Tax Measures to Support Anti-pandemic Materials


This paper focuses on the preferential tax measures adopted by BRITACOM jurisdictions that consist of 36 Council Member Tax Administrations and 30 Observers, with a view to providing suggestions on supporting pandemic control and prevention supplies. The material in this paper is mainly extracted from websites of BRITACOM, OECD, PWC, official websites of BRITACOM jurisdictions, etc.
To tackle the shortage of pandemic control and prevention supplies at the very beginning of the COVID-19 outbreak, BRITACOM jurisdictions have introduced a series of preferential tax measures to support the production, import, export and donation of the supplies, which have played a significant role in facilitating the containment of the virus spread and reduction of its negative impacts.
1.Tax policies
1.1 Angola 
March 27. Exempts from Value Added Tax (VAT), customs duties and from any other fee due for any supply of services, the import of goods intended to prevent and contain the expansion of COVID-19. Only goods imported for humanitarian aid or donations can benefit from this exemption. 
1.2 Armenia
March 16. The customs duties on the import of certain medical supplies is waived.
1.3 Cyprus 
May 20. Exemption from import duties and a VAT exemption on imports of goods needed to combat the effects of COVID-19, such as medical equipment and consumables which has been imported from January 30, 2020 to July 31, 2020.
1.4 Georgia 
April 4. The import and supply of the following goods become exempt from VAT without right to credit until October 1, 2020: protective shields; show covers; gloves; insulating overalls; medical gowns; sets of medical gowns, hats and show covers; plastic goggles; masks; contactless thermometers.
1.5 Greece
April 10. VAT exemption and relief from import duties on importation until October 31, 2020 for goods needed to combat the effects of COVID-19, provided, however, that such items are made available free of charge to specified beneficiaries.
March 20. The rate of VAT is reduced to 6% (from 24%) until December 31, 2020, on products needed to protect against COVID-19 and prevent its transmission: (a) masks and gloves; (b) antiseptic solutions, wipes and other preparations; (c) soap and other items for personal hygiene, and (d) ethyl alcohol, if used as a raw material by industry for the production of antiseptics.
March 25. VAT exemption until November 2020 for the supply of goods and/or provision of services to the Greek State in the form of donations of any kind of hospital-specific equipment, personal protective equipment and all kinds of medicines, by suppliers that are subject to VAT. Suppliers have the right to deduct input VAT on these items.
1.6 Hungary
December 31. Certain products used in the fight against the COVID-19 pandemic were granted customs and import VAT exemptions. The exemptions apply retroactively form January 31, 2020 until July 31, 2020
1.7 Indonesia
June 04. Government agencies, hospitals and certain other sectors which sell or buy goods to fight COVID-19 (qualified persons) will be granted VAT, income tax and import tax incentives. This measure will apply from the April Tax Period 2020 until the September 2020 Tax Period.
June 4. Tax incentives for goods and services needed in tackling corona virus disease 2019 for the period April-September 2020 (exemption of several withholding taxes).
June 24. Domestic business can grant an additional 30% reduction on the taxable income for the cost incurred to produce medical devices or household health supplies to fight COVID-19. 
June 24. Donations in cash or in kind to organizations such as National Disaster Management Agency, the Ministry of Health or other institutions and organizations appointed by the government to combat COVID-19 can be deducted from the gross income.
1.8 Italy
April 8. Removing negative tax liability effects as concerns free transfer of medicines used to fight COVID-19, originally aimed at other therapeutic purposes. Before the introduction of the measure, the corresponding value was included in business income and was not VAT deductible.
May 19. VAT safeguard clauses are abolished. (VAT safeguard clauses were an automatic rise of VAT rates to meet deficit targets, in absence of other measures). VAT rate on some medical equipment is reduced for 2020 and 2021. Payments of stamp duties related to electronic invoices are postponed to 2021.
1.9 Ivory Coast
March 31. Exemption of taxes for medical equipment used in the fight against the COVID-19 pandemic. 
1.10 Mongolia
April 9. The Parliament of Mongolia enacted the Law on Exemption from Value Added Tax VAT will not be levied on the import of diagnostic kits, drugs, medical devices, equipment, disinfectants and face masks for the purpose of treatment or diagnostic of the COVID-19. The government shall approve the list of applicable products.
1.11 Morocco
March 17. The donations in favor of the Special Fund for Pandemic Management are deductible for income tax purposes.
March 27. The contributions made to the special fund for managing the COVID-19 pandemic is treated as deductible for corporate income tax.
1.12 New Zealand
April 15. New Zealand -Singapore Trade Initiative to ensure free flow of essential goods. New Zealand and Singapore launched a new trade initiative to ensure supply chain connectivity and the removal of blockages to trade in a list of essential products that includes medicines, medical and surgical equipment. The Declaration setting out the initiative includes a list of COVID-19 related products for which New Zealand and Singapore undertake to remove tariffs, not to impose export restrictions, and to remove non-tariff barriers. It also includes an undertaking to keep supply chains operating effectively for these products.
1.13 Nigeria 
March 20. VAT exemption for basic food has been expanded while medical and pharmaceutical products are also exempted from VAT.
1.14 Pakistan 
March 20. Medical and testing equipment are exempt from duties and taxes (customs duty, withholding tax on imports, sales tax on imports) for a period of 3 months commencing from the date of publication of the Statutory Regulatory Orders. The exemption may be extended for another 3 months on the recommendation of the Ministry of National Health, Services, Regulation & Coordination in case the COVID-19 pandemic would continue. 
1.15 Qatar
March 16. Exemption of custom duties on food, medical supplies and hygiene products for 6 months.
1.16 Rwanda 
