Measures on Personal Income Tax in Response to COVID-19

updated:2021-04-15    

 
Introduction
 
This paper focuses on preferential measures on personal income tax (PIT) adopted by BRITACOM jurisdictions that consist of 36 Council Member Tax Administrations and 30 Observers. The aim is to provide suggestions on sustaining people’s livelihoods and reducing the negative impact of the COVID-19 pandemic. The materials in this paper are mainly extracted from websites of BRITACOM, OECD and other official websites of BRITACOM jurisdictions, etc.
 
The COVID-19 pandemic has wide implications for the social-economic fabric worldwide. In addition to health fears, individuals are facing problems in meeting tax reporting and/or payment obligations. Due to its negative impacts on the economy, a series of tax incentives, expected to provide relief to individual taxpayers, have been made by BRITACOM jurisdictions in response to the COVID-19 pandemic. 
 
1. Main features

1.1 BRITACOM jurisdictions take appropriate measures to help taxpayers during this difficult period, which include extension of deadlines, deferral of payments, remitting penalties and interest and debt payment plans. Taxpayers impacted by COVID-19 could be given additional time to file tax returns as well as to make tax payment. Tax payments, which are due in installments, could be deferred in order to ease cash flow. Taxpayers would also be given easier access to payment plans and extensions of plan duration. Consideration may also be given to have an interest-free period.
 
1.2 In many BRITACOM jurisdictions, international travel was either suspended or severely restricted for a number of weeks, leaving people stranded in jurisdictions where they might not otherwise be. This temporary dislocation of people can have tax consequences for those individuals and the businesses for which they work. Governments of the BRITACOM jurisdictions have taken practical approaches to the impact of COVID-19 restrictions in these circumstances and have issued guidance outlining how the rules will be enforced. 
 
2. Tax Policies
 
2.1 Afghanistan
 
May 20. According to recent reports, the Afghanistan Revenue Department has extended the deadlines for the submission of individual and corporate tax returns and payment to May 20, 2020 to provide relief in light of the COVID-19 pandemic. Normally, returns and payment are due within 3 months after the end of year, which would be March 20 based on the standard year ending December 20. With the extension, no late filing or late payment penalties will be imposed as long as returns are filed, and payments are made by May 20. 
 
2.2 Algeria 
 
April 28. The return declaration and payment dates with regard to salaries tax for the months of January, February, and March 2020 are postponed to May 20, 2020. 
 
May 19. The tax authority extended the payment deadline for the first 2020 prepayment for corporate income tax and individual income tax purposes (business income) until June 21,  2020. For taxpayers under the special lump sum tax regime, the tax authority extended the income tax return for the first quarter of 2020 also until June 21,2020.
 
2.3 Angola
 
April 9. The rules regarding the payment of social security contributions have been temporarily altered: Authorization for deferral of payment of payroll tax contributions (8%) due from companies for the second quarter of 2020, allowing its payment in six monthly installments during the months of July to December 2020, without interest. Employers in the private sector required to directly return to their workers the portion of such payroll tax contributions (3%) made by those workers during the months of April, May and June 2020.
 
2.4 Armenia
 
April 20. The taxpayer (including the tax agents) shall pay a fine in the amount of 0.04 percent for each overdue day of late payment on the tax instead of 0.075 percent before.
 
2.5 Cambodia
 
April 2. PIT exemption for the period from April 2020 to June 2020 for both state and private employees with salaries up to 5 million LAK. 
 
Income tax exemption for businesses with annual income up to 400 million LAK for the period from April to June 2020.
 
April 10. In response to COVID-19, from April 10, 2020, the government will contribute 40 USD per month for two months to support individuals who are working in the garment and tourism sector and are suspended from their employment. Employers are exempt from paying national social security fund contributions for employees during business suspension. Delay the time for paying the seniority payment. There is an exemption from penalties for late renewal of work permit for 2020.
 
2.6 Cote d'Ivoire
 
April 1. Suspension of tax audits for a period of three months. Three months deferral of payment of taxes, levies and similar payments due to the state, as well as social charges.
 
2.7 Cyprus

March 20. Extension of the time-period for filing of objections with the Social Insurance Department by self-employed individuals by one month to April 30, 2020 (Deadline was originally March 31, 2020). A two-month extension to those that are required to submit a tax return by March 31, 2020.
 
