ECONOMY

Incentives for debtor companies

incentives-for-debtor-companies

According to the tax bill submitted to Parliament by the Finance Ministry on Friday, the government is introducing incentives for enterprises with debts to the state to pay up in fewer tranches having entered the scheme where payments can be made in up to 120 installments. The vote is to be held on Thursday following a decision to shorten the debate process.

The incentives for the speedier repayment of dues to the tax authorities have come about due to the government’s desire to collect as much as possible through the new arrangement so as to avoid a revenue shortfall in the 2019 budget.

This new 120-tranche arrangement, dubbed “the last chance,” offers businesses with a main debt of up to 1 million euros the option of settling their debts in monthly payments over 10 years without any turnover criteria. However, enterprises that choose to pay their dues in fewer installments will enjoy a greater discount on their penalties and interest to be paid.

Those that pay at least twice their regular monthly tranche in one go will get an equal exemption from total penalties and interest. Therefore a 100 percent lump sum payment up front relieves them of all interest and penalties. Companies that pay their debts in two to four tranches will get a discount of 95 percent on their interest and penalties. Payment in five to 12 tranches will lead to an 85 percent discount, and those that pay in 13 to 24 installments will be entitled to an 80 percent discount.

For individual debtors, the changes concern a drop in the interest rate from 5 to 3 percent, and a reduction of the minimum monthly tranche from 30 to 20 euros. Moreover, individuals joining the new plan will have their frozen bank accounts unblocked by the tax authorities, and, provided they stick to their payment plans, all forced measures such as confiscations will be stopped for them. People who are already in the old 120-tranche scheme are allowed to switch to the new one.