Measures on Corporate Income Tax in Response to COVID-19

updated:2021-04-15    

 
Introduction
 
This paper focuses on the temporary corporate income tax (CIT) measures in response to the COVID-19 pandemic adopted by BRITACOM jurisdictions that consist of 36 Council Member Tax Administrations and 30 Observers. The aim is to provide suggestions for tax administrations in their consideration of CIT measures to reduce the negative impacts of the pandemic. The material in this paper is mainly selected from websites of BRITACOM, OECD, PwC, KPMG, official websites of BRITACOM jurisdictions, etc.
 
In response to the COVID-19 pandemic, the BRITACOM jurisdictions have implemented different tax measures to support businesses with cash flow problems or difficulties in meeting tax reporting or payment obligations or otherwise facing hardship. The majority of jurisdictions have extended filing and tax payments deadlines. Other measures including temporary tax cuts have been introduced to boost consumer confidence as jurisdictions move from the emergency to recovery phase of the pandemic.
 
1. Main features
 
1.1 Many jurisdictions have introduced policies related to deduction, allowing corporate income tax deductions for donations by companies or organizations to fight the COVID-19 pandemic.
 
1.2 Some jurisdictions extended the taxable carry forward loss-taking period and enhanced depreciation rates for movable assets acquired or made in given period.
 
1.3 Most jurisdictions have extended filing and tax payment deadlines in response to the COVID-19 pandemic. The deadline will be extended by weeks or months and some jurisdictions will grant a further extension according to the duration of the pandemic. Extension of filing deadlines mainly includes extending the filling of tax returns and financial statements, while extension of payments deadlines includes allowing installment, reducing or suspending advance tax payments and deferral of payment deadline.
 
1.4 Extension of filing and tax payments deadlines in some jurisdictions applies to certain industries (tourism, hotels and transport) and enterprises (mainly small and medium-sized enterprises) that have been more severely affected by the pandemic. 
 
1.5 Generally, taxpayers are exempted from penalty or interests if they comply with filing and payment duties within the extended deadlines. Some jurisdictions permit late CIT payments without interest or penalties. Taxpayers may also apply for a phased repayment plan.
 
2. Tax policies
 
2.1 Angola
 
April 16. Imported goods, as well as those produced in Angola, donated for the prevention and expansion of COVID-19, are considered as a deductible cost for the purposes of industrial tax. The quantities and type of goods donated must be registered, as well as the respective beneficiaries.
 
2.2 Armenia
 
June 18. Taxpayers are exempt from CIT advance payments for the second quarter of 2020.
 
2.3 Cameroon
 
May 1. Full deductibility of expenses for the determination of CIT on donations and gifts by companies to fight against the COVID-19 pandemic.
 
2.4 Congo
 
April 15. Payments to the COVID-19 support fund will be treated as deductible expenses for the determination of the 2020 CIT.
 
2.5 Ecuador
 
August 5. Rules have been issued for the application of advance income tax collection for fiscal year 2020.
 
2.6 Germany
 
June 12. On June 12, 2020, a draft bill has been issued by the government containing several tax measures to stimulate the economy, inter alia enhanced depreciation rates for movable assets acquired or made after December 31, 2019 and before January 1, 2022 up to the factor of 2.5 compared to the currently applicable depreciation and up to a maximum of 25% per annum. The bill is meant to pass the parliamentary procedures in June.
 
January 19. According to a resolution concluded on January 19,  2021 and the heads of the governments of the federal states, full amortization will be available for specific digital assets acquired from January 1, 2021 onwards. This will be made available via an administrative procedure (without a legislative act).
 
2.7 Greece
 
April 1. A 25% discount on certified tax liabilities with payment dates from March 30, 2020 to April 30, 2020, provided they are paid in due time (with the exception of VAT and withholding taxes) is provided to businesses that have been financially affected or their operation has been suspended under a state decision if their total value is greater than 20% of their average monthly turnover in the immediately preceding tax year, provided that the remaining 75% is paid in due time.
 
April 1. Extension of deadlines for the payment of certified tax liabilities which expired on March 30 and 31, 2020 until April  21, 2020, is provided to all businesses and individuals entitled to the 25% discount.
 
2.8 Hungary
 
November 14. In connection with COVID-19 a new rule has been introduced regarding development tax incentives. In connection with notifications on or before December 31, 2019, terminated jobs between January 1, 2020 and June 30, 2021 would not result in breach of relocation declaration. Moreover, development tax incentive can be claimed by a company who did not qualify as a company in difficulty on December 31, 2019 but qualifies so during the period between January 1, 2020 and  June 30, 2021.
 
