The government plans to offer companies temporary value-added tax (VAT) rebates to help them get through the coronavirus crisis. However they will have to repay the funds to the state with three percent interest, Minister of Economic Affairs Mika Lintilä said on an Yle radio programme on Saturday morning.
The cabinet is now preparing a VAT refund bill for presentation to Parliament. The standard VAT on most goods and services is 24 percent, one of the five highest VAT rates in the EU.
On Saturday evening Finance Minister Katri Kulmuni said in a tweet that the government is planning a separate system for restaurants where subsidies would be directed at compensating them for overhead costs and staff wages during the epidemic. Restaurants and bars were ordered to close on April 4, except for takeaway sales.
“People probably wonder why interest would be added at a time like this. But the interest is completely based on an EU directive. If the interest rate was any lower, the money would not be considered a state subsidy rather than a loan, and that would require a different procedure,” Lintilä explained.
Speed is of the essence
“It is a method that is used internationally. One crucial reason is that it is the kind of element that you can get underway quite quickly. The tax authorities have all this information, so it is easy to execute technically,” the minister added.
Lintilä, a veteran Centre Party MP, served as Minister of Economic Affairs in PM Juha Sipilä's cabinet from 2016 until last summer, when he became one of the few carry-overs to the Antti Rinne government.
He was promoted to finance minister, but held the post for less than half a year before being bumped back to his old position. That happened when Sanna Marin replaced Rinne as premier and Kulmuni claimed the weightier finance portfolio after she took over from Sipilä as Centre chair.