This paper focuses on the preferential tax measures adopted by BRITACOM jurisdictions that consist of 36 Council Member Tax Administrations and 28 Observers. The aim is to provide suggestions on supporting the industries severely hit by COVID-19 pandemic and stimulating economic recovery. The materials in this paper are mainly selected from www.britacom.org
, official websites of BRITACOM jurisdictions, and etc.
At present, the continuing spread of COVID-19 pandemic has presented a global challenge to the entire international economy. The unprecedented pandemic has caused serious impacts on global tourism, transportation, catering, culture, entertainment, aviation and many other industries.
Countries around the world have invested huge resources in the prevention and control of the pandemic BRITACOM jurisdictions introduced a series of policies and measures to support the development of industries to go through the crisis.
1. Tax Policy
February 25. Exemption from all monthly tax payments for registered taxpayers engaged in the hotel and guesthouse businesses in the province of Siem Reap for the period from February to May 2020.
March 30. Corporate income tax (CIT) waiving for 3 months from March to May 2020 for hotels, guesthouses, restaurants and travel agencies operating in Phnom Penh, Siem Reap, Sihanouk, Kep, Kampot, Bavet and Poipet.
March 30. Tax waiving on minimum tax for 3 months from March to May 2020 for Cambodia’s airline companies.
May 26. Further exemption of all monthly taxes from June to July 2020 for registered hotels, guesthouses, restaurants and travel agencies operating in Phnom Penh, Siem Reap, Preah Sihanouk, Kep, Kampot, Bavet city, and Poipet city.
May 26. Further exemption from minimum tax for all airlines registered in Cambodia from June to July 2020.
May 1. Exemption for the second quarter, of withholding tax and municipal taxes (right of market place, etc.) for the benefit of small food re-sellers (Bayam, Sellam).
May 1. The exemption of Tourist Tax for hotel and restaurant industry for the rest of the fiscal year 2020, beginning in March; exemption from the flat-rate tax and the tax parking fees for taxis and motorcycle taxis, as well axle tax for the second quarter. This measure could be extended to the rest of the year 2020.
1.3 Cote d’Ivoire
April 23. Postpone for three months of the payment of CIT by tourism and hotel businesses experiencing difficulties.
June 23. The VAT rate for the following services will be reduced from 9% to 5% for the period July 1, 2020 to January 10, 2021: hotel accommodation, restaurant and catering, passenger transport.
April 24. Taxpayers having income from agriculture or forestry, trade, self-employment, rent/lease and expecting to suffer losses due to the COVID-19 pandemic in 2020, which may be carried back to 2019, may apply not only for a reduction of income or corporation tax prepayments for 2020 but also for a retrospective reduction of income or corporation tax prepayments made for 2019 based on a lump-sum (15% of the tax base for the prepayments in 2019) loss carry back.
June 29. Reduction of the VAT rate for meals (not drinks) in restaurants from 19% to the reduced rate of 7% from July 1, 2020 to June 30, 2021.
June 30. Increase in the gross list price for the tax relief on the private use of a carbon-free company car.
May 20. VAT reduction from 24% to 13% for passenger transport, coffee and non-alcoholic drinks and the provision of services in cafes, restaurants, pastry shops etc. Furthermore, VAT is reduced to 6% for movie tickets (entered into force on May 30, 2020).
March 18. Sectors that were severely hit by the pandemic (e.g. tourism, restaurants, entertainment venues, sports, cultural services, transportation, agriculture) will be exempted from paying social security contributions (SSC), payroll taxes and small business tax.
March 18. Temporary waiver of the tourism development contribution, a levy paid on food, catering and accommodation services.
March 19. Government regulation as of March 19, 2020 provides that: (i) The declaration and payment of the tourism development contribution is suspended for the period March 1, 2020 and June 30, 2020. (ii) Small taxpayers carrying out passenger transport services (e.g. taxis) are exempt from their tax liability for March, April, May and June 2020. The suspension of the declaration and payment of the tourism development contribution was extended until December 31, 2020.