2.9 Italy
 
March 20. Tax credit equal to 50% expenses for sanitizing of the environment and work tool.
 
April 9. Reduction by 20% of the advance payment for income taxes ordinarily due in June 2020 for the current fiscal year. Smaller payments are still allowed (based on economic forecasts).
 
April 9. The provision excludes that the free transfer of medicines and drugs for compassionate purposes are taxable for CIT purposes.
 
April 9. Tax credit for sanitation costs extended to the purchase of personal protective equipment. The amount of the tax credit is unprejudiced, being equal to 50% of the costs borne by enterprises and professionals for fiscal year 2020 up to an amount of 20,000 EUR.
 
May 19. Tax credit for sanitation costs extended to the purchase of personal protective equipment. The amount of the tax credit is unprejudiced, being equal to 50% of the costs borne by enterprises and professionals for fiscal year 2020 up to an amount of 20,000 EUR.
 
May 19. Tax credit equal to 50% expenses for sanitizing of the environment and work tools.
 
2.10 Kazakhstan
 
July 1. For the period from June 1 to the end of 2020: the 2020 CIT liability may exceed the CIT advance payments by not more than 33 percent for mining entities (save for those producing hydrocarbons) without incurring fines.
 
2.11 Mongolia
 
April 9. On April 9, 2020, the Parliament of Mongolia enacted the law on exemptions from CIT and tax credits.
 
2.12 Peru
 
March 20. Regulation for the communication of the information required to deduct withholding tax on dividends paid abroad not subject to a Double Tax Treaty.
 
April 21. Modification of the Income Tax Law Regulations regarding the determination of the fair market value of the shares or participations representative of the capital of legal entities domiciled in Peru for the purposes of determining an indirect transfer of shares.
 
April 21. Modification of the Income Tax Law Regulations regarding the deduction of decreases or wastes suffered by a company, for income tax determination purposes.
 
April 29. Suspension or decrease of income tax payments from April to July 2020, provided that there is a decrease in the revenue earned in such periods in contrast with those obtained in the same period in the year 2019.
 
May 8. Extension of the taxable carry forward loss-taking period under system “a” for the loss compensation utilization against future annual taxable profits. Net losses established in the year 2020 shall be offset year-to-year in the 5 immediate years, counted from 2021, until their amount is exhausted. Originally, said losses could only be offset in the 4 subsequent fiscal years until depleted.
 
May 10. Incorporation of a special asset depreciation regime of a 20% yearly rate for buildings whose construction initiated since January 1, 2020 and registered an 80% completion by December 2022. Special regimes for land transportation vehicles, data processing equipment, and assets for tourism and lodging business.
 
2.13 Saudi Arabia
 
April 18. CIT will be issued without restriction for the fiscal year 2019 to allow companies to renew visas, licenses and receive payment in respect of government contracts.
 
2.14 Singapore
 
February 18. In the Singapore Budget 2020, a 25% tax rebate capped at 15,000 USD was announced for year of assessment 2020.
 
February 18. In the Singapore Budget 2020, enhancement of loss carry-back relief scheme was announced for year of assessment 2020.
 
2.15 Spain
 
May 7. Improvement of the tax credit for investments in film productions, effective for fiscal years that start on January 1 or onwards. 
 
2.16 Ukraine
 
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.
 
3. Tax administration
 
3.1 Algeria
 
April 4. As per the measures instructed in the recent announcement dated on April 4, 2020 of the Tax Directorate General, under the real regime, the deadline for payment of the first provisional CIT installment is extended to June 20, 2020. 
 
3.2 Cyprus
 
May 22. The deadline for electronic submission of the 2018 corporate tax return has been extended until June 30, 2020 at 23:59 (from June 1 as per our report of March 30, 2020).
 
March 27. The Minister of Finance has been granted the power to extend, by ministerial decree, the deadlines for submitting CIT returns and for paying tax liabilities.
 
3.3 Ecuador
 
March 18. The income tax payment is due by April. The Government announced an extension of tax payments in installments.
 
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.
 
August 5. Rules have been issued for the application of advance income tax collection for fiscal year 2020.
 
