How the world is navigating the COVID-19 storm

March 31: The Federal Government has continued its economic stimulus program with the release of the JobKeeper Payment initiative, supporting employers to retain their workforce while managing through the commercial disruption of COVID-19.

March 23: Australia’s Federal Government has introduced a range of economic stimulus measures, with a focus on small to medium businesses. And it has flagged the likelihood of more stimulus measures to assist hard-hit industries such as airlines, tourism, hospitality, events, the arts and sport. The total package of measures unveiled so far is valued at more than $17 billion and includes instant asset write-offs for business purchases and a 15-month investment incentive to support business investment and economic growth over the short-term, by accelerating depreciation deductions. There are also cash payments of between $2000 and $25,000 for businesses employing staff and with less than $50 million in turnover, subsidies for apprentice and trainee wages for small businesses and a fund of $1 billion set aside to support regions and communities disproportionately affected by the economic impacts of the coronavirus.

Friday, March 20
The Austrian Government has announced a series of measures aimed at supporting entrepreneurs, starting with a EUR 4 billion “COVID-19 crisis management fund.” This fund will provide for stimulation of the labour market (especially short-time work), cushioning of loss of revenue as a result of the crisis and stimulation of the Austrian economy in general.

Austria’s Federal Ministry of Finance has also unveiled a variety of special regulations for taxpaying businesses whose liquidity has been impacted by the COVID-19 crisis. These steps include the ability to reduce income or corporate tax advances for 2020, the opportunity to defer tax or pay by instalments, options to defer interest and avoid the imposition of additional interest and, under certain circumstance, reduction or waiving of penalty surcharges for late payment.

It’s a scenario not seen since the September 11 attacks.

The US is closing its border with Canada to ‘non-essential traffic’ but US President Donald Trump says trade between the nations will not be affected, as the nation moves on economic protections and stimulus packages with increasing urgency in the face of the COVID-19 crisis.

About $2bn in goods and services crosses the US-Canada border each day and leaders of both nations stressed that cross-border trade will not be blocked. For the moment, the US-Mexico border will remain open.

Visitor entry restrictions from mainland Europe was already in place and that was extended to the UK and Ireland earlier this week.

As the economic fallout gathers from the unprecedented COVID-19 health crisis, Congress and the White House are discussing a stimulus package estimated at more than $1 trillion.

Measures being considered include loans and loan guarantees for airlines and other affected industries and as much as $250 billion in direct payments to citizens.

Industry has been hit hard. Ford, General Motors and Fiat Chrysler are temporarily shuttering their plants in the United States. Manufacturing and restaurant associations are seeking billions of dollars in loans to help their members survive.

Already approved by the Senate is a relief package that makes provision for emergency paid sick leave. Employers with more than 500 employees are exempt, and the Department of Labor can exempt small businesses with fewer than 50 employees.

Payments will be capped at $511 per day and eligible employees can get up to two weeks of paid sick leave if they are being tested for or diagnosed with COVID-19, as well as those instructed by doctors or officials to stay isolated at home.

The Treasury Department says taxpayers can delay paying some federal income taxes for 90 days but must still file their return or request an extension by April 15. The maximum deferral is $10 million for corporations.

Businesses are taking unusual and extreme measures to combat the rapid spread of COVID-19, which has now appeared in every US state after West Virginia reported its first positive test. There has been more than 11,800 cases in the US and at least 179 deaths.

In the brave new world of social distancing, businesses are creating ways to maintain trading. Funerals are being livestreamed to people outside the immediate family and sitting down in restaurants and bars is taboo in many states, where only food to go is being offered.

Firms had already been moving towards working remotely but New York has forced them to step it up, with the Governor issuing an executive order that requires at least 50% of a business’ employees to work from home. The New York Stock Exchange is closing its trading floor and moving to electronic trading for the first time in its history.

Friday, March 20
The Belgian Government is providing flexibility for businesses impacted by COVID-19, including the ability to request payment plans or defer payment for social security contributions from the first two quarters of 2020.

There are also a number of options available around tax obligations for businesses and people affected by the coronavirus who make application by June 30. Repayment plans can be requested for withholding tax on earned income, VAT, personal tax, corporation tax and legal person tax – with a guaranteed exemption from deferred interest and a waiver of fines for non-payment.

Self-employed persons dealing with the coronavirus can request a postponement or exemption from payment of social security contributions from their social insurance fund but must do so by March 31.

March 22: After a poor performance in 2019, heavy industry in China looks set for its worst start to a year since the global financial crisis.

