The plan represents the next stage in the Government’s response to the COVID-19 crisis with further measures to be announced in Budget 2021 and the National Economic Plan in October. One of its main aims is to protect existing jobs while creating new ones. In his comments today, the Taoiseach mentioned in particular that the measures “will support small and medium businesses”.
The following are the highlights of the measures announced today in support of businesses.
Employment Wage Support Scheme
The Employment Wage Support Scheme will replace the existing Temporary Wage Subsidy Scheme which was put in place in March this year as an early response to the financial difficulties facing employers affected by the COVID-19 crisis. The new scheme will apply to employers whose turnover has fallen by 30% (currently 25%) and also to new firms operating in impacted sectors. Such employers will receive a flat-rate subsidy of up to €203 per week per employee, including seasonal staff and new employees. The scheme will run until April 2021 and is expected to support around 350,000 jobs. The start date is not specified; but is expected to be from the beginning of September.
Carryback of Trading Losses
Companies will be allowed an early carryback of trading losses in order to provide them with a full or partial refund of corporation tax. The purpose of this measure is to provide immediate cashflow support to previously profitable companies. Details of how this measure will work in practice are yet to be provided.
Income Tax Relief for Self-Employed Individuals
A new income tax relief was announced, which will assist self-employed individuals who were profitable in 2019 but who incurred losses in 2020 due to COVID-19. Details of how this measure will work in practice are yet to be provided.
Two measures were announced in support of companies who have difficulties in settling their tax liabilities:
- The warehousing of tax liabilities, which was announced in May, will now be passed into legislation. This will allow for businesses affected by COVID-19 to delay payment of their PAYE and VAT debts in part or in full for a set period with no interest or penalties.
- 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%.
From the beginning of September, the standard VAT rate will be reduced from 23% to 21% for a 6-month period. This will have disappointed many in the badly hit hospitality and tourism sectors, which generally apply the reduced VAT rate of 13.5% and were hopeful that the Government would have matched the UK in reducing the rate to 5% in response to COVID-19.
Stay and Spend Initiative
A new Stay and Spend Incentive has been introduced to support the hospitality and tourism sectors. Taxpayers may claim a tax credit of up to €125 where they spend over €625 on accommodation, food and non-alcoholic drinks between October 2020 and April 2021.
Waiver of Commercial Rates
The waiver of commercial rates is being extended by 6 months to the end of September 2020.
Investment in Infrastructure
The Government has reconfirmed its plans to grow infrastructure expenditure next year by €1 billion. This will allow for additional investment in areas set out in the Programme for Government, which includes broadband. With a greater number of employees now working from home due to COVID-19, this investment should help ensure the continued sustainability of this practice for businesses.
Restart Grant for Enterprises
A Restart Grant for Enterprises was initially introduced as a €250m scheme to small and medium enterprises which were closed or experienced a drop of 25% or more in turnover. The criteria for accessing the scheme is being widened and the funding is being increased by €300 million. The maximum grant available will rise to €25,000 (up from €10,000). Some businesses not previously included in the scheme, such as B&Bs, will now be eligible.
COVID-19 Credit Guarantee Scheme
The purpose of the SME Credit Guarantee Scheme is to encourage additional lending to SMEs by offering a partial Government guarantee to banks against losses on qualifying loans to eligible SMEs. The Government will provide an 80% guarantee as part of the €2 billion scheme and credit products will range from €10,000 to €1 million. The maximum term is 6 years.
Future Growth Loan Scheme
The Future Growth Loan Scheme is available to eligible SME and Small Mid-Cap businesses, as well as the farming and seafood sectors, and is being expanded by €300 million. The scheme is designed to support strategic long-term investment with loans available with a term of 8-10 years.
Some further schemes announced in the package are as follows:
- A new €25 million COVID-19 Life Sciences Products to aid the research, development and production of medicinal products in Ireland that are used in the fight against COVID-19.
- The first phase of a Green Enterprise Fund that will see €10 million provided to support businesses engaging in green research, development and innovation, capital investment, and capacity building.
- €10 million to support IDA promotional and marketing initiatives targeting job-rich FDI projects that will be an essential part of our economic recovery
- A €20 million Brexit fund to help SMEs involved in exporting and importing with the UK and further afield to put in place the staff, software and IT systems to be ready for new customs arrangements from 1 January 2021
- An increase in funding for schemes being operated through Enterprise Ireland including the Seed and Venture Capital Scheme, the Online Retail Scheme and Sustaining Enterprise Fund Scheme
For more information, please contact Cian O'Sullivan at [email protected].