Following the Government meeting today (Tuesday), the Minister for Finance, Paschal Donohoe, T.D., has announced the following set of measures to provide support to businesses as they re-open and resume normal trading:
- The extension of the Employment Wage Subsidy Scheme to 31 December 2021;
- The extension and enhancement of the Covid Restrictions Support Scheme to provide additional support to businesses upon re-opening and to give certainty to businesses still directly affected by public health restrictions;
- A new additional business support scheme (Business Resumption Support Scheme or BRSS) for businesses with reduced turnover as a result of public health restrictions to be implemented in September 2021;
- The extension of the tax debt warehousing scheme to allow the period where liabilities arising can be “warehoused” to be extended to the end of 2021 for all eligible taxpayers, with an interest free period during 2022, and to include overpayments of EWSS in the scheme;
- The Government agreed to the drafting of legislation to provide for these measures.
These measures will provide certainty to businesses as public health restrictions are lifted and allow them to plan for the future as they re-open and resume normal trading.
Employment Wage Subsidy Scheme:
The EWSS continues to represent a substantial and key part of the Government response to the Covid-19 pandemic, supporting businesses, encouraging employment and helping to maintain the link between employers and employees.
As at the week ending 27 May, a total of €3.835 billion has been spent under the scheme of which €3.293 billion relates to direct subsidies and €0.542 billion relates to Employers’ PRSI foregone.
For Q3, the Government has decided to broadly maintain the status quo for EWSS, including the enhanced rates of support and the reduced rate of Employers’ PRSI with a modification to widen eligibility.
For Q4, the Government has approved the extension of the EWSS, however, it is considered too early yet to prescribe the precise operational parameters of the scheme that should apply for that quarter and decisions in that regard would be taken closer to the time around the end of August / early September.
Covid Restrictions Support Scheme:
The Covid Restriction Support Scheme (CRSS) which has been an extremely successful intervention by the Government to provide support to businesses whose customers are prevented from accessing their premises because of Public Health restrictions.
The CRSS in its current form will be continued to the end of 2021 for the reducing number of businesses that are still directly affected by public health restrictions that may remain in place. The qualification criteria and payment rates will remain unchanged.
The Government will also provide for an enhanced restart week payment – a single payment of three double week to businesses upon re-opening (subject to a maximum of €30,000). This will provide additional support to the businesses in restocking and making the necessary preparations to welcome their customers back in a safe manner.
This enhanced restart payment is intended to incentivise them to exit the scheme and return to trading as early as possible.
Business Resumption Support Scheme:
As the economy re-opens, a further scheme is being introduced for vulnerable but viable businesses, particularly in sectors that were significantly impacted throughout the pandemic, even during periods when restrictions were eased.
Businesses whose turnover is reduced by 75% in the reference period (1 September 2020 to 31 August 2021) compared with 2019 will be eligible. The scheme will not be restricted by location, rate paying or physical premises. It is expected that there will be a limited number of such businesses and recognised that it is important that such businesses are supported.
Businesses who previously availed of other schemes such as SBASC and the Tourism Business Continuity Scheme for example as well as CRSS will be eligible to apply provided they meet the qualifying criteria.
The BRSS will be administered by Revenue and will operate in a similar way to CRSS.
Tax Warehousing:
The tax debt warehousing scheme has provided approximately €2.3 billion of liquidity to Irish businesses at a time that they need it most. The scheme is now being extended to the end of this year, with no interest during 2022 and interest at a reduced rate of 3% thereafter.
Speaking on the overall package of measures, the Minister said
“The Government and I have committed on multiple occasions that there will be no “cliff edge” to supports for business. We are now taking decisive actions to provide businesses with clarity and certainty on their situation as they reopen, as far as it is possible to do so with the uncertain situation in relation to public health.”
ENDS
Notes for Editors
Extension of EWSS to 31 December 2021
The EWSS continues to represent a substantial and key part of the Government response to the Covid-19 pandemic, supporting businesses, encouraging employment and helping to maintain the link between employers and employees.
As at the week ending 27 May, a total of €3.835 billion has been expended under the scheme of which €3.293 billion relates to direct subsidies and €0.542 billion relates to Employers’ PRSI foregone.
For Q3, the Government has decided to broadly maintain the status quo for EWSS, including the enhanced rates of support and the reduced rate of Employers’ PRSI.
There is a modification to the conditionality for entry to the scheme. The current threshold of a 30% reduction in turnover is retained but the reference period of assessment is being broadened out so that, for the purposes of determining eligibility for the scheme, a firm’s turnover in the full year 2021 will be compared against its turnover in the full year 2019.
This change acknowledges the frail nature of firms in certain sectors as they emerge from the impact of public health restrictions; it aims to ensure that such firms can continue to benefit from the EWSS and are not precluded from the scheme because their business picks up in Q3. The full year reference period will enable these firms to continue availing of the EWSS as they begin to recovery and maintaining the important link with their employees.
For Q3, there are no changes for qualification for EWSS for the childcare sector.
