This week the Ministry of Economy presented the framework document describing the main directions of the envisaged state support to the economy, businesses and entrepreneurs negatively affected by the coronavirus pandemic. According to the Ministry, the execution of the program is envisaged to start by 4 April 2020. Here is a brief overview of the key support tools for economic growth and entrepreneurship with the total volume of 2.5 billion AZN accounting for 3% of GDP:
1. Financial support to be provided to pay the salaries of 304,000 employees in the affected spheres of the economy, including trade, industry, services, transport and other sectors to avoid the job cuts.
2. Financial assistance to be provided to 292,000 individual micro entrepreneurs affected by the pandemic in order to protect jobs.
3. Tax benefits, privileges and holidays are envisaged for business entities operating in the areas affected by the pandemic.
- Simplified tax
- Provision of simplified tax exemptions to micro-enterprises for a specific time;
- Reduction of simplified tax for persons engaged in catering activities.
- Profit (income) tax
- Exemption of profit (income) tax for payers engaged in catering activities
- Deduction for tax purposes of donations made by individuals and legal entities to the Coronavirus Support Fund;
- Exemption of taxpayers from profit (income) tax for the relevant amount and period.
- VAT
- VAT exemption of some tax payers for the specific period;
- Temporary exemption from VAT of some products necessary for food and medical needs of the population (VAT exemption on import and sale of some products);
- VAT exemption of raw materials related to the production of food, medicine and other essential products in order to satisfy the population's demand for food, medicine and other necessary products in a timely and more flexible manner;
- Application of zero (0) rate VAT to the supply of free services provided by the tax payer in connection with the prevention of the epidemic.
- Other privileges
- Exemption from the property and land taxes for the relevant period;
- Extension of the deadline for payment of profit (income) tax due on the results of 2019;
- Extension of the deadline for submission of tax returns as well as the deadline for payment of taxes;
- Exemption from current tax payments for the relevant period for the specific industries.
4. Credit-guarantee support program for new bank loans to businesses operating in the areas affected by the pandemic (0.5 billion AZN):
- State guarantee for 60% of new loans in the amount of 500 million AZN;
- Maximum interest rate on loans not more than 15% and loan term up to 3 years;
- Subsidising half of the interest on guaranteed loans (7% out of 15%) from the state budget;
- Allocation of additional funds to the Entrepreneurship Development Fund.
5. Credit-guarantee support program on the existing loan portfolio of business entities operating in the areas affected by the pandemic (1 billion AZN):
- Subsidization of 10% interest rate item for the first year on existing bank loans in the amount of 1 billion AZN without state guarantee (regardless of the term and interest rate of loans);
- Allocation of special funds for this purpose;
- Implementation of subsidies through the Entrepreneurship Development Fund.
6. Social package to support the financial situation of the population, including tuition support program for students from socially vulnerable families, financial support program for mortgage and credit guarantee mechanism, program to support utility payments for electricity consumption of the population and support program for vital passenger transport activities.
For more detailed information and Azerbaijani text please visit the official site of the Republic of Azerbaijan Ministry of Economy here.