FINANCE

End to horizontal support

Measures such as the coverage of enterprises’ fixed expenditure will be strictly targeted

end-to-horizontal-support

State support measures will from now on operate increasingly with ceilings and restrictions in an effort to contain costs and prevent any cases of abuse – intentional or not.

The pressure on the budget is growing as restrictions keep being extended and ever more regions are deemed to be at very high risk; this means the Finance Ministry is running out of other options, so it has to make the shift to targeted measures.

The decisions of the last few days, regarding the sixth phase of the cheap state loans program and contract suspensions, show that this policy is already being applied. In both cases the businesses’ 2020 turnover has been set as the criterion, leading to the rejection of applications from more than 430,000 enterprises for the so-called “Deposit To Be Returned” program, half of which had a higher turnover last year than in 2019. Even doctors and supermarkets dared apply for state support, ministry officials stress; they concede that the retro-setting of the eligibility criteria by the state may be an excuse for the numerous applications accountants submit, in case any of them make the cut.

Likewise, Wednesday’s joint ministerial decision about the March furlough rules out companies that saw their turnover increase in the period from April to December 2020 from the same time in 2019 from the special-purpose compensation.

Last year’s turnover, concerning which the full results are now available, and the activity code numbers (KAD) are the main criteria based on which eligibility will be determined, ministry officials say. The KAD numbers have also been used for distinguishing the sectors that deserve 100% exemption from rental payments or a 40% discount on their rent in the first quarter of the year.

The same tactics, ministry sources add, will also be employed for the measure of covering companies’ fixed expenditure as of April. Therefore, besides a 30% drop in turnover, companies will only benefit if they also recorded losses throughout 2020.