The advent of the “Coronavirus” within the Italian territory took the Government off guard, now called to adopt a series of emergency measures concerning both the social and administrative sector but also the fiscal and financial sector.
The first type (of measures) has already entered into force through the Legislative Decree of February 23, 2020, n.6 while for the latter the text is expected soon.
The hope is that the italian Government has understood the extent of the problem, the seriousness of which is not so much related to the virus mortality but to the macro (and micro) economic consequences that must affect businesses and individuals belonging to the “red areas”.
At this juncture, the Chinese government is an example, which, aware of the consequences mentioned, has issued a series of financial and fiscal measures, aimed at supporting subjects between natural and legal persons.
On 23 February 2020 a Legislative Decree was issued which provides, by way of example, a series of restrictive measures for the freedom of movement and economic freedom of individuals and legal entities belonging to the areas “in which is a case not attributable to a person from an area already affected by the contagion of the aforementioned virus “.
The intervention of the executive, therefore, can be read in a preventive and precautionary key being, the spread of the virus, harmful both for the greeting of people but also (and above all) for the economy. According to the writer, the latter aspect is even more serious than mortality (now described as low); in fact, the closure of numerous commercial establishments and the restriction in the freedom of movement of citizens can only weigh on the productivity of a region (among other things one of the most productive, that is, Lombardy) and of the entire country. For these reasons, the Government is called to intervene to protect the Taxpayers and facilitate them in the fulfillment of tax debts and in the exercise of their economic activity.
Examples may be the measures envisaged by the Chinese Ministry of Finance, in connection with the People’s Bank of China (PBoC), the China Banking Regulatory Commission (CBRC) and the China Securities Regulatory Commission (CSRC), aimed at supporting “the actors”, both businesses and individuals, active in the “fight” against the virus and involved in the consequences of these.
- The intervention of the chinese Government: a possible example for Italy?
A first financial intervention can be seen in the huge injection of liquidity into the Chinese economy – about 1,200 billion (equivalent to 156 billion euros) of chinese renminbi (RMB) through the so-called “reverse repo” aimed at maintaining “a reasonable and abundant liquidity” – which can be used, first and foremost, to finance businesses and, secondly, to maintain stability within the currency markets.
As regards loans, the Government has committed itself to guaranteeing and making less onerous the loans granted to companies “connected to the supply of sanitary and medical material or that guarantee epidemic prevention, monitoring and control services, including those relating to research and tests for related vaccines ” both large and small dimension (so-called “micro-enterprises“). The ratio for this intervention lies in the increase in the productivity of individuals operating in the sectors of greatest utility for the containment of Coronavirus. Specifically, the Ministry of Finance, with retroactive effect on January 1, 2020, will support, through allocated resources in a special fund, the loans granted by banks to companies, thus reducing the value of the related interest rate (the maximum limit imposed is equivalent to 1.6%).
Turning now to tax measures, there is a strong commitment from the chinese Executive also in this respect.
In particular, there is the possibility – specifically for “companies that are directly or indirectly involved in research, in the production of pharmaceutical products, anti-epidemic medical devices, personal protection equipment and any other product related to prevention, monitoring and control of the epidemic ” and for natural persons residing in the “red areas” exposed to a high bacteriological risk – respectively:
1) to deduct from the tax base the costs incurred for carrying out their public utility activities for the context for which, moreover, it is possible to request the full refund of the value added tax (henceforth “VAT”);
2) to benefit from the exemption from payment of any tax or duty regarding “drugs, vaccines and medical devices relevant to the epidemic“;
3) to benefit from the exemption from the payment of VAT on the turnover generated in the performance of activities related to the “shipment of supplies pertinent to control, the supply of public transport connected to procurement and storage, services to the consumer and those relating to the courier expressed“;
4) to benefit from the deferral in the payment of welfare and social security contributions of workers employed in the context of the business activity;
5) to deduct entirely, both for businesses and individuals, from the tax base the value of donations, in money or in kind, made through competent bodies. Furthermore, donations of goods will be exempt from VAT and;
6) to benefit from the total and temporary exemption from the payment of personal income tax as regards only those persons who carry out “direct activities of prevention and control of infestation“.
From the review of the measures introduced in the chinese legal system, it emerges that awareness of the problem is strong with regard to its economic consequences that should not be underestimated. The intervention aims to maximize the efficiency of companies operating in currently “sensitive” sectors by reducing costs (costs of capital goods, materials, tax, etc.) and exemption from taxes aimed at leaving, thus, greater breathing space for those directly concerned.
- The fiscal and financial intervention of the italian Government: what to expect
Turning to the Italian tax system, it’s important to highlight the relevance and usefulness of a rule to be called into question regarding the next intervention of the executive.
This is the art. 9 of the Law of 27 July 2000, n. 212 (so-called “Statuto dei Diritti del Contribuente“) which governs the institute of the “remissione in termini“. In particular, paragraph 1 of said regulation provides that:
“The Minister of Finance, by decree to be published in the Official Gazette, puts the taxpayers concerned “back in terms”, in the event that the timely fulfillment of tax obligations is prevented by force majeure. If the remittance in terms concerns the payment of taxes, the decree is adopted by the Minister of Finance in consultation with the Minister of the Treasury, the Budget and Economic Planning “.
In other words, in the event that the Taxpayer does not have the possibility, due to reasons not attributable to him, to promptly meet his tax obligations, then the Minister of Finance, in consultation with the Minister of the Treasury, will have the faculty to suspend these obligations, extending the tax terms within which to make the payments. In the case in question, the condition that calls for the intervention of the Executive, i.e. the “cause of force majeure“, can be said to be certainly satisfied as the spread of the Coronavirus limits the impossibility of fulfillment.
On the basis of this rule, therefore, the object of the future intervention could concern:
1) the suspension of the payment of taxes and duties (general tax obligations) until a date to be allocated;
2) the suspension in the payment of utilities such as those relating to electricity, gas, etc.;
3) the possibility for companies to access loans at subsidized rates and/or draw on the Guarantee Fund for PMI (small and medium-sized enterprises);
4) the suspension of payment of the rated mortgage loans and;
5) the activation of tools aimed at supporting the income of employees of companies such as ordinary layoffs.
The resources to carry out these interventions will be obtained from the fund set up for the so-called “Receipt lottery” given that the ticket will begin in July 2020.
The above description has tried to shed light on the economic consequences that the spread of a virus, regardless of its mortality, can reserve for the entire world system.
The chinese system becomes an excellent example for other states, such as Italy itself, which should find themselves in similar conditions where, in addition to public health, it is the economic system itself in danger.
The attention of the “Dragon” focuses on both private individuals and businesses, the central engine in containing the virus.
One cannot help but hope for a similar move by the Italian Executive which, although it does not fall into a “serious” situation like the Chinese one, must intervene as a precaution and preventively, as it has done well in the health and administrative sphere, also under the financial and tax profile.
Sources: the quotes reported in the contribution are taken from the official document in which the Italian Trade Agency (abbreviation “ITA”) summarized in Italian the emergency measures introduced within the Chinese system.
Here are some useful links (mentioned in the same document above) that refer to the official communications of the Chinese institutions: