Finance Minister says focus right now is on safeguarding economy.
The government is extending a series of measures for businesses struggling because of the COVID-19 pandemic, with Finance Minister Clyde Caruana saying the focus right now is on safeguarding the economy and not on collecting tax.
Addressing a press conference, Minister Caruana said the government wants to assure business owners that they would be offered support as they dealt with the impact of closures and slow business because of the pandemic.
All non-essential shops, including restaurants, have been ordered to close for a month until April 11 as part of efforts to control the spread of COVID-19.
Among the measures being extended, Caruana announced that the tax deferrals scheme will once again be introduced and will be in place until the end of the year.
“Payments will start being made from May 2022. This will help business owners focus on their business’ recovery and not worry about paying tax,” Caruana said.
He noted, however, that when the time came for payments, the government expected everyone to pay up the full amounts due. There will be no amnesties and the government will collect every cent, he said.
The minister also called on business owners to ensure that all their paperwork is in order, saying they must submit all the necessary forms as they would normally have done had they paid the taxes.
“Penalties will still apply if the paperwork is not in order, even though the payment is not expected,” Caruana warned.
Last year, a total of €230 million in taxes had been deferred, of which just under €100 million has been settled.
A one-time concession will also be introduced for those who have pending tax balances. These business owners will be exempt from the Capital Gains Tax when selling property to settle the tax owed to the government.
This measure expires in March 2022 and will, therefore, apply to those who enter into promise of sale agreements by then.
Another measure is that the moratorium on the repayment of bank loans has been extended by another six months. This is the second time this scheme has been extended, now to an overall period of 18 months, with it set to expire in September 2021.
The main measures announced today are:
Extension of the Tax Deferral Scheme
The Tax Deferral scheme will be extended such that the deferral period will now cover August 2020 to December 2021.
The scheme will not remove the obligations of beneficiaries to submit documents and returns by the due data as required by law.
The payment of such taxes will start from May 2022.
Eligible taxes included all taxes paid by the employer.
No interest or penalties will be charges in respect of eligible taxes that would have been deferred in terms of this scheme.
Extending the COVID-19 Guarantee Scheme (CGS) and the Moratorium
The moratorium period under the COVID-19 Guarantee Scheme (CGS), will be extended from 12 to 18 months;
Businesses will benefit from the much needed additional breathing space.
Banks will not be exposed to the risk of a sudden spike in non-performing loans with adverse repercussions on their capital adequacy ratios.
The 6 months could be extended to 12 months by banks on a case-by-case basis.
The COVID-19 Guarantee Scheme (CGS) will be extended from 30th June 2021 to 30th September 2021;
This will facilitate the access to bank financing by businesses.
The definition of ‘working capital’ will be widened to include the financial costs related to the servicing of bank loans of businesses; interest payments and principal payments.
Settling Tax Owed by Businesses
Business who have pending tax balances will be given a one-time concession to settle the tax owned to the Government
The exemption would apply on the amount of revenue receiveed from the sale of property which is equivalent to the amount of tax that is owned by the Government by the date of the promise of sale agreement.
Businesses will be exempted from the Capital Gains Tax when selling property to settle the tax owned bto the Government.
The promosie of sale agremment needs to be registered by March 2022.
Source: Times of Malta