The package includes an additional $130m of Government-backed and guaranteed loans to businesses in difficulties. Based on the Government public announcement, this extended sovereign guarantee is dedicated to the sectors of tourism, toll-manufacturing and production, which are most affected by the Covid-19 crisis and will be made available through a risk-sharing mechanism between the Government and commercial banks. Further guidelines from the Ministry of Finance and Economy are expected on the modalities of the implementation of this financial instrument and criteria to benefit from it.
Also, the package includes financial support to employees of businesses affected by the Covid-19 crisis, which were not covered by the first financial package. The financial aid consists of a one-off payment of roughly $350 per person for the entire period April – June 2020 to be provided to:
► Employees of medium and large business that closed their activities by order of the Ministry of Health and Social Protection
► Laid-off workers of business that were allowed to operate who were terminated from the entry into force of the preventive measures until 10 April 2020
► Employees of small business that were allowed to operate and thus could not benefit from the first financial aid package, excluding food and groceries stores, drugstores and liberal professionals
► Employees of accommodation businesses.
To benefit from the financial aid actual employees and laid-off ones must have been employed before the entry into force of the Ministry of Health and Social Protection orders. Employees cannot benefit from the second financial aid package, in case they:
► have benefited from the first financial aid package
► have earned more than ALL 2m income from employment in 2019
► have more than one job and one of them consist of a liberal profession
► are employed by public institutions, public companies or non-for-profit organizations.
Employees who have more than one job, can benefit only once. The application is done by the employer for the actual and laid-off employees through the tax e-filing portal and should include the beneficiaries’ generalities, ID and bank account details. The tax administration should process the application and approve it within ten days from the filing date.
Other measures announced earlier this week by the Government are still expected to be approved. Among others, the Government announced that it will assume the interest costs for loans taken under the $100 million sovereign guarantee instrument provided with the first financial aid package. Also, it announced the postponement of deadlines for corporate income tax prepayments, as follows:
► after (*) 30 September 2020 for all businesses, except those operating in the banking and telecommunications sectors and the supply chain for essential goods which should effect their tax prepayments as originally set by the income tax law, and
► after (*) 31 December 2020 for businesses operating in the tourism, toll-manufacturing sectors and call-centers.
(*) According to the announcement of the Government, the deadlines for corporate income tax prepayments for companies operating in different sectors will be postponed beyond the above deadlines; however, it is yet to be clarified what will be the final deadlines, once the changes are published in the official gazette.
Apart from the explicit tax changes there are many new topics on the tax agenda driven by the changes of business realities, like recognition of revenue for incomplete transactions, utilization of tax losses, VAT on rescheduled supplies or damages, treatment of changes in supply chains. The complexity involved and the variety of taxation issues driven by the Covid-19 situation is endless and therefore case-by-case examination of every single tax and accounting issue involving uncertainty and judgment is highly recommended.