Senior ruling party officials reached a broad agreement Thursday on a package of tax relief measures to mitigate the economic impact of the coronavirus pandemic.
The agreement was reached at a meeting of executives from the Liberal Democratic Party’s Research Commission on the Tax System.
Small companies facing a drop of 50 percent or more in annual sales will be exempt from fixed property tax payments. The tax will be halved for those seeing drops between 30 percent and 50 percent. Companies whose sales fall 20 percent or more will be allowed to defer the payments for a year.
In other relief, mortgage-linked tax breaks that were set to expire at the end of the year will be extended for another year, while a tax break on automobiles will be extended for six months to the end of March 2021.
As for event cancellations and postponements linked to the pandemic, people will be eligible for income tax deductions if their tickets are not refunded.
The corporate tax refund program for small money-losing companies will meanwhile be expanded to include midsize firms. The panel is also considering deducting corporate taxes for small companies that introduce teleworking.
The government is aiming to help virus-hit firms have enough cash in hand to stay in business by temporarily exempting them from paying any sort of tax, including the corporate and consumption taxes as well as such social security premiums as pension and health insurance fees, sources close to the matter said.
Currently, companies that have difficulty staying afloat can, in principle, seek a one-year grace period on their taxes, as long as they provide collateral. But the new system will exempt such requirements, according to the sources.
The plan is expected to be part of the government’s economic support package to offset the fallout from the pandemic and could be finalized on Tuesday.