May 9. The Ministry of Finance and Planning provided that Masks made in Rwanda to prevent COVID-19 are exempt from VAT.
March 24. Elimination of all taxes (i.e. Customs Duty, GST) on 61 essential health machinery, equipment.
1.17 Serbia 
March 27. Zero VAT rate on donations in goods and services The Decree on fiscal benefits and direct aid to companies in the private sector and citizens in order to reduce economic consequences of COVID-19 disease envisages: (i) Implementation of the VAT exemption on the free of charge supply of goods and services in the Republic of Serbia to the Ministry of Health, the Republic Health Insurance Fund and health institution in public ownership; (ii) The right to recover associated input VAT; (iii) Application of zero VAT rate on all related supplies made during the state of emergency.
March 27. The Customs administration issued an Explanation regarding the customs clearance of goods subject to priority flow with the effect as of April 14, 2020. The procedure will be applied as long as specific measures are in place to prevent the spread of COVID-19. The goods for which priority flow is ensured are within the following categories: meat and meat products, milk and milk products, vegetables, fruits, cereals, flour, yeast, animal feed, pharmaceuticals, clothing, medical instruments, etc. The Government of the Republic of Serbia recently has adopted new Decision on temporary prohibition of export of basic commodities important for population, in force as of April 13. Prohibition shall apply for 30 days. Exceptionally, the export of these products may be approved by a special act of the Serbian Government. New Decision allows export of refined sunflower oil, yeast (fresh and dry), wipes and napkins. In addition, it restricts the export of mercantile maize to 400 thousand tons. Further, the Serbian Government issued a new Decision which prohibits the export of medicines, applicable starting from April 15, for a period of 30 days. Imposed restrictions are the same as those imposed by the previous Decision, except that its applicability is limited to human medicines. In line with the further development of COVID-19 situation, new Decisions and measures could be introduced for the purpose of protection of health and the economy.
April 10. Zero VAT rate is introduced for the goods and services provided free of charge to the Ministry of Health, Health Insurance Fund or public healthcare institutions, with the right to deduct input VAT during the state of emergency.
1.18 Singapore 
April 15. Customs duties for certain alcohol products (mainly medicated samshu and other samshu) have been reduced to 0/L of alcohol as of April 15, 2020.
1.19 Spain 
March 27. The Customs and Excise Duties Department published an Informative Note whereby it gives certain instructions derived from the "State of Alarm" declared by the Spanish Government on March 14, 2020. The duration of these instructions will be fully linked to the duration of the "State of Alarm". In brief, the main purpose of this informative note is to simplify formal requirements (removal of the standard authorization by the Spanish Drugs and Sanitary Products Agency under certain conditions) for the importation of protection goods such as face masks, boots, gloves or personal protection equipment.
1.20 Tajikistan
June 30. Importation of materials for production of disinfectants, medicines and equipment for examination and treatment of COVID-19 will be exempt from VAT and custom duties from July 1 to September 1, 2020.
1.21 Ukraine 
March 18. The import of medicine, medical goods and medical equipment used in the fight against COVID-19 is temporarily exempt from VAT and customs duty for three months.
April 2. Donors of funds or medical goods and other listed goods during the quarantine period (i.e. starting from March 17, 2020) will be able to fully deduct the respective expenses for tax purposes for the year 2020. State and municipal health care institutions that have received funds or free of charge medical goods and other listed goods during the quarantine period shall not tax income from the receipt / tax deduct expenses from the use of such funds and goods for tax periods of 2020.
April 2. Temporary VAT exemption on import is extended to local supply of goods (medicines and medical items) needed for performing measures against COVID-19 from March 17, 2020 until the end of quarantine. The list of medicines and medical equipment are to be defined by the Government. Such exemption should not impact input VAT recovery in general. However, this exemption came into force after the beginning of the quarantine and VAT exemptions are mandatory in Ukraine. Due to this, VAT payers which have supplied respective goods with VAT (usually with 7% rate if no exemption) starting from March 17 should return respective VAT amounts to their customers and reverse their VAT liabilities. The latter, in their turn, should reverse input VAT recognized on such purchases. Until 2022, VAT exemption shall apply on: (i) import/first supply (by producers) of medicine, medical goods and medical equipment if respective purchases are made for state budget funds by the entity authorized respectively; (ii) further supply of such items within the healthcare system up to the patients.
1.22 Uruguay
March 6. Exemption on excise duty on ethyl alcohol used for the production of disinfectants.
March 24. The Executive Power established a special regime for import and export of goods considered essential for health purposes. The goods listed in the resolution will be exempt from all taxes and subject to a simplified customs regime.
2. Main features
2.1 Tax measures to stimulate the production of anti-pandemic materials are highly related to the jurisdiction‘s medical industry. Based on the different distribution of medical industry, tax measures adopted by different jurisdictions are also quite different, and portfolio policies are enacted by some countries but others almost not. 
2.2 Tax policies focus on VAT,Consumption Tax, CIT, PIT and Customs Duty. These measures include fully refunding newly increased excess input VAT for producers of important anti-pandemic materials, one-off deduction in the calculation of CIT for equipment that is purchased to enlarge production capacity, and VAT, Consumption Tax, and Customs Duty exemption for imported goods for pandemic control. Donations made by individuals for pandemic control are allowed to be included in PIT deduction.

    NO. 3(A) Longqing Street, Economic and
    Technological Development Area,
    Beijing, CHINA


    BRITACOM Secretariat Office