May 25. In accordance with a Decree issued on May 22, 2020, the submission deadline for the 2018 corporate income tax return and the 2018 PIT return of individuals preparing audited financial statements is further extended to June 30, 2020.
 
June 2. An amending Income Tax Law was published in the Official Gazette with respect to tax relief on rental income. The amendment was voted to support the Cyprus economy following the COVID-19 outbreak and provides a tax incentive to landlords (individuals or companies) so as to voluntarily reduce the rent charged to tenants.
 
June 5. The deadlines for the electronic submission of the 2019 PIT returns are extended to October 30, 2020.
 
October 20. The deadlines for the submission of 2019 PIT returns and for the payment of tax, are extended to November 30, 2020.
 
2.8 The Republic of Congo
 
April 15. A one-month extension of the deadlines for the payment of other direct taxes borne by taxpayers (i.e., if the regular due date is May 10 to 20, extension provided to June 10 to 20; if the regular due date is June 10 to 20, extension provided to July 10 to 20 and etc.). 
 
A suspension of the deadline for the payment of the 7.5% payroll tax due from April 2020 until June 30, 2020.
 
2.9 Djibouti
 
May 6. The employee will receive compensation for his loss of salary up to 70% of his gross salary, which will be composed as follows: 30% of the gross salary will be paid by the state; 40% of the gross salary will be paid by the employer. The conditions of compensation will apply for 3 months from May 1, 2020. Under the same conditions as wages, companies can claim deferral of the salary taxes and social security contributions until July 31, 2020.
 
2.10 Ecuador

April 16. The National Assembly is analyzing a bill submitted by the Executive Branch on April 16, 2020 establishing additional measures aimed to tackle the economic effects of the COVID-19 pandemic. The following are the most important tax measures included in the bill: (i) Establishment of a contribution levied on income derived by individuals. A progressive rate of up to 36% would apply on income derived by individuals in 2020; (ii) Establishment of a solidarity contribution levied on real estate. The applicable rate would be 2% on the cadastral value of the property in 2020. Taxpayers would be real estate owners (companies and individuals); (iii) Income tax advance payments made spontaneously by taxpayers would generate interest from the date on which the payment is made to the deadline for payment of income tax for 2020; (iv) expenses incurred for tourism activities would be deductible for purposes of individual income tax during fiscal years 2020 and 2021.
 
July 30. To assist with COVID-19 relief efforts, the Ecuadorian president ordered certain taxpayers to pay estimated income taxes for fiscal year 2020, rather than paying the entire tax by the April 2021 deadline. Affected taxpayers may pay their entire tax by August 14, 2020, or in installments from August 2020 through October 2020. Through an executive decree, the Ecuadorian president ordered certain taxpayers to pay estimated income taxes for fiscal year 2020. 
 
2.11 Ethiopia
 
April 30. Exemption from PIT withholding for 4 months for firms who keep paying employee salaries despite not being able to operate due to COVID-19.
 
May 18. Taxpayers who have made charitable donations in response to a call issued by the government to mitigate the impact of the COVID-19 pandemic are allowed to deduct such donations against their taxable income in an amount not exceeding 20% of the taxable income of the taxpayer in the tax year.
 
2.12 Gabon
 
April 15. Tax exemption of all exceptional bonuses granted to employees who exercise their professional activity during the lockdown period. 
 
2.13 Georgia
 
March 30. The Ministry of Finance of Georgia has announced tax deferrals for companies engaged in tourism and auto import sectors. For that an official application form is published by the Georgian Revenue Service and companies are authorized to apply for tax deferrals on property and PIT liabilities. For companies in the tourism sector, deferral of tax applies to PIT and property tax returns due to be filed in March, April, May and June. For these submitted tax returns, tax collection measures will not be taken and interest penalties imposed on outstanding tax liabilities will be written off by the Georgian tax authorities.
 
April 10. The Government of Georgia will postpone the liability of payment of property and PIT for the enterprises engaged in tourism-related activities and other entities whose business activities have ceased due to the current state of affairs, until November 1, 2020. Enterprises operating in the tourism industry include hotels, restaurants, travel agencies, transportation companies and etc. For the purpose of obtaining the relief, taxpayers are required to submit an application to the Revenue Service of Georgia. Furthermore, no late payment interest will be assessed on deferred tax liabilities.
 
