Filenews 15 February 2021
Two bills to extend tax incentives to landlords renting real estate to businesses affected by the Infectious Diseases Act, aimed at voluntary rent reductions in the first half of 2021, were discussed Monday in the House Finance Committee.
The first bill provides for a tax credit to be granted to homeowners and equal to 50% of the reduction to be granted to rent and must be between 30% and 50%. The discount on the rent should be for a period of one to 3 months. The second bill concerns the exemption from