Industrial profits data for January and February, due to be released on Friday, will provide insights into the depth of the nation’s economic gloom.

Mainland China saw a drop in its daily tally of new coronavirus cases, reversing four straight days of gains, as the capital Beijing ramped up measures to contain the number of infections arriving from abroad.

Friday, March 20
The Government of the Republic of Cyprus has introduced a wide variety of measures aimed at helping businesses and individuals cope with the COVID-19 crisis. These include a two-month temporary suspension of the need to pay VAT and the reduction of the standard VAT rate from 19 per cent to 17 per cent, and the reduced VAT rate from 9 to 7 per cent. Submission of company tax returns have been extended for two months to May 31, while tax liability arrears can be paid by instalment and additional GESY contributions will be postponed for two months.

Cypriot banks will be able to obtain liquidity from the Eurosystem on favourable terms and there is a business suspension plan in place for businesses that have been or will be suspended (like shopping centres and hotels) and those which continue to operate with a turnover reduction of more than 25 per cent. Affected employees will be entitled to unemployment benefits until the suspension is lifted.

Among the individual measures being introduced are special leave for parents required to care for children due to the suspension of schools, childcare centres and nurseries, and subsidies for students studying abroad, who will not return to Cyprus over Easter.

Friday, March 20
The Danish Parliament has passed legislation to provide temporary liquidity relief for large enterprises through one-month postponement of VAT payments due over the next three months. In addition, small and medium-sized businesses will have their monthly AM-contribution and A-tax payments postponed by four months from May 11, while those for large enterprises will also be pushed back four months from April 30.

Small and large companies can also apply to raise the amount limit for deposits into the tax account to DKK 10 million for the period from March 25 to November 30.

Self-employed people will not be required to pay B-tax in April or May. The payment they would have paid on April 20 has been deferred to June 20, while their pay payment is not now due until December 20. People who are self-employed are also entitled to reduce their B-tax payments themselves for the rest of the year if they lower their expected earnings.

March 26
The French government has published 25 decrees to implement new measures under the country’s “state of health emergency”, declared last week.
The measures include:
– A €1 billion fund for small businesses and self-employed people;
– Financial aid for the travel sector;
– Systems put in place to pay salaries to the workers whose jobs have been stopped under the lockdown.

March 25: Germany’s finance minister asked lawmakers on Wednesday to suspend the country’s debt brake so the government can fight the coronavirus pandemic with “full force”, Reuters reports.

Olaf Scholz told the Bundestag lower house the government needed a debt-financed supplementary budget of 156 billion euros (142.99 billion pounds) to protect the health of Germans and keep struggling companies afloat.

He proposed using an exit clause for emergencies to get around the debt brake.

Monday, March 23
Chancellor Angela Merkel is in quarantine after contact with a doctor who tested positive for coronavirus. Germany, the European Union’s largest economy, has banned meetings of more than two people in public for the next two weeks to contain the spreading virus.

The Wall Street Journal reports Olaf Scholz, Germany’s vice chancellor, will preside over a cabinet meeting on Monday that will draft an emergency budget.

The new budget would allow the government to raise borrowing to the tune of €150 billion this year and include several hundreds of billions euros more in loan guarantees to help businesses of all sizes secure liquidity amid a coronavirus shutdown.

The German Government is implementing one of the most radical stimulus packages, with potentially unlimited government financing for disrupted businesses. It involves a €550 billion loan and loan-guarantee program for businesses that the government stressed has no limit on financial support.

Where full-time employees are forced into part-time hours, the German Federal employment agency will cover 60% of the lost net wages, or 67% in the case employees with children. It was a measure developed during the Global Financial Crisis in 2009.

Payment of business taxes can be deferred and the Government has agreed to increase public investment spending by €12.4 billion until 2024.

Friday, March 20
Israel’s Government has doubled its loan fund for struggling businesses to 8 billion shekels, saying that ‘any business that has incurred damage’ directly from coronavirus is eligible to access a loan.

Collateral requirements have been reduced to just 10% of the loan and banks are cutting the loan review time to a maximum of nine working days. Approved funds are received within 7-10 days.

Workers who are being placed on unpaid leave can receive unemployment benefits and they are entitled to immediate benefit without having to use vacation pay. Unemployment pay covers 70% of a worker’s salary, up to a cap of 10,000 shekels a month, for 50 days.

Monday, March 23
Italy has banned any movement inside the country and closed all non-essential businesses as it desperately seeks to stem the spread of coronavirus following a horror weekend in which more than 1,400 people died.

Italy’s Government had adopted an emergency decree of €25 billion euros to support an already weak economy, as it faces the worst COVID-19 crisis in Europe.