April 16. Tourism may be positively affected by the fact that taxpayers concerned will not be required to pay tourism tax, nor will entities tasked with collecting and paying such tax be required to do so.
April 22. Tourism tax will not be collected for the year 2020.
May 16. Employers’ SSC and payroll taxes will not be charged on businesses in the aviation industry.
February 25. The first package comprises support to the tourism sector and to low-income households. The central government provided tax cuts and discounts on airline tickets and jet-fuel to offset potential losses in the tourism sector. The government will waive taxes for hoteliers and restaurants located in 10 destinations (Denpasar, Batam, Bintan, Manado, Yogyakarta, Labuan Bajo, Belitung, Lombok, and Malang) for the next six months.
March 2. The payment of employers’ and employees’ SSC as well as employees’ personal income tax (PIT) withholdings for tourist sector operators is suspended until April 30, 2020 for the entire country.
March 17. Tax and SSC payments for March and April, as well as VAT payments for March, are suspended for all firms in the most affected sectors (tourism, transport, catering, entertainment, sport and education).
March 17. Payments of harbor taxes and fees are suspended up to July 31, 2020 for firms operating in the shipping sector.
May 19. Hotels are exempted from payment of municipal property tax on buildings. Restaurants are exempted from the payment of land-use fees.
May 19. Tax credit of 60% on the rent of March, April and May for buildings where the activity is carried out by companies, craftsmen and self-employed workers with a turnover of less than 5 million EUR in 2019 and which suffered a reduction of turnover greater than 50%. This tax credit is due to hotels regardless of their dimension.
The tax credit can be transferred to financial intermediaries as well as other firms providing a discount.
May 19. Touristic vouchers that takes the form of a tax credit between 150 to 500 EUR granted to household with income lower than 40,000 EUR. Both tax credits can be transferred to hotels, construction companies as well as financial intermediaries.
March 20. Property tax will be levied at 0% to December 31, 2020 for legal entities and individual entrepreneurs in large retail facilities, shopping and entertainment centers, cinemas, theaters, exhibitions, fitness and sports facilities and 0% land tax will be levied on agricultural lands of agricultural producers.
March 27. As per the Decree of the Kazakhstan Government No. 141 dated March 27, 2020, producers of gasoline (except for aviation gasoline) and diesel sold on export will be exempt from excise tax till December 31, 2020.
April 1. According to the Statement of the President of March 31, 2020, accrual and payment of payroll taxes and other related payments are suspended for 6 months (from April 1, 2020 to October 1, 2020). This measure is for small and medium enterprises operating in the following sectors: catering, individual trade sectors, transport services, consulting services, IT sector, hotel business, tourism, and etc. The state commission on state of emergency will approve the final list and update it, as required.
April 9. Taxpayers who rented out premises and plots in trade and service centers and had to reduce rental fees due to worsened economic conditions, shall be exempt from income tax until the end of 2020.
1.12 New Zealand
March 17. Introducing depreciation deductions for commercial and industrial buildings, including hotels and motels, at 2% declining value.
March 16. The Supreme Committee for Crisis Management has announced an exemption from customs duties for food and medical goods for a period of six months for the following sectors: hospitality and tourism; retail; small and medium sized industries; and commercial complexes in exchange for providing services.
February 18. A property tax rebate of 30% for financial year 2020 will be provided for the accommodation and function room components of licensed hotels and serviced apartments, and prescribed meetings, incentives, conventions, and exhibitions venues. Furthermore, international cruise and regional ferry terminals will receive a 15% property tax rebate, and the integrated resorts will receive a 10% property tax rebate.
February 18. 15% property tax rebate for qualifying commercial properties, such as premises of the international airport and tourist attractions. Up to 100% for non-residential properties.
