COVID-19 TAX MEASURES
In order to encourage consumer spending for the next six months the main rate of VAT at 23 percent is reduced to 21% from September 1.
Loss Relief: Many businesses are in serious cash-flow difficulty due to no sales since midMarch. However, these businesses will be due to pay tax now on profits made last year. With a view to assisting them, the losses made in the current year can be carried back against the profits of 2019, e.g. a Bed & Breakfast business might have made a profit of €50,000 in 2019 but due to permanent overheads and no sales has lost about €20,000 so far in 2020. A claim can now be made to set the €20,000 loss in 2020 against the €50,000 profits in 2019 so that tax is only due now on profits of €30,000.
For sole traders, the loss carryback relief is limited to €25,000 while there is no limit on the carryback figure for a company.
Tax Debts: Where a business suffers trading difficulties then unpaid VAT and PAYE may be ‘parked’ or as the Revenue call it ‘warehoused’. In effect, the debts are frozen with no interest charge on the arrears as long as the Returns are maintained up to date. When normal trading resumes then the business will have another 12 months before the taxes have to be paid. An interest rate of 3 percent per annum will apply after that date.
Tax Arrears: Where there are pre Covid-19 arrears, a taxpayer can come to an agreement with
Revenue to settle the debts with an Instalment Arrangement over five years with an Interest Rate of 3 percent per annum. The usual Rates are 8 percent or 10 percent per annum.
Wages Subsidy: In order to retain staff in employment a lower rate of subsidy applies since 1st September. The subsidy is now €203 per week for workers earning between €203 and €1,462 per week and €151.50 where wages are below €203 per week. New workers and seasonal workers also are eligible but proprietary directors are not.
This payment continues for those laid off due to the Pandemic but the amounts paid are reduced. The top rate is now €300 per week where they earned more than €300 per week before the layoff. A rate of €250 per week will apply to those who previously earned between €200 and €300 per week. Anybody who was on less than €200 per week before the layoff will still get €203 per week.
Tax Clearance: This is needed for State and Local Authority work. Where the business has arrears but has come to an agreement with Revenue on an Instalment Arrangement and continues to file timely Tax Returns then a Tax Clearance Certificate will be available. |