Govt decides to allow businesses to re-borrow of VAT

The government on Friday has decided to allow the businesspersons to re-borrow the Value-Added Tax to businesses in early 2020.

It decided to prepare a proposal for Parliament on the re-lending, said a government press release.

The government in its negotiation also heard a report on the situation in the restaurant sector and held a preliminary discussion on compensation for the losses incurred due to restaurant closures.

In the case of restaurants, preparations will continue with a model in which support will be provided to compensate for fixed costs and to enable the re-hiring of personnel. The Government will submit a bill on the model to Parliament as soon as possible.

According to the plan, VAT paid in the earlier part of the year could be reimbursed to businesses.

The condition is that the reimbursed and deferred VAT would be paid back to the State over a period of two years. In other words, it is a loan to businesses in which they can borrow back the value-added tax they have already paid.

In addition, the government decided on preparations for an arrangement through which a zero tax rate would be applied to the procurement by health and social service sector operators of personal protective equipment produced in Finland and the EU.

The government also discussed the development of business subsidies granted by Business Finland and the Centres for Economic Development, Transport and the Environment. The Government decided that these subsidies would be further developed to better respond to the financial difficulties faced by businesses due to the COVID-19 epidemic.

The objective is that the subsidies granted could be targeted more towards businesses’ fixed costs as part of development activities. However, the development of business activities will remain one of the criteria for granting the subsidies.