March 26. Property tax rebates for 2020 that were proposed during the Singapore Budget announcement on February 18, 2020 were enhanced. Rebates ranging from 10% to 30% have been increased to 30% to 100%. Commercial properties worst affected by COVID-19 such as hotels, serviced apartments, tourist attractions, shops and restaurants will receive the 100% rebate. The rebate has also been extended to non-residential properties such as offices and industrial properties. These were previously not eligible for any rebate but will now get a 30% rebate.
March 26. Enhanced property tax rebates for 2020 (replacing first wave of property tax rebates). Increased property tax rebates for qualifying commercial properties, such as hotels, serviced apartments, tourist attractions, shops and restaurants, from 15% or 30% to 100%. Increased property tax rebate for Integrated Resorts from 10% to 60%. All other non-residential properties will receive a new 30% Property Tax Rebate.
June 24. The Singapore tax authority updated its e-Tax Guide titled “Income Tax Treatment of Real Estate Investment Trusts and Approved Sub-Trusts” to provide details and clarification on the following: extension of time for the distribution of taxable specified income of the trustee for financial year 2020 and 2021; taxability of real estate investment trust rental income that is suspended from collection pursuant to the COVID-19 Act 2020 ; treatment of over-distribution of taxable specified income in the earlier quarters of financial year 2020; deductibility of impairment losses on lease receivables that are credit impaired.
1.15 South Korea
March 23. For all companies there is an increase in allowed entertainment expense deductions for financial year 2020.
March 23. Reduction in consumption tax on motor vehicles by 70% (from 5% to 1.5%) for purchases between March 1 to June 30, 2020 (capped at 1.43 million KRW including surtaxes and VAT).
April 23. Super-reduced 4% VAT rate applicable to e-books, newspapers and magazines supplied electronically.
May 7. Improvement of the tax credit for investments in film productions, effective for fiscal years that start on January 1 or onwards.
June 30. Tax holidays will be granted to certain business taxpayers such as taxpayers engaged in tourism, hotels and catering from April 1 to September 1, 2020.
June 30. Tax holidays will be granted to individual taxpayers working based on the patent at the markets in shopping centers or engaged in consumer services (including hairdressing salons, beauty shops, fashion house and sewing services) from May 1 to September 1, 2020.
1.18 United Arab Emirates
March 12. Dubai introduced a package of 1.5 billion AED (410 million USD) with 15 initiatives focused on the commercial sector, retail, external trade, tourism, and the energy sector. Major initiatives include: extends a refund of 20 per cent on the custom fees imposed on imported products sold locally in Dubai markets; reduction of municipality fees imposed on sales at hotels from 7% to 3.5%.
June 30. Introduction of a special tax incentive for large construction work (investment amount of at least 60 million index unit (approx. 6.4 million USD) for office, house and housing developments by private initiatives. It applies to projects presented before December 31, 2021 and to investments executed before April 30, 2025.
The CIT exemption varies depending on the investment amount of the project and ranges from 15% to 40% of the amount of investment.
Eligible real estate property is exempted for 8 years in Montevideo and 10 years elsewhere. The movable assets will be exempted for its useful life.
Tax credit for the VAT included in the acquisition of equipment, machines, materials and services for construction works.
2. Tax administration
March 30. Hotels, guesthouses, restaurants and travel agencies operating in Phnom Penh, Siem Reap, Sihanouk, Kep, Kampot, Bavet and Poipet must file 2019 tax returns by March 31, 2020, but tax payments are allowed to do monthly installments until November 2020.
April 1. The Tax Administration introduced the deferral of the payment of income tax for some economic activities such as tourism (food and accommodation), agriculture small business, among others, for six months and installments as from April.
January 1. Deferral of payment of business property tax for taxpayers that are forced to suspend their business activities due to the COVID-19 pandemic, following the same rules as for the tourism sector.
