotel accommodation and services are to be zero-rated.
VAT Rates Waived on certain items: The tax authorities have abolished duties and VAT on certain list of medicines and medical equipment.
United Arab Emirates
The stimulus package released by the Dubai Government includes a refund of 20% of customs duties paid on imported goods that are sold locally, cancellation of bank guarantee required to clear goods, and a 90% reduction of customs clearance fees. Dubai Customs has also put audits on hold. (source)
Update 31/03/2020: Import VAT and duties waived on certain goods: Goods arriving from outside the EU will not be subject to customs duty or import VAT. These goods are vital medical equipment including ventilators, coronavirus testing kits and protective clothing.
Update 30/03/2020 : Making Tax Digital Phase 2 postponed to 2021: In light of Covid-19, HMRC has decided to delay MTD phase II that was set to be launched on April 1 2020. Phase 2 will now commence April 2021.
UK VAT Payment Deferment: All VAT payments are postponed for the next three months until the end of June 2020. The VAT not paid during the period is then due to be paid by the end of the 2020/21 financial year, which ends on 31 March 2021. There was no mention of interest charges on any deferred VAT. However, it can be assumed that this will not be imposed. There are no allowances for businesses on special schemes, such as the annual VAT payment. Returns must still be filed on time.
United States of America
USA Tax relief: The following states have issued tax provisions and easements in light of the Coronavirus outbreak: Alabama, California, Connecticut, District of Columbia, Hawaii, Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nebraska, North Carolina, North Dakota, Oklahoma, Oregan, South Carolina, Texas, Utah, Virginia.
Update 30/03/2020: Uganda VAT Deferment: VAT filings due on 15 April is now postponed until 30 April 2020. Uganda Late filing penalties waived: Any returns due on 15 March may now be filed and paid by 31 March without accruing penalties or late payments.
Vietnam VAT deferment: The Vietnamese Ministry of Finance is offering a 5-month Value Added Tax deferment to assist with companies during the COVID-19 pandemic. The measures are targeting: small businesses; transport; agriculture sector; and foodstuffs and textile sectors.