September 3. Rules have been issued on the advance payment of income tax to cover the pending payment to the health sector, as well as to cover the main health needs for the COVID-19 pandemic.
 
3.4 Gambia 
 
June 15. Extension of the deadline for filing 2020 first quarter declaration and paying the first quarter installments by 2 months. The declaration and payment was due by April 15, 2020 but was extended to June 15, 2020.
 
3.5 Germany
 
March 19. On March 19, 2020, 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. As the Federal Ministry of Finance makes clear, no strict requirements are to be set when reviewing the conditions for deferral. 
 
3.6 Greece
 
July 17. The CIT for fiscal year 2019 may be paid in 8 equal monthly installments.
 
October 27. Introduction of a new framework for the settlement of tax liabilities, for which their payment has been suspended due to COVID-19, with favorable terms, providing for a repayment in 12 interest-free installments or in 24 installments with an interest rate of 2.5%, starting from May 31, 2021.
 
November 25. Extension until April 30, 2021 of the deadlines for the payment of installments of tax liabilities, free of interest or surcharges, under the settlement scheme that expired in November 2020.
 
December 2. Businesses that have been financially affected as per their Activity Code Numbers (ACN), will benefit from a one month deferral of the deadlines for the payment of all remaining installments pertaining to liabilities under a settlement scheme, free of interest or surcharges.
 
December 21. Deferral of the deadlines for the payment of installments pertaining to liabilities under a settlement scheme expiring in December, free of interest or surcharges. The installment pertaining to December 2020 shall be paid on the last business day of the month following the last installment of the existing payment schedule.
 
3.7 Italy
 
May 5. The amount of the first advance payment for 2020 shall be excluded from the amount of tax due as balance payment for fiscal year 2020. The provision does not apply to banks, other financial entities.
 
3.8 Kazakhstan
 
June 1. According to the Government Decree No. 224 dated  April 20, 2020, the deadline for submission of 2019 CIT return was extended from March 31, 2020 to May 31, 2020.
 
July 5. Businesses have sixty days from July 15, 2020 to file CIT returns and financial declarations for financial years ending March 31, 2020, with no penalties and interest imposed.
 
July 5. Businesses have sixty days from August 15, 2020 to file CIT returns and financial declarations for financial years ending April 30, 2020, with no penalties and interest imposed.
 
July 5. Businesses have sixty days from the date the Ministry resumes operations to file CIT returns and financial declarations for financial years ending February 29, 2020, with no penalties and interest imposed.
 
3.9 Kuwait
 
June 16. Businesses are required to settle their CIT either in full at the time of filing their CIT and financial declarations or in extended installment deadlines, with no penalties and interest imposed.
 
July 5. Businesses have 60 days from July 15, 2020 to file CIT returns and financial declarations for financial years ending March 31, 2020, with no penalties and interest imposed.
 
3.10 Morocco
 
March 27. The notice released by tax authorities on March 27 allows companies with a turnover not exceeding 20 million MAD to postpone the following payment of taxes and reporting obligations until the end of June 2020. The companies concerned benefit automatically from the deadline extension based on the total sales reported for fiscal year 2018. Companies with a turnover of 20 million MAD and above, suffering significant harm due to the drastic drop in activity and facing financial difficulties, should formally request a deferred payment of tax from the Ministry of Finance. The decision is to be made by the ministry on a case-by-case basis. The contributions made to the special fund for managing the COVID-19 pandemic are treated as deductible for CIT.
 
3.11 Myanmar
 
March 18. The Ministry of Planning, Finance and Industry (“MoPFI”) announced on March 18, 2020 that tax assistance will be provided for SMEs.
 
3.12 Nigeria
 
April 9. The due date for filing CIT returns has been extended by one month. Taxpayers may file returns using unaudited accounts but must subsequently submit audited accounts within two months after the revised due date of filing.
 