The decree suspends loan and mortgage repayments for companies and families thanks to state guarantees for banks and increases funds to help firms pay workers temporarily laid off due to the lockdown.

The country has been in lockdown since March 6, closing all non-essential shops, as well as schools and universities. Economists believe the country is headed into its worst recession since the financial crisis.

March 26
The Japan Finance Corporation, a financial institution funded by the Government of Japan, is providing loan support of up to JPY300 million (without any collateral) for companies whose sales for the last month have been decreased by at least 5%, compared to the same month of last year or the year before last.

Friday, March 20
The Malaysian Government is targeting tourism and hospitality with its relief package, exempted those businesses from charging a 6% service tax on accommodation and other taxable services, which also covers the sale of tobacco, alcohol and non-alcoholic beverages from March 1.

Bank Negara Malaysia will provide RM2b special relief facility for SMEs at 3.75% interest, while Bank Simpanan National to allocate RM200m micro-credit facility to affected businesses at 4% interest. Banks generally are encouraged to restructure and reschedule loans.

Employees may reduce compulsory contributions to the Employees Provident Fund (EPF), with the rate reduced from 11% to 7%, effective 1 April 2020. Tax payments can be deferred and a revision of the estimated tax payable is available.

Friday, March 20
The European Commission said on Sunday it approved 3 billion euros of Portuguese guarantee schemes for small and medium sized companies affected by coronavirus epidemic.

“The economic impact of the coronavirus outbreak is severe. We need to act in a coordinated manner, to help Europe’s economy weather this storm and bounce back strongly afterwards. The four Portuguese guarantee schemes for SMEs and midcaps are an important step in this direction,” said Margrethe Vestager, in charge of competition policy at the Commission.

Portugal’s Government has put in place a €2.3 billion package, including deferred tax payments for businesses for up to 12 months.

New credit lines for the businesses most affected by the outbreak, such as restaurants and the tourism sector, will be available with a maximum of €1.5 million per company. Loans will be guaranteed by the state, provided through the banking system and may be paid back over four years.

Companies may suspend social security payments and maintain employees’ contracts with payments equal to two-thirds of salaries, funded largely by the Government.

The European Central Bank has launched a EURO 750 billion package, as it joins other banks around the world in taking emergency measures to ease the impact of COVID-19.

The ECB on March 18 announced it would launch a new temporary asset purchase programme of private and public sector securities to “counter the serious risks to the monetary policy transmission mechanism and the outlook for the euro area posed by the outbreak and escalating diffusion of the coronavirus, COVID-19.”

The coronavirus is present in all 27 European Union states, with the death toll in Italy now exceeding that of China and Spain reporting more than 29,000 cases of COVID-19, the fourth most of any country.

EU leaders last week approved plans to close borders for 30 days.

But on top of the humanitarian crisis, hugely economic challenges are also unfolding across the Union.

The United Nations forecast this week that the global cost of COVID-19 could be more than US$1 trillion.

With many economists predicting a recession, the ECB’s purchase programme will extend at least until the end of the year – and longer if the impact of COVID-19 is still being felt economically.

The aviation, travel, and tourism sectors have been among the earliest ,hardest and most visibly hit by the pandemic, but agriculture, aquaculture, fishing and manufacturing are also being severely impacted. Ford has shut down its plants in Germany and Romania.

Although EURO 750 billion has been initially set aside for the programme, the ECB’s announcement of the package noted “the Governing Council is fully prepared to increase the size of its asset purchase programmes and adjust their composition, by as much as necessary and for as long as needed.”

The bank’s president Christine Lagarde tweeted that there were “no limits” to how far the ECB would go to protect the Euro, as “extraordinary times require extraordinary action.”

The ECB intervention came after countries across the European Union unveiled their own economic stimulus measures in response to the coronavirus crisis (link to main article).

The German Government unveiled EURO 550 billion of loans and loan guarantees, while Spanish authorities announced an assistance package that includes EURO 100 billion in loans and guarantees.

Italy’s challenged economy will be bolstered by an emergency decree of EURO 25 billion.

Over the weekend, the French Government announced its plans to to mobilise €300 billion of liquidity support for companies affected by COVID-19.

The European Council of the European Union has pledged from a humanitarian and economic perspective it will to do whatever it takes to “effectively address the current challenges and to restore confidence and support a rapid recovery.”

The council indicated earlier this week that fiscal measures of 1 per cent on average of GDP had already been decided upon, with a further commitment to providing liquidity facilities of at least 10 per cent of GDP, consisting of public guarantee schemes and deferred tax payments.

