As the pandemic continues to threaten the global economy, a lot of companies have taken a hit and as such trying hard to survive this austere period. Some of these companies are either laying off staff or cutting down salaries to reduce costs.
A wise woman — Ayn Rand — once said, “We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission.”
To help businesses stay afloat in this crucial time, many governments around the world have introduced various plans while citizens and organisations are adjusting to the new development.
The Ethiopian Minister for Finance, Eyob Tekalign, revealed via a state TV station that the government will offer tax reliefs to companies affected by COVID-19.
A report by Bloomberg states that the government will cancel interest payment and penalties on outstanding taxes due between 2015 and 2018 for companies and the underlying tax due can be paid in instalments.
The Ethiopian government will also give companies affected by the COVID-19 a four-month income tax relief, grant a one-month grace period on payment of value-added and turnover tax payments as well as waive some percentages off taxes for companies that pay in a lump sum. Such companies will receive a 10% discount and those who are donating to the COVID-19 response fund will receive as much as a 20% discount.
Interestingly, these tax alleviation developments are not only seen in Ethiopia. Botswana, another country in Southern Africa, through its minister of finance and economic development had also disclosed plans to give tax relief to companies as this will help contain the impact of COVID-19 on the business.
Coming to West Africa, Ghana has equally announced that its taxpayers who redeemed all their outstanding debts to the country’s tax authority by June 30, 2020, will be granted a cancellation of penalties on their principal debts.
Similarly, the government of Algeria, Egypt and Mauritius revealed that they will delay the filing and due dates for certain tax returns as well as provide relief for late-filed tax returns and payments respectively.
On the other hand, in Nigeria, the Federal Inland Revenue Service (FIRS) offered to waive interests and penalties for taxpayers on outstanding tax debts if only they pay their debts in full on or before May 31, 2020.
PUBLIC NOTICE: UPDATE ON THE PALLIATIVE MEASURES TO CUSHION THE EFFECTS OF COVID – 19 ON TAXPAYERS NO 3 pic.twitter.com/4u526fNgWT
— FIRS Nigeria (@firsNigeria) April 29, 2020
A source claims that some critics have called on the federal government to reduce or suspend taxes this period as part of the palliative to lessen the impact of the pandemic on businesses.
But the Minister for Finance, Budget and National Planning, Zainab Ahmed had simply mentioned that corporate organisations and individuals could get tax relief based on their donations towards the pandemic relief fund.
Zainab further said that the government would rather look into the option of postponing tax deadlines rather than tax reduction and this is because it may not give the intended result.
In the last few months, some financial institutions which include Access Bank, UBA, Guaranty Trust Bank etc. had donated to the coronavirus pandemic response fund.
While other African governments are giving discounts to companies contributing to the COVID-19 response fund, the FIRS appealed to corporate bodies to pay their annual returns earlier than the due date.
The agency is also yet to implement palliative measures on taxes for businesses or give tax breaks whilst some African governments are either relieving companies of taxes or cancelling interest payments in due taxes.
However, there are some noteworthy activities from the Nigerian government. Through the Central Bank of Nigeria (CBN) and the Federal Ministry of Finance, Budget, and National Planning, a ₦50 billion Targeted Credit Facility (TCF) is being introduced as a stimulus package to assist families and micro, small and medium enterprises (MSMEs) that are affected by the coronavirus outbreak.
The FIRS also moved the monthly remittance to VAT charges from the 21st of every month till the last day of the month. Recall that earlier in the year, President Muhammadu Buhari signed the new Finance Bill that increased VAT rate from 5% to 7.5% with the exemption of some critical goods.
I am pleased to announce that this morning I signed into Law the Finance Bill, 2019.
— Muhammadu Buhari (@MBuhari) January 13, 2020
Although the bill was meant to help improve the government’s revenue and also protect MSMEs, regarding bad debts, no provision for specific relief by the value-added tax (VAT) law.
While the FIRS believes that some sectors — eCommerce, telcos, logistics — are booming this period, there’s no telling whether or not they are really profitable as the costs of running the company will definitely be on a high side.
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