On March 19, the Executive announced an economic emergency plan in response to the spread of COVID-19. The measures include postponing tax payments, and making direct subsidies to inject resources into employment and shore up the Health budget.
One of the government’s main objectives is to protect citizens’ income. To this end, it plans to send Congress a bill known as ‘Covid-19 for the protection of labor income’, to guarantee economic income for citizens who have to stay at home due to the emergency (and who are unable to work remotely). There will also be an urgent request to examine the bill for the protection of employment, which allows working hours to be reduced by compensating the decrease in remuneration using resources from the solidarity unemployment fund. The idea is also to launch a Covid-19 Bond for people lacking any formal work and create a solidarity fund to help mitigate the effects of the crisis.
On the other hand, the Executive announced that provisional monthly corporate income tax payment will be suspended for the next 3 months, to give companies greater breathing room by allowing them greater cash flow. Meanwhile, VAT payments will be postponed for the next 3 months for companies with sales under a given threshold, and such payments may be made over 12 monthly installments at 0% interest rate. In addition, some SMEs will be allowed to delay the payment of income taxes.
In addition, relief measures are being planned in relation to SME tax debts and people with lower incomes, and it has also been announced that all expenses incurred by companies which have to deal with this health contingency may be tax deductible.
Finally, the Executive stated that it will accelerate payments to state suppliers and is planning a new BancoEstado capitalization for US$ 500 million to provide individuals and SMEs with financing, among other measures.