May 25. According to the anti-crisis social economic plan of the Government of Georgia, companies will receive a tax benefit for each employee in the amount of 150 GEL if they maintain jobs for their employees, meaning that employers will be exempted from withholding tax liabilities on paid salaries up to 750 GEL. The tax benefit is applicable for six months from May to October 2020, unless gross salary exceeds 1500 GEL each calendar month.
 
2.14 Greece
 
May 5. Provision of a 25% discount on certified tax liabilities with a payment date from March 11 to 29, 2020, provided they have been paid in due time, with the exemption of VAT and withholding taxes.
 
May 30. Suspension until April 30, 2021 of the payment of certified tax liabilities and installments, expired within June 2020, is provided to employees whose contracts are temporarily suspended.
June 30. A 25% discount on certified liabilities pertaining to June 2020 (excluding VAT liabilities) in case they are paid in due time, will be provided to individuals that have been financially affected.
 
July 17. Provision of a 2% discount on the total amount of the PIT liability due, provided that it will be paid in a single lump sum payment within the deadline for the payment of the first installment. 
 
July 22. For the purposes of application of the provisions of the Income Tax Code pertaining to tax residence, the period from March 18 to June 15, 2020 is determined as a period of objective inability to move due to the pandemic and will not be taken into account for their application.
 
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. Especially for the tax year 2021, income from employment in the private sector will be exempted from the special solidarity contribution. Income exemption from the special solidarity contribution, with the exception of employment income and income from pensions, especially for the tax year 2020.
 
November 18. Extension until February 28, 2021 of the deadline for submitting Assets Declaration Returns and Financial Interests Declarations for the year 2019.
 
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, is provided to employees whose contract was suspended. 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. 
 
2.15 Hungary
 
March 18. Employees working in severely hit industries such as tourism, hospitality, entertainment, sports and cultural services will pay significantly lower social security contributions until June 30, 2020. In addition in relation to these industries, the Hungarian Government waived the employment related contribution payment obligation of employers until June 30, 2020.
 
2.16 Indonesia
 
March 13. Indonesia plans to waive income tax for individuals for six months as it seeks to boost purchasing power. A second stimulus package will allow firms to delay payments of corporate and income tax on the sale of imported goods. These measures will be effective from April 1 and last for six months.
 
April 13. The relief measures include reporting and payment relief with regard to the individual income tax return that is filed annually. The tax administration will waive the administrative penalty that would be imposed if the annual income tax return for fiscal year 2019 and payment of tax is made by individual taxpayers on or before April 30, 2020. The forbearance will be that a tax collection letter will not be issued. In additional, tax amnesty annual reporting by individuals (that had been set to be submitted by March 31, 2020) can be submitted by April 30, 2020. In general, the relief allows more time for taxpayers and the tax administration to comply with certain deadlines. The deadline for refunds of tax over-payments will be extended for one month.
 
The due date for requesting reductions or elimination of administrative penalties, refunds of tax over-payments, cancellation of incorrect tax assessments, and cancellation of inspection (audit) results will be extended for a maximum of six months.
 
2.17 Italy
 
March 17. Donations made by individuals and non-commercial entities in favor of state, regional or local entities, public bodies or institutions, foundations, and non-profit associations are 30% deductible from the income tax. The deduction cannot be higher than 30,000 EUR.
 
April 9. For professionals and enterprises acting as sales agents (whose proceeds are ordinarily subject to withholding tax on payment) that reported proceeds up to 400,000 EUR in the previous fiscal year, the proceeds cashed in till May 31, 2020 are not subject to withholding tax at source provided the taxpayer did not bear employment expenses in the previous month. The amount of taxes which have not been withheld must be paid (by the recipient) by July 31, 2020 in full, or in five equal installments starting from July 2020, without interest.
 
May 19. In order to encourage investments, both in equity and debt and, in particular, in unlisted companies the capacity of long-term individual savings plans is enhanced to direct private savings to enterprises. Investors may establish a second individual saving plan with more specific investment restrictions. In addition to financial instruments, qualified investments include, among others, sources of financing alternative to the banking channel, such as the granting of loans and the acquisition of credits of the companies to which the plan is addressed. The provision also provides for: (i) a concentration restriction on investments in the individual saving plan raised to 20%; (ii) limits on the amount of investments equal to 150,000 EUR per year and 1,500,000 EUR in total.
 