Although the main fiscal response to the COVID-19 will come from member state budgets, the European Commission has committed to a EURO 37 billion “Corona Response Investment Initiative” and proposed to make another EURO 28 billion in structural funds available.

The Commission has also offered relief to the hard-hit airline industry by proposing a temporary lift on the “use it or lose it” rule around airport slots.

Friday, March 20
Singapore Airlines will cut capacity by 96% and ground almost all of its fleet, the carrier said on Monday, in response to coronavirus travel restrictions it called the “greatest challenge” it had ever faced.

The Singapore Government has begun working on a second stimulus package that may examine ways to better support self-employed workers after the first wave of measures was delivered in February when Budget 2020 was handed down.

The first suite of measures included a $SGD1.3 billion Jobs Support Scheme to retain local workers by offsetting 8% of wages; enhancement of a Wage Credit Scheme with the monthly wage ceiling raised to $SGD5000; and the raising of Government co-funding levels.

Five sectors will also get additional support with tourism, retail, aviation, food and beverage, and point-to-point transport given special attention.

March 25
Spain is struggling to cope with a mounting coronavirus crisis as its death toll exceeded China’s with another 738 lives lost in a single day, and a third senior government minister was diagnosed with the virus.

Parliament sat late to approve extending a state of emergency from 15 to 30 days. People have been largely confined to their homes since the lockdown began on March 14, while schools, restaurants and most shops have been shuttered.

Friday, March 20
Spain’s Government announced €100bn of loans and guarantees for companies in what the Prime Minister described as the “biggest mobilisation of resources in the country’s democratic history”.

Spain, one of the worst-affected countries by COVID-19, has declared a ‘state of alarm’ and allowed for deferred payment of business tax debts up to €30,000 (with interest after three months) for payments due between March 13 and May 30, but only for companies whose turnover in 2019 did not exceed €6,010,121.04.

The Government has also enacted ERTE (Temporary Regulation of Employment), allowing firms to suspend employment contracts or reduce working hours of their employees. They are obligated to re-employ those workers when the ERTE is lifted.

March 31
There has been updated advice issued for the Coronavirus Job Retention Scheme applicable to Motor Dealers.
All UK dealers with a pay-as-you-earn scheme that was created and started on or before 28 February 2020 will be able to access support to continue paying part of employees’ salary for those employees that would otherwise have been laid off during this crisis and to avoid redundancies.
It is intended the JRS will run for at least 3 months from 1 March 2020 but it will be extended if necessary.

Thursday, March 26
Britain-based airlines are seeking industry tax breaks to help survive a coronavirus pandemic that has brought air travel to a standstill.

Airlines UK, which represents British Airways, Virgin Atlantic and easyJet, has asked the Government for:
• A suspension in air passenger duty;
• A waiver of air traffic control and related charges;
• Relief from EU flight compensation rules.

Flights in Europe are down 60% this week, equal to 92,000 fewer services, compared with the same week last year, according to aviation data firm OAG.

Thursday, March 20
The UK Government’s Budget 2020 contained measures worth £12bn specifically targeting coronavirus, including short term assistance to support businesses as they navigate the fallout from the pandemic.

A one-off £3,000 grant will be available to businesses currently eligible for Small Business Rate Relief, and a temporary Coronavirus Business Interruption Loan Scheme has been set up that will be delivered by banks, under which the government will provide lenders with a guarantee on each loan.

SMEs will be able to reclaim Statutory Sick Pay paid for sickness absence due to COVID-19 and relief from business rates is available for small businesses in the retail, leisure and hospitality sectors. For businesses or taxpayers in financial distress with outstanding tax liabilities, a “time to pay” arrangement with tax authorities can be negotiated, to delay and spread the payment of tax.

March 27: US senators and Trump administration officials reached an agreement on a massive economic stimulus bill to alleviate the economic impact of the coronavirus outbreak.
Reuters reports the Senate has passed the $2-trillion package and the House of Representatives is expected to follow suit soon after. It is the biggest fiscal stimulus package in US history.
The proposed package includes:
• $350 billion in small business loans;
• $250 billion in unemployment insurance benefits;
• $500 billion in loans for distressed companies;
• $100 billion for hospitals and related health systems.
US President Donald Trump said in a television interview that he wanted to see businesses returning to normal by Easter, or April 12.
But the US Chamber of Commerce, National Retail Federation and National Restaurant Association pointed to less optimistic recommendations by public health officials. Many of these have urged that Americans stay in their homes as much as possible for weeks to prevent the virus’ spread.