The tax discount incentive for enterprises suffering as a result of the coronavirus failed to prop up the state budget, which showed a decline in revenues of between 30 and 35 percent. However, as one Finance Ministry official points out, had the government not offered that discount, the revenue losses would have been much greater.
Provisional data at the ministry reveal a loss of revenues amounting to €1.15 billion euros, and if the tax reduction for March is added the losses come to €1.4-1.5 billion.
The drop in consumption has led to a decrease in value-added tax revenues, a course that will hopefully change with the partial lifting of the restrictions on movement and the gradual reopening of stores. Even so, ministry officials estimate that store turnover will be reduced, given that they will still have to operate under certain restrictions. Restaurants, bars and clubs will be especially affected.
Although the tourism sector remains an unknown quantity for this year, VAT losses are estimated at €4-5 billion, or about 25 percent. For 2020, the budget had provided for VAT takings of €18.2 billion, so the latest scenarios project revenues of €13-14 billion at best. If one adds the plans for further tax breaks for businesses affected by the pandemic, it is clear the gap in revenues cannot be bridged.
The ministry is working toward a new extraordinary arrangement to make it easier for enterprises to pay off their tax dues that will accumulate from September, taking into consideration the four-month tax and social security contribution suspension till August 31. Kathimerini understands the extraordinary arrangement will provide for 10 monthly installments with a low interest rate and will only concern the payment of taxes and debts created exclusively by the coronavirus crisis.
It remains unknown what will happen with income tax declarations – i.e. whether the deadline for submission will still be June 30 or if there will be an extension, in which case income tax payments will also be delayed. The ministry is considering replacing the three bimonthly tranches with eight monthly ones. So far, 191,449 declarations have been submitted, against 605,449 at the same time last year.