2.18 Kazakhstan
 
March 20. PIT to be levied at 0% up to December 31, 2020 for individual entrepreneurs working under the general tax regime.
 
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). 
 
2.19 Mongolia
 
April 9. The Parliament of Mongolia enacted the law on exemption from personal income taxes. PIT exemption will apply on salaries, wages, bonuses, incentives and similar employees remuneration earned by Mongolian nationals from April 1, 2020 to October 1, 2020. The tax authorities will notify a detailed regulation in this regard.
 
2.20 Myanmar

March 20. The payment deadline for Social Security Contributions of employees is extended from within 15 days after the end of relevant month to within 3 months after the end of relevant month with effect from March 20, 2020. Workers who are made redundant by a company registered with the Social Security Board are entitled to the following benefits, subject to conditions prescribed under the Social Security Law 2012: Extension of the period of healthcare from 6 months to 1 year from the date of unemployment. 
 
2.21 New Zealand 
 
April 17. The Government has announced that Inland Revenue will be given greater flexibility to modify timeframes or procedural requirements for taxpayers who are impacted by COVID-19. An amendment will introduce a discretionary power into the Tax Administration Act 1994 to allow the Commissioner of Inland Revenue additional discretions to provide administrative relief. This measure will be available to all taxpayers. 
 
2.22 Nigeria
 
March 30. The Federal Capital Territory Internal Revenue Services has extended the due date for filing the 2019 individual income tax returns from March 31 to June 30, 2020.
 
April 30. The period to file PIT returns for foreign affairs, non residents, military and police has been extended to June 30, 2020.
 
2.23 Pakistan
 
April 15. Individuals and associations of persons providing basic food items to government-owned departmental stores will pay a reduced rate of withholding tax of 1.5% (reduced from 4.5%).
 
2.24 Papua New Guinea
 
June 17. There is the potential to avail of a two month extension on the lodgment of corporate income tax returns and PIT returns. The potential to apply for an installment arrangement for corporate income tax and PIT due under the 2020 lodgment program until after June 30, 2020 for taxpayers impacted by the crisis. Taxpayers may obtain agreement to pay the tax due in installments until the end of 2020. This does not apply to provisional tax.
 
2.25 Peru
 
March 24. A previous resolution issued on March 13, 2020 to support taxpayers and the economy in response to the COVID-19 had extended the deadline only for individuals and small and medium-sized companies whose net taxable income did not exceed 2,300 UIT in fiscal year 2019. The original schedule approved by the tax authorities for filing the annual income tax return for fiscal year 2019 established deadlines ranging from March 27 to April 8, 2020, depending on the taxpayer’s identification number.
 
2.26 Qatar
 
June 22. The new extended deadline for fiscal year 2019 returns and tax payments is August 30, 2020. The deadline was previously extended to June 30, 2020. The tax authority issued Circular No. 7 to provide an additional extension of two months for filing the income tax returns for fiscal year 2019. The new tax return submission deadline for taxpayers with financial year ended December 31, 2019 is therefore extended to August 30, 2020. Taxpayers also have until August 30, 2020 to remit payments of income tax for fiscal year 2019.
 
2.27 Senegal
 
April 7. A partial remission of the tax debt recorded as at December 31, 2020 will be granted to companies and individuals for a total amount of 200 billion XOF.
 
2.28 Serbia
 
April 24. Postponement of the deadline for acquiring the status of a qualified new employee for the purpose of applying the exemption from the obligation to pay PIT and related contributions for that employee, from April 30 to 60 days upon the end of the state of emergency.
 
2.29 Singapore
 
March 26. It was announced in the Supplementary Budget that all self-employed individuals with income tax payments due in May, June and July 2020 would be granted an automatic three-month deferral of these payments to August, September and October 2020 respectively. Individuals who are employees may apply for a similar deferral of their tax payments.
 