3.13 Peru
 
March 16. The following extensions are applicable for taxpayers with net income up to 2,300 Tax Units in 2019 (i.e., 9.66 million PEN), depending on the company’s Peruvian Tax ID. The deadline to file the February monthly tax return is extended to June 4-11 (main taxpayers) and July 2-9 (non main taxpayers). The following extensions are applicable for taxpayers with net income up to 5,000 Tax Units (i.e. 21 million PEN) in 2019, depending on the company’s Peruvian Tax ID:  (i) The deadline to file the annual corporate income return is extended to June 24 to July 9 (main taxpayers) and July 21 to August 7 (non main taxpayers); (ii) The deadline to file the March monthly tax return is extended to June 12-22 (main taxpayers) and July 10-20 (non main taxpayers); (iii) The deadline to file the April monthly tax return is extended to July 3-13 (main taxpayers) and August 5-13 (non main taxpayers); (iv) The deadline to file the May monthly tax return is extended to July 14-22 (main taxpayers) and August 14-24 (non main taxpayers); (v) The deadline to file the June monthly tax return is extended to August 5-13 (main taxpayers) and September 3-11 (non main taxpayers); (vi) The deadline to file the July monthly tax return is extended to August 14-24 (main taxpayers) and September 14-22 (non main taxpayers); (vii) The deadline to file the August monthly tax return is extended to September 14-22 (main taxpayers) and October 5-15 (non main taxpayers).
 
3.14 Qatar
 
March 16. The CIT filing deadline for financial years ended December 31, 2019 has been extended from April 30, 2020 to June 30, 2020.
 
June 21. The CIT filing deadline for financial years ended December 31, 2019 has been further extended from June 30, 2020 to August 30, 2020 (original filing deadline April 30, 2020).
 
3.15 Rwanda
 
March 25. The Rwanda Revenue Authority (RRA) announced an extension of the deadline for filing and payment of the income tax for 2019 which would have been due by March 31, 2020. The deadline was extended to April 15, 2020 for large taxpayers. The deadline was extended to April 30, 2020 for small and medium taxpayers respectively.
 
3.16 Senegal
 
April 4. The deferral of the payment of taxes and duties until July 15 for SMEs with a turnover of less than or equal to 100 million XOF, as well as companies operating in the hardest hit sectors (tourism, catering, hotels, transport, education, culture and the press).
 
3.17 Serbia
 
April 10. Taxpayers can apply for postponement of monthly advance CIT payments for March, April and May 2020, until the final filing of tax return for CIT for 2020. Payment (now due next year) can also be made in installments (up to 24 equal monthly installments) with no interest charged. This measure can be used by resident micro, small, medium and large legal entities, entrepreneurs, branches and representative offices of foreign legal entities, under the condition that, starting as of March 15 have not reduced the number of employees by more than 10% (not including employees whose employment contracts on definite period, concluded before March 15, expire during that period). Measure does not apply to banks, insurance companies, voluntary pension funds, leasing companies and other payment and e-money institutions, as well as to public funds beneficiaries.
 
3.18 Singapore
 
February 18. In the Singapore Budget 2020 on February 18, 2020, a two months’ interest-free extension of tax installment payments on estimated income was announced.
 
March 26. It was announced in the supplementary budget that all companies with CIT payments due in April, May and June 2020 would be granted an automatic three-month deferal of these payments to July, August and September 2020 respectively.
 
April 23. Automatic extension of tax filing deadlines for: (i) Estimated chargeable income for companies with financial year ended January 2020 and February 2020 (from April 30 and May 31, respectively to June 30); (ii) Income tax return for trusts, clubs and associations (from April 15 to June 30).
 
November 11. Companies with financial years ended October 2020 to December 2020 which are facing genuine difficulties filing their tax returns for the year of assessment 2020 by December 15, 2020 may apply (by November 27, 2020) for a one-month extension till January 15, 2021 to e-file their returns.
 
3.19 Slovakia Republic
 
July 21. A taxpayer is not obliged to pay a difference that arises in respect of paid CIT advances due from the beginning of 2020 until the deadline for filing the tax return for 2019 and the higher tax advances calculated based on the 2019 tax return. This applies to the tax period that began on January 1, 2020, as well as to financial years.
 
3.20 Spain
 
May 28. Royal Decree-Law 19/2020 dated May 26 (in force as from May 28): those companies which, as a result of the current situation, have not been able to approve its financial statements at the date of filing its CIT return, should file the return using the available accounting information at that time (i.e., for companies whose fiscal year follows the calendar year, the deadline to file the CIT return is July 25). If, later on, the corporate income tax return calculated with the approved financial statements differs from the return submitted within the established legal deadline, a complementary return must be submitted no later than November 30, 2020. Interest on late payment would be accrued on the difference.
 
3.21 Uruguay
 
March 20. Tax authorities established that February’s tax payments due dates which were originally between March 23-26  would be deferred to March 27 for all taxpayers except for public companies. Small companies can pay their February and March obligations in six installments without interest from the month of May.
 
 
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