Ireland Active gives a cautious welcome to some of the measures included in the July Stimulus announced by government today. The extension of the wage subsidy scheme, increase in restart grants, extension of the commercial rates exemption, warehousing of tax liabilities and state backed loans were all sought by Ireland Active as part of their government submission last month. The sector will examine the measures in more detail and seek further clarity from government over the coming days. Below is a summary of the July Stimulus measures:
Employment Wage Support Scheme
A new Employment Wage Support Scheme will succeed the Temporary Wage Subsidy Scheme, and run until April 2021.
Employers whose turnover has fallen 30% will receive a flat-rate subsidy of up to €203 per week per employee, including for seasonal staff and new employees. New firms operating in impacted sectors will also be eligible.
Restart Grant for Enterprises
The Restart Grant for Enterprises is being extended to a broader base of SMEs and expanded by €300 million, bringing the total funding of the Restart Grant to €550 million.
The payment level is being increased to €25,000. Further payments may be available to firms which have already received them.
Waiver of commercial rates
With limited exceptions, all businesses will be granted a waiver of commercial rates for the six months to end-September 2020.
VAT rate reduction
There will be a 6-month reduction in the standard rate of VAT from 23% to 21%, effective from the beginning of September.
Tax Warehousing
The government will also pass legislation to confirm the previously announced warehousing of tax liabilities. This will allow for businesses affected by COVID-19 to delay payment of their PAYE and VAT debts in part of in full for a set period with no interest or penalties.
In order to provide support to taxpayers experiencing difficulty with tax liabilities, the interest rate applying to agreed repayments of all tax debt (where agreement has been reached prior to 30 September 2020) will be reduced to 3%.
Other Tax measures
To provide immediate cash-flow support to previously profitable companies, the early carryback of trading losses will be allowed, leading to an immediate refund of some or all of corporation tax paid.
There will be a new income tax relief for self-employed individuals who were profitable in 2019 but, as a result of the COVID-19 pandemic, incur losses in 2020.
COVID-19 Credit Guarantee Scheme
The €2 billion COVID-19 Credit Guarantee Scheme will see Government provide an 80% guarantee for a wide range of credit products from €10,000 to €1 million up to a maximum term of 6 years.
Additional resources for MicroFinance Ireland and the Local Enterprise Offices
A package of liquidity and enterprise investment measures worth €55 million will be put in place to support small and micro companies through additional resources for MicroFinance Ireland and the Local Enterprise Offices. This will include measures to reduce interest rates on lending for micro and small businesses, including grants equivalent to 0% interest on the first year of SBCI and MFI loans.
Extension of Pandemic Unemployment Payment
The Pandemic Unemployment Payment, due to end in August 2020, is being extended by 7 months until 1 April 2021, giving those on emergency income support greater security as the country recovers and job opportunities return. Between now and April, there will be a gradual reduction in payment level, linked to previous incomes, bringing payments in line with existing social welfare levels over time. The scheme will close to new claimants from Thursday 17 September 2020.
