Corona-Pandemic: Immediate Taxation, Legal Measures and Financial Aid in Brazil, Chile, Colombia, Uruguay
Since the coronavirus spread to South America, countries have introduced immediate measures to support SMEs. Brazil and Chile have announced support for individuals and SMEs. The Colombian President has used additional powers to implement aid measures and Uruguay is taking steps to ensure liquidity. Our experts summarise the most important points.
On 20 March 2020, the Federal Senate approved the Legislative Decree Project (PDL 88/2020) to address the state of public emergency due to the global coronavirus pandemic. With this approval, the decree comes into effect immediately.
The Brazilian government has also announced action to reduce the economic effects and to safeguard jobs and the payment of salaries. These include:
- Aid for the most vulnerable within population, e.g. bringing forward the date payment of a 13th payment to retirees and pensioners; reinforcement of the “Bolsa Familia” federal social programme by allocating resources to enable the inclusion of more than 1 million new beneficiaries; emergency financial aid for around 20 million people in informal, unemployed and low-income worker categories registered in the CadUnico system to meet essential needs during next 3 months.
- Deferral of the FGTS (Severance Pay Indemnity Fund – a social charge) payment for 3 months.
- Deferral of the federal portion of corporate tax for the “Simples Nacional” tax regime (small business regime) for 3 months.
- Simplification of the requirements for obtaining credit and dispensing with documentation (CND) for credit renegotiation
- Measures to simplify employer / employee relationships, such as home office, bringing forward vacations, collective vacations, compensatory time systems, proportional reduction of wages and working hours.
ECOVIS BRAZIL, with its team of specialists, is able to assist companies in this challenging phase. Our technical capabilities allow us to assist clients on any urgent occasion during this pandemic period.
The Emergency Economic Plan was presented on 21 March 2020 to protect jobs and businesses in Chile. A major focus of the plan is the support of individuals and SMEs through tax payment deferrals and other measures. The main measures include:
- Suspension of provisional monthly payments (PPM) of corporate income tax for the next 3 months. The postponement of the payment of VAT for the next 3 months for all companies with sales under 350,000 UF1 during 2019, which will also allow this payment in 6 or 12 monthly instalments at zero percent real interest rate, depending on their size.
- Bringing forward the date of payment of income tax return for SMEs. SMEs will receive their refund in April 2020.
- Postponement until July 2020 of income tax payments for SMEs, based on what they report in the next income tax filing in April.
- Postponement of property tax payments for April for companies with sales under 350,000 UF and for people with properties with a tax appraisal under CLP 133 million (Chilean pesos). The postponed property tax will be paid in three instalments, together with the following three contribution instalments, with a real interest rate of 0%.
- Temporary reduction of stamp duty to 0% as of April for all credit operations during the next 6 months.
- Relief measures for dealing with tax debts with the General Treasury of the Republic (Tesorería General de la República, TGR) focused on SMEs and individuals with lower incomes: flexibility to enter into tax debt payment agreements with the TGR, without interest or fines as of April 2020.
- All company expenses associated with dealing with the health contingency will be accepted as tax expenditure.
Ecovis Chile is devoting itself to supporting clients with all new measures during the pandemic period. With all our experience, we are confident of helping clients get through the difficulties smoothly.
On 17 March 2020, the central government declared an economic, social and ecological emergency throughout the national territory with Decree 417. This decree allows and empowers the President to issue legal decrees without all of the procedural requirements before the Senate and the Chamber.
- Decree 434 of 2020: “Through which the terms for the renewal of commercial registration are extended until 3 July 2020” – This obligation was foreseen for 31 March 2020.
- Decree 435 of 2020: “Through which the deadlines for the filing and payment of some national taxes are extended.”
- International flights into the country are prohibited from 23 March 2020.
- Some local entities (Municipalities, Governors) are allowed to postpone the payment and filing of local taxes such as ICA (Industry and Commerce) and property taxes. This measure was initially announced in a few regions and is expected to be extended to the entire country.
Ecovis Colombia is committed to its clients and with our employees we have developed the ideal technological conditions to continue providing the support that companies require in adjusting to local regulations, minimising risks and ensuring that companies can meet their daily obligations. We are monitoring this situation and will be reporting the measures that are emerging and that may have an impact on companies in general.
On 20 March 2020, the Government announced a series of economic measures especially designed for businesses. The aim of these measures is to preserve the chain of payments by providing liquidity. These measures are:
- Credit facilities with flexible conditions
The State Bank (BROU) will provide credit facilities with flexible conditions for a total amount of up to 125 million dollars. These credit facilities will be granted firstly to SMEs.
- Loans for SMEs
The credit guarantee fund of the ANDE (National Development Agency) will be increased so financial institutions can grant credits for up to 2.5 billion US Dollars. A specific credit line will be issued for those businesses which have been affected directly by these circumstances. Also, all direct credit beneficiaries will be granted an extension of the due date until next month.
The Central Bank of Uruguay has authorised financial institutions to extend the due dates for credits given to non-financial entities for 180 days.
- Extension of tax and social security due dates
Tax authorities have extended the payment of VAT for February and March 2020 for those businesses who pay minimum VAT (“Literal E” businesses). The payment will be made in six consecutive and equal fees, with no interest. Also, due dates for the coming days will be extended to 27 March 2020.
Social security due dates will also be extended for partnerships with up to 10 employees (only the industry and commerce sector), sole proprietorships or monotax business. The payment of employers’ contributions for March and April 2020 will be made in six consecutive and equal payments starting in June 2020 and only 60% will be paid. The remaining 40% will be paid by the state.
- Extension of special unemployment insurance to all sectors
On 18 March 2020, the government released a decree which adds increased flexibility and extends unemployment insurance to specific sectors such as hotels, restaurants, bars, cultural and events services and travel agencies. On 19 March, the government stated that this special unemployment insurance is extended to all sectors. With this decree, the employer can send workers to unemployment insurance for specific days or even hours, the insurance company covers the salary for the agreed period of time during Pandemic. The Social Security Authority (BPS) will pay 25% of the salary to those workers.
Ecovis Uruguay keeps delivering the latest policies and provides tailored solutions to help clients survive and thrive this Pandemic.
1UF: “Unidad de Fomento” is an indexation unit adjusted by monthly inflation, widely used in Chilean business 1 UF = 28.900 CLP =USD 33,00.