Ireland has taken up several initiatives to protect its economy by introducing a business relief package for all range of agencies including small and medium firms and retailers besides setting aside a fund for country’s workers. The Irish government announced on Saturday, May 2, 2020, that it would allow firms impacted by the coronavirus crisis to warehouse tax liabilities for 12 months, with a special package for business support worth 6.5 billion euros.
Business Relief Strategy
Irish Finance Minister, Paschal Donohoe explained business package in detail that commercial rates would also be written off for three months, with a 2 billion euro credit guarantee scheme introduced for small and medium-sized businesses, and Ireland’s sovereign wealth fund mandated to invest 2 billion euros directly into bigger firms. The business package on Saturday also included a 10,000 euro restart grant for micro and small businesses.
Earlier, the government had funded its initial 8 billion euro to spend on increased jobless payments and wage subsidies for workers, with 1 billion euros of liquidity supports offered to ailing firms. Citing the level of the economic crisis, Donohoe said firms had deferred 800 million euros of tax in March alone and that that figure could reach 2 billion euros by June. Welcoming the new measures of the government, Ireland’s main business lobby, IBEC, hailed it as an important further step in addressing the cash flow crisis of the country.
Following a national lockdown prompted by the spread of COVID-19, Ireland introduced its economic way out on Friday, which included a gradual re-opening of building sites and some retailers to reopen in two weeks, with restaurants following in June, hotels in July, and finally pubs in August.
Tax Deferral and Credit Schemes
Citing the upcoming election, Donohoe said a new government would be required to enact the tax deferral and credit guarantee schemes, which would be the first tangible sign after political deadlock emerged in February. He told a news conference, “It is very clear to me that there are economic decisions that our country will need relevant to keeping jobs and creating new jobs that in the coming weeks will require the election of a new Taoiseach (prime minister).”
Heather Humphries, who served as Minister for Business, Enterprise, and Innovation, said more supports would be needed for those economic sectors, which were more vulnerable in the coming months. Donohoe, meanwhile, put his concern that Ireland Strategic Investment Fund’s (ISIF) new equity fund would lead to investment far in excess of the 2 billion euros available capital as it seeks to maximize added capital from existing shareholders and new co-investors.
Sources reported that hotels, restaurants, and pubs, which would be allowed limited operation after the government lifted restrictions, have called for a revision of the existing VAT rate. In analysts’ opinion, the VAT rate for the hospitality sector would be temporarily cut to 0% from 13.5% and for state funds to help them pay rent. Nonetheless, Donohoe stated that the acting government had not decided yet of any potential sector-specific cut to VAT rates.
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