March 13. Deferral of annual personal income tax untilNovember 1, 2020 for taxpayers operating in the tourism sector, including accommodation, catering, tour operating, transportation, excursion and conference services, entertainment and other persons providing organized services to tourists. Under normal circumstances, taxpayers have to submit their annual PIT return before April 1, 2020. This payment deadline can now be extended. In order to apply for the PIT deferral, the taxpayer has to file a request to the tax authorities, upon which the tax authorities will extend the deadline of the payment of PIT until November 1, 2020. In addition, the payment of the withholding taxes on income earned over the same period are deferred as well, following the same time schedule as described above for the PIT liabilities themselves.
March 19. The German Federal Ministry of Finance has issued a circular about tax measures to take account of the effects of the COVID-19 pandemic. This decree deals with deferral and enforcement measures and the adjustment of advance payments. While it is applicable for most taxes levied in Germany (including but not limited to income and corporation tax and VAT), the below text deals with the decree as far as VAT is concerned. The measures are limited to taxable persons directly affected by the effects of the COVID-19 pandemic. It is also necessary that a taxable person is affected to a considerable extent. However, these conditions shall not be put to an in-depth test by the tax office. Upon application (and if these conditions are met), deferment for VAT for which the taxable person has become liable, or will become liable, can be granted upon application until December 31, 2020.
June 15. 10-days extension of the deadlines for the collection of excise duties and VAT corresponding to coffee products, in cases where the obligation of certification and collection arises until June 5, 2020.
June 19. Suspension until October 30 of the payment of certified tax liabilities and installments, expiring within June 2020, for businesses whose operation has been suspended under a state decision and businesses operating in the tourism, catering, transport, culture and sports sectors.
March 20. Legal entities and individual entrepreneurs in large retail facilities, shopping and entertainment centers, cinemas, theaters, exhibitions, sports and fitness facilities as well as the producers of agricultural products are exempt from penalties on unfulfilled tax liabilities for all types of tax until August 15, 2020 and the deadline for submitting tax reports is postponed to the third quarter of 2020.
2.7 New Zealand
April 1. For the next 2 years, use of money interest on late payment of tax will be waived for businesses that can demonstrate that they have been sufficiently affected by COVID-19 to need this relief. It will apply to interest on all tax payments. Under limited circumstances, penalties for late payments incurred due to the effects of the COVID-19 may also be remitted.
2.8 Papua New Guinea
March 12. Taxpayers in medical services, hospitality, tourism, manufacturing, air transport and agriculture are reaffirmed as being priority cases for goods and service tax (GST) refunds.
April 4. Small and medium-sized companies with a turnover of less than or equal to 100 million XOF and companies operating in the sectors most impacted by the pandemic, including tourism, catering, hotels, transport, education, culture and the press, will benefit from deferred payment of taxes until July 15, 2020.
April 16. A Singapore-listed real estate investment trust (S-REIT) must distribute at least 90% of its taxable income within three months after its financial year end in order to qualify for tax transparency. For taxable income derived in the financial year ending 2020, this timeline has been extended to 12 months after the end of the financial year to give S-REITs more flexibility to manage their cash flows. On June 3, 2020 this timeline was further extended to December 31, 2021. In addition, the timeline for distributing taxable income derived in the financial year ending 2021, has been extended to December 31, 2021 or three months after the end of the financial year, whichever is later.
3. Main features
3.1 Countries have generally introduced tax support policies for tourism, hotel, catering, film, retail, aviation and other industries that have been greatly hit by the COVID-19.
3.2 As for tax policies, the support measures adopted include tax exemption for specific industries within a certain period of time, reducing the tax rates of VAT, CIT, PIT and other taxes in some industries, increasing the tax refund threshold, and expanding the scope of tax credits, etc.
3.3 In terms of tax collection and management, many countries have introduced measures to allow enterprises in industries seriously hit by COVID-19 to pay taxes in installments, as well as exempt the late payment fees.
3.4 In addition to industry-specific tax policies, some countries have introduced policies applicable to all industries such as increasing the threshold of entertainment expenses deduction, for the purpose of encouraging consumption and stimulating economic recovery.