April 7. Individual income tax filing due date has been extended from April 18, 2020 to May 31, 2020. If an individual has been exercising overseas employment but is now working from Singapore remotely due to COVID-19, IRAS is prepared to treat him/her as not exercising an employment in Singapore, if he/she meets the conditions as set out in the below IRAS website link under two circumstances: (i) Singaporeans/Singapore permanent residents exercising overseas employment and are now working remotely from Singapore for that employment due to COVID-19; (ii) Non-resident foreigners exercising overseas employment who are on short-term business assignment in Singapore and are unable to leave due to COVID-19. Based on the tax guidance, eligible employees will not be subject to Singapore individual tax for the duration they are stranded in Singapore due to COVID-19, subject to qualifying conditions.
 
April 23. Automatic extension of employers' tax clearance filing deadlines for foreign employees leaving Singapore (from April and May to June 2020).
 
2.30 Slovakia
 
March 20. The Ministry of Finance together with the Financial Directorate of the Slovak Republic has prepared a regulation based on which the sanction for not filing an income tax return (annual payroll report) and non-payment of tax due for a tax period for which the statutory filing deadline expires on March 31, 2020, April 30, 2020 or May 31, 2020, is relieved, provided the company or individual fulfill their obligation by June 30, 2020. Based on the current wording, it is not clear whether the sanction would first be levied and then canceled, or not levied at all. The same approach will apply to reporting and tax obligations of healthcare providers in relation to income they received from holders, provided doctors meets their statutory obligations by June 30, 2020.
 
March 27. The deadline for filing the annual tax return is postponed until the last day of the calendar month following the month in which the pandemic period comes to an end. The income tax is due by the same deadline. This applies also if an already extended period for filing a tax return expires during the pandemic period.
 
2.31 South Korea
 
December 29. Limitation on tax deductions on individual spending increased by 300,000 KRW for 2020.
 
2.32 Spain
 
April 15. Royal Decree Law 14/2020 of April 14, 2020 was published in the Official State Gazette on April 15, 2020 and extended the filing and payment deadlines for certain tax returns and self-assessments.
 
The sole article of the above Royal Decree-Law provides that taxpayers with a volume of business not exceeding 600,000 EUR in 2019 shall have until May 20 to file and pay tax returns and self-assessments with deadlines falling between April 15  and May 20. In other words, qualifying taxpayers may defer the filing of quarterly VAT returns, corporate income tax installment payment returns, and PIT returns. The deadline is also extended by one month, from April 15 to May 15, where taxpayers have opted for payment by direct debit. 
 
This measure will also be applied to the public administrations (including social security) although in such cases, budget rather than volume of business will be used as the relevant threshold value.
The tax-related measures introduced by the Royal Decree-Law include tacit waiver of the objective assessment method for PIT in 2020 is permitted, with the introduction of a limitation on the duration of the effects of such waiver. 
 
June 17. The Spanish tax authorities have recently published a binding tax ruling which concludes that days unwillingly spent in Spain by a given individual due to COVID-19 mobility restrictions must always be taken into account for the purposes of determining tax residency i.e. the 183 days calendar year presence rule.
 
2.33 Suriname
 
April 9. For both corporations and individuals, the ultimate filing date for the preliminary tax return for the year 2020 has been extended from April 15 to June 15, 2020. Accordingly, no fines and interest will be imposed during the extension period. The filing date for both the final corporate and PIT return for the year 2019 remains in accordance with the statutory due date of June 30, 2020.
 
Taxpayers who are experiencing cash flow challenges because of COVID-19 can submit a substantiated request to the Tax Collector of Direct Taxes to qualify for a deferred payment arrangement. This measure seems to apply to all taxes falling under the authority of the Tax Collector of Direct Taxes, i.e., corporate income tax, PIT, wage tax, dividend withholding tax, old age premiums and turnover tax. The announcement of the Minister of Finance does not further specify or define the extent of the cash flow problems required to benefit from the deferred payment arrangement.
 
2.34 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.
 
May 20. PIT for resident individual taxpayers who render services in a non-dependent relationship can pay their March and April advanced payment obligations (originally due in May) together with the advanced payments for May and June, which are due in July.
 
November 16. The bill of Law proposes to exempt from the PIT and the non-resident income tax, the income derived from temporary leases of real estate for tourism purposes accrued from November 16, 2020 until April 4, 2021.
 
 
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