Insider Economy Cyprus’ financial support package to coronavirus-affected companies almost ready

Cyprus’ financial support package to coronavirus-affected companies almost ready

The Cyprus government is putting the final touches on the financial package providing financial support to companies in response to the coronavirus.

The package is expected to go before the Council of Ministers for approval by Wednesday the latest, informed sources told Phileleftheros.

But what the overall cost of the stimulus plan to avoid a damaging economic downturn should be is the big question. And one that President Nicos Anastasiades will probably give an answer on Friday evening when he addresses the nation.

The package will include subsidies and initiatives as well as a series of tax breaks, according to informed sources.

All political parties and business organizations are calling for an extension of income tax, VAT, and social security payments up until the epidemic’s consequences are defined and clarified.

This is one measure to most probably be implemented – either fully or partially. Another possible measure is the cancellation of seizure of guarantees by the Customs Department if the VAT for products arriving at a port is not paid within 10 days – as is the custom.

As for employee support and keeping businesses alive, the most possible scenario is for employees to be subsidised for as long as a business entity is suspended. However, the dilemma is the number of subsidised people and how to control it.

The situation is much clearer when it comes to hotel, food and tourism related activities.

According to the agreement drafted in 1994, for hotel employees whose jobs are suspended during winter (November-March),  employers pay 2.8% to maintain the opening and the rest is paid by the state in the form of an unemployment allowance.

It will be practically easy for the government to subsidise this sector’s staff for one more month through the unemployment allowance.

But things are trickier for tourism-related businesses that are open all-year-round. There is no clear picture, for example, with hotels and restaurants in tourist areas which operate with tourists – or locals – throughout the twelve months of the year.

Also, tour operators who have been badly affected by the coronavirus are also crying for help. The government’s intention is to include these two categories in the support package, according to insiders.

However, there is a grey area when it comes to  restaurants in Nicosia or a brewery in Larnaca or a leisure centre in Limassol which are affected because of the 75 people in a confined space restriction.  Some of these businesses have already announced suspension of operation.

The government is preparing to set up an ad hoc committee that will examine each and every application separately and take decisions.

By Demetra Landou


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