The Government has approved the extension of the EWSS for Q4, however, it is considered too early yet to prescribe the precise operational parameters of the scheme that should apply for that quarter.
Decisions in that regard will be taken closer to the time around the end of August / early September, with the benefit of more up-to-date information on a number of variables (overall epidemiological situation, progress made in reopening all sectors of the economy, the vaccine efficacy, as well as the operation of the EWSS during the early parts of Q3).
It is important that, as the recovery gains further momentum, supports are further recalibrated in the longer-term interests of firms that are in receipt of those supports and in the interests of the wider body of taxpayers. As such, for Q4 consideration will be given to a future change to EWSS which will require an employer contribution towards employee wages.
This possible change is being signalled now to provide sufficient notices to business of this potential change for Q4.
The EWSS is a demand led scheme and the cost is driven by the number of employers and employees supported by the scheme.
The estimated cost of the extension of EWSS for Q3 is in the order of €1.4 billion, which includes the direct subsidy payments and the reduced rate of Employers’ PRSI relief. This cost is based on an average of around 300,000 employees being supported by the scheme each month.
No decisions have been taken regarding the future of the scheme beyond Quarter 4, 2021.
Continuation of CRSS & Enhanced Restart payments for CRSS
Continuation of CRSS
The CRSS is a targeted support for businesses directly impacted by restrictions introduced by the Government under public health regulations to combat the effects of the Covid-19 pandemic with the result that they have to temporarily close or significantly restrict access to their premises.
The CRSS will be continued to the end of 2021 for those businesses that are still directly affected by public health restrictions that may remain in place. The qualification criteria will remain unchanged, and will apply to companies, self-employed individuals and partnerships who carry on a trade or trading activities, the profits from which are chargeable to tax under Case I of Schedule D, from a business premises located in a region subject to restrictions introduced in line with the Living with Covid-19 Plan.
The CRSS is administered by Revenue and takes the form of an Advance Credit for Trading Expenses. The amount paid is 10% of the average weekly turnover of the business in 2019 up to €20,000, plus 5% on turnover over €20,000, subject to a maximum weekly payment of €5,000.
Enhanced Restart payments for CRSS
An enhanced Restart Payment is being introduced for businesses availing of CRSS who can re-open from 2 June, they will be eligible to claim an enhanced restart payment of three weeks at double rate of payment paid in one ‘restart week payment’ as they exit the scheme. The statutory maximum payment will be increased from €5,000 per week to €10,000 per week for this restart payment. This means that businesses opening from 2 June will receive a maximum of €30,000 restart payment calculated with reference to the average weekly turnover of the business in 2019.
This measure will provide certainty to businesses as they re-open and incentivise them to exit the scheme and return to trading as early as possible.
Business Resumption Support Scheme (new additional business support scheme)
As the economy seeks to re-open, a new broad scheme will be introduced aimed at businesses which have had reduced turnover as a result of public health restrictions. Similar to CRSS it will apply to businesses registered with Revenue, whose profits are chargeable to tax under Case I of Schedule D, and their turnover is reduced by 75% in the reference period ( 1 September 2020 to 31 August 2021) compared with 2019. Qualifying businesses will be able to apply to Revenue for a cash payment, representing an advance credit for trading expenses that are deductible for income and/or corporation tax purposes.
Payments will be calculated on the basis of 3 weeks at 10% of the first €1m in turnover and 5% thereafter, based on average VAT exclusive turnover for 2019, and will be subject to a maximum weekly payment of €5,000. Similar conditionality to CRSS and EWSS will apply including tax clearance and payment will be conditional on the intention to trade. The scheme will be implemented in September 2021.
Extension of tax debt warehousing scheme
Extension of Period 1 of the tax debt warehousing scheme to end-2021
The Financial Measures (Covid-19) (No. 2) Act 2020 legislated for “warehousing” of PAYE (Employer) liabilities beginning with the February 2020 income tax month. Similar measures were introduced in Finance Act 2020 to provide for warehousing of certain self-assessed income tax liabilities. Over 80,000 businesses have been able to “warehouse” certain tax liabilities which accrued during the Covid-19 pandemic but which the businesses were unable to pay. The liabilities which are eligible for warehousing are VAT, PAYE (Employer) liabilities, including income tax, PRSI, USC, Income Tax for self-assessed individuals and excess payments under the Temporary Wage Subsidy Scheme (TWSS). The total amount warehoused to date is over €2.3 billion.
The warehousing scheme has three phases:
Period 1, the “Covid-19 restricted trading phase” – liabilities accrued during this period (“Covid-19 liabilities”) can be warehoused;
Period 2, the “zero interest phase” – Covid-19 liabilities from Period 1 attract 0% interest for a further 12 months; and
Period 3, the “reduced interest phase” – Covid-19 liabilities will be put into a “phased payment agreement” and are subject to 3% interest p.a. until paid in full.
Period 1 is now being extended to 31 December 2021. Period 2 interest free will last throughout 2022 and period 3 will commence on 1 January 2023.