Guidelines on the tax deferral scheme announced by the government have now been published. The aim of this scheme is to improve business liquidity by easing pressures on their cash flow arising from the economic impact of the coronavirus pandemic and encourage the retention of employees.
Which taxes does the scheme apply to?
- Provisional tax
- Employee taxes
- Maternity Fund payments and social security contributions
- Social Security contributions of self-employed persons
Which payments are being deferred?
The payment of any of the above taxes which fall due in March and April 2020. It is important to note that the deferral only applies to the payment of taxes. All relevant forms must still be submitted on time.
Who may benefit from the scheme?
The Guideline states that companies and self-employed persons who suffer a significant downturn in their turnover as a result of situation brought around by the Covid-19, and as a result face substantial cash flow difficulties any benefit from the scheme. The actual application lists the following sectors available to be selected:
- Hospitality and tourism
- Hairdressing, beauty treatment and physical well-being activities
The application also gives the option to select other, for businesses not operating in any of the above-mentioned sectors.
Who may not avail himself of the tax deferral scheme?
Companies and self-employed persons who have failed to comply with their tax obligations (submission of documents/returns and payments) falling due by 31st December, 2019.
Also the benefit granted under this scheme shall be forfeited if the applicant is found to be in breach of any of its terms and conditions making use of this scheme under false pretences. In case of forfeiture, beneficiaries will have to settle their dues as demanded by the Commissioner for Revenue and such payments shall be subject to interest or penalties as stipulated by law.
When will the deferred taxes fall due?
VAT: the Guidelines state that VTA dues are to be settled in two equal instalments with the two quarterly returns immediately following the quarter whose dues would have been deferred.
Presumably this means: The deferred VAT which was due by those that had a March deadline (period from November 2019 to January 2020), must be settled at the time when the VAT for the two subsequent quarters fall due ( February to April due 15 June 2020 and May to July due 15 September 2020) in two equal instalments.
Other taxes: All other eligible taxes which were originally due in March and April must be settled in four equal instalments between May and August 2020.
The application to benefit from this scheme is to be made by not later than the 15th April 2020.