It has to be said that these measures have been imposed by the current exceptional circumstances and the scale of the feared health, social, economic and financial effects of the crisis affecting the entire planet.
In addition to reiterating the imperative need to maintain, and even step up, efforts to ensure compliance with individual and collective hygiene rules, the French President announced the creation of a Economic and social resilience program, to strengthen the healthcare system and support households, businesses and their employees in times of emergency.
As far as businesses and their employees are concerned, the third pillar of the program announced by the President is geared towards safeguarding macroeconomic and financial stability to support the private sector and maintain jobs, through a liquidity injection program combined with tax and customs measures.
A priori, it will mainly benefit the «most affected businesses», in this case transport, tourism, catering, hotels, education, culture and the press, and could be extended to agriculture, construction and trade, according to the Head of State.
Pending the enactment of concrete implementation measures, this third axis of the program, which is economic and financial in nature, will focus on :
- The payment of domestic debt resulting from contracts already delivered in the amount of 302 billion FCFA. Beneficiaries should be determined on the basis of payment rules and priorities contributing to the objective of economic stabilitý to be defined and the commitment of said beneficiaries to maintain their employees.
- The injection of 100 billion FCFA in direct support of the sectors of the economy most heavily affected by the crisis, and the setting up of a financing mechanism for affected companies of 200 billion FCFA, according to a simplified procedure.
- Reimbursement of VAT credits within shorter timeframes, to ease companies' cash flow. In our view, this measure could prove difficult to implement, given the staff rotation system in place at the General Directorate of Taxes and Domains and the large number of files that have been in the system for years.
- Remissions and suspensions of payment of tax and social security deductions applicable to wages (VRS, social security contributions) for companies that undertake to keep their workers in business for the duration of the crisis, or to pay more than 70% of the wages of employees laid off during this period. For this measure to be more effective, it should be applied to all companies, given that the crisis does not and will not spare any sector.
- Deferred payment of taxes and duties until July 15, 2020 for small and medium-sized businesses with sales of 100 million FCFA or less, and for businesses operating in the sectors most affected by the pandemic, notably tourism, catering, hotels, transport, education, culture and the press, according to terms to be set by the authorities.
According to the Minister of Finance and Budget, this support would consist, for companies in the above-mentioned sectors, in deferring the payment of taxes and spreading their payment over a period to be agreed.
- Extension from 12 to 24 months of the deadline for payment of VAT on domestic purchases and imports as part of an approved investment program. For certain investments and in certain sectors, the 24-month deadline would be unrealistic, in our view, given the uncertainties of the immediate post-crisis period.
- Partial remission of the tax debt owed by companies and individuals at December 31, 2019, for a total of FCFA 200 billion.
- Suspension of tax and customs debt collection for companies most affected by COVID-19.
In return, beneficiary companies will have to undertake to maintain their employees' wages or pay more than 70% of the wages of employees on short-time working.
- The deductibility of donations in support of FORCE COVID-19 paid into the account opened with the French Treasury. It will be necessary to specify whether or not the 0.2/00 limitation provided for by the French General Tax Code is applicable in this case, for the security of donor taxpayers.
The accompanying measures announced by the Head of State are most welcome, and will undoubtedly bring relief to businesses in all sectors.
It's already clear at this stage that the crisis will impact all sectors and all companies, albeit to varying degrees. This being the case, we should already be thinking about and anticipating measures to emerge from the crisis and revive economies once the situation has been brought under control and recovered.
