COVID-19 Tax Credit & Deferral

The Tax Credit and Tax Deferral Employment Retention Programme is designed for businesses with an annual turnover of $3 million or more and an overall staff complement of 25 or more, total employees. 

 

ELIGIBILITY REQUIREMENTS:

To be eligible, enterprises would be required to:

  • Be in good standing in VAT or BL payments as at February 2020 (not including BL due for current 2020 cycle);
  • Have annual sales of $3 million or more (businesses under $3 million can access support through the Small Business Continuity Loan program)
  • Have an overall staff complement of 25 or more (line staff, executive & management). Please note- The value of the tax credit/tax deferral can be no greater than the payment to the non-executive staff complement which can include lower level mangers & supervisors. 
  • Commit to retaining 80 percent of staff levels as at February 29th  2020 levels, though to October, 31st  2020;
  • Make application on the prescribed form for concession
  • Commit to the utilization of tax credits solely for purposes of covering non- executive payroll. Executive payroll will be the payroll of persons who hold positions of a Proprietor, President, Vice President, Director or similar Job Title level. 

This concession is not available to businesses in the following sectors:

  • Hotel & Resorts (which are closed during this phase)
  • Retail or Wholesale grocery food establishments
  • Regulated Telecommunications Sector
  • Regulated Financial & Insurance business
  • Gaming

PROVIDE PAYROLL COST:

This will determine the amount for Approved Tax Relief (ATR) for the months April, May & June 2020, the qualifying period (QP). To accomplish this the taxpayer must provide:

  • A copy of their non- management payrolls for the month of February, 2020.
  • A copy of banking information in support of their payroll cost.
  • A copy of NIB returns for that month.
  • A payroll showing the breakdown by employee categories.
  • Evidence that the number of employees is equal to or > 25
  • A declaration that they will retain 80% of the workforce through to 31st October, 2020. (Declaration included with the application form)

If the payroll cost is greater than $200K in any given month within the qualifying period, the ATR provided will not exceed $200K for that month, to a maximum of $600K over the qualifying period.

If the payroll cost is less than $200K per month within the qualifying period, the approved tax relief will be equivalent to the payroll cost.

 

QUALIFYING BUSINESSES WILL BE ALLOWED TO:

  • Apply the full amount of the ATR firstly to the outstanding business license fees where applicable. Where the outstanding business license is greater than the ATR, fifty percent (50%) of the approved amount will be in the form of a non-reimbursable credit applied to the debt and the remaining fifty percent (50%) as a deferred tax that would be payable starting January, 2021.
  • Use the approve tax relief on business license fees owed regardless of the period in which the debt arose.
  • Use any excess ATR after accounting for outstanding business license where applicable as a non-reimbursable or tax deferral credit in the VAT owed.
  • Where there is no business license fees outstanding, the full amount of the approve tax relief will be applied to the VAT outstanding balance. Fifty percent (50%) in the form of a non-reimbursable credit applied and the remaining fifty percent (50%) as a deferred tax liability that would be payable starting January, 2021.
  • Use any unapplied remaining balance of the non-reimbursable credit, to offset any future VAT liability that may materialize in the qualifying period cumulatively.

BUSINESS CONTINUITY:

  • The taxpayer will conduct business in the usual manner and withhold VAT payable (output VAT less Input VAT) to the extent of the available credit
  • Taxpayers will be required to upload with their filing schedules and copies of all Input VAT supporting documents
  • In rare cases a taxpayer might find themselves in a receivable position the amount so available will be utilized against future tax liability but will not be available as a cash refund. 

DEPARTMENT OF INLAND REVENUE

  • Will acknowledge receipt of application within 24 hours
  • Will advise of approval of application and the value of any approved tax relief within 48 hours of receipt of the payroll cost and supporting documentation.
  • Will reverse finance charges during the program and deferral periods.

CLICK HERE TO APPLY  (atlas.revenue.gov.bs)

Click here to download a PDF version of the Guide