02 May 2020 | 04.17 pm
Government Signals Rates Relief For SMEs
Three months waiver, and more to come
02 May 2020 | 04.17 pm
The government has agreed new measures to support businesses that have been negatively impacted by the Covid-19 lockdown. Those measures are:
• Three month commercial rates waiver for impacted businesses.
• €2 billion Pandemic Stabilisation and Recovery Fund within the Ireland Strategic Investment Fund, which will make capital available to medium and large enterprises.
• €2 billion Credit Guarantee Scheme to support lending to SMEs for terms ranging from three months to six years, which will be below market interest rates.
• ‘Warehousing’ of tax liabilities for a period of 12 months after recommencement of trading, during which time there will be no debt enforcement action taken by Revenue.
In addition, the government is formulating a Restart Grant for micro and small businesses of up to €10,000, again linked to their commercial rates liability.
While the rates measures will be of assistance to locked out retailers and hospitality businesses, the assistance package falls well short of aid requests outlined by business lobby groups.
Local government minister Eoghan Murphy (pictured) said commercial rates are being waived for a three month period beginning on 27 March for businesses that have been forced to close due to public health requirements. It is estimated that this waiver will reduce local authority income by €260m and the Exchequer will meet these costs.
A new Restart Fund will assist these businesses in reconnecting with the market, their employees and their customers. Details will be finalised in the coming weeks.
Murphy said it is envisaged that the fund will operate through a system of rebates/waivers of commercial rates payments. “It is intended that companies will receive a total amount equivalent to no more than their 2019 rates bill and that there will be a cap per business of €10,000,” Murphy added.
The COVID-19 Credit Guarantee Scheme will provide an 80% guarantee on lending to SMEs until the end of this year, for terms between three months and six years.
The guarantee can be used for a wide range of lending products between €10,000 and €1 million and the scheme is open to all SME sectors, including primary producers. Finance minister Paschal Donohoe said implementing this scheme will requires new legislation. This can’t happen until a new government is formed, which currently looks like mid-June at the earliest.
Deferred Tax Liabilities
Donohoe also stated that Revenue will warehouse deferred tax liabilities associated with the Covid-19 crisis.
He explained that arrangements will be put in place to allow debt that cannot be paid during the Covid-related period to be warehoused interest-free for a year from recommencement of trading, during which time there will be no debt enforcement action taken by Revenue in respect of the debt.
The minister pledged that there will be no interest charge accruing in respect of the warehoused debt. “Prior to the expiry of the warehousing period, the business will be expected to engage with Revenue to reach an agreement on an exit strategy suited to the specific business needs and the need for continued viability,” Donohoe added.
He expects that businesses will qualify for a reduced rate of interest of 3% on outstanding debts on agreement of such arrangements, to be set out in legislation.
The minister made clear that for continued qualification by businesses for these arrangements, it will be a prerequisite that the businesses remain compliant with all their return filing and tax payment obligations in respect of tax periods that postdate the periods covered by the warehoused debt.
Necessary legislative amendments will be included in Finance Bill 2020, the minister said.