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How World Is Addressing Economic Concerns From Coronavirus

How World Is Addressing Economic Concerns From Coronavirus
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By Monday, 23 March 2020 08:05 AM Current | Bio | Archive

Never in the history of our lifetime has the world faced an issue such as COVID-19.

The ensuing lockdowns and shutdowns in country after country have triggered a massive worldwide economic impact on a scale never seen previously, necessitating government intervention on a scale also never seen before, simply in order to prevent a collapse of world order.

In this article, I summarize some of the major steps taken by governments around the world as of today’s date recognizing that while the U.S. leads the field in this regard with its $850 billion stimulus package, it cannot shoulder this burden alone.

What follows is an overview of important updates regarding what several countries are doing to thwart economic casualties:

In Australia, a 607 million Australian dollar ($351.5 million) stimulus package has been announced to be focused on households and small businesses. Payroll tax payments can now be deferred until July 21, 2020 and small businesses will receive a grant of 17,500 Australian dollars. There are also a number of other notable measures allowing any business with a cashflow problem to coordinate with the Australian Tax Office for deferred payments and there is also relief from late GST payments, penalties and interest.

In Brazil, the state-owned bank Caixa will reduce interest rates and extend deadlines for debt payments for 60 days. This measure may be extended for 120 days, if required. In addition, Caixa will reduce by 45% the lower rates that already apply for small and medium sized companies. In order to give more working capital to companies, the government has suspended for three months the requirement for companies to pay into the Severance Pay Fund (FGTS). Furthermore, an anti-unemployment program is being formulated to avoid layoffs during this pandemic period.

Canada has been less specific to date but has announced a number of measures notably a 7.1 billion Canadian dollar (CAD) ($4.8 billion) package providing loans to businesses with cash flow difficulties. In addition, provinces are implementing additional relief measures. For example, Ottawa has announced a 10 billion CAD business credit line for qualifying businesses.

China, hard hit by the epidemic, has introduced a variety of measures that include a reduction of VAT from 3% to 1%, and temporary reliefs from social security contributions for the period up to June 2020. In addition, China is deferring payments by the employer into the Housing Provident Fund without impacting the employees’ entitlements.

In France, a 45 billion euro ($48 billion) economic aid package aimed at preventing any business from going under as a result of COVID-19 has been introduced that also includes loan guarantees by the government, delays to tax and social security payments and suspended rents and utility bills for small firms.

In Germany, a 550 billion euro ($589.8 billion) stimulus package is pending which will include tax concessions for businesses.

Italy, the hardest hit country so far, has announced a 25 billion euro ($26.8 billion) package that includes a moratorium on debt payments, various employment subsidies, and tax credits for companies whose revenues decline by 25% or more as well as an extension of tax deadlines.

The Netherlands has announced a package that includes a government guarantee for loans to SMEs, carry-back of a loss this year against last year’s profits, suspension of late tax payment penalties as well as a variety of other measures.

South Korea has introduced an 11.7 trillion Korean won ($9.2 trillion) emergency funding package to assist SMEs facing difficulties paying wages as well as a reduction in VAT rates for small businesses together with a slew of other measures.

In Spain, SMEs can defer their tax payments by 6 months without interest and suspend VAT filings from March 13 to May 30, 2020.

The U.K. has announced a 30 billion British pound ($34.5 billion) package including tax breaks and sick pay guarantees for small businesses, the setup of a hardship fund, 5 billion British pounds ($5.7 billion) of emergency cash for the NHS together with arrangements for deferral of tax payments by affected businesses.

As a trusted resource to U.S. companies navigating the global expansion landscape, we are hopeful that these and other measures to come will stem the financial difficulties associated with COVID-19 and bring relief to beleaguered businesses in these volatile times.

Shan Nair is the president of Nucleus, a one-stop global expansion solution for businesses and a consultant on international expansion.

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Never in the history of our lifetime has the world faced an issue such as COVID-19.
world, addressing, economic, concerns, coronavirus
Monday, 23 March 2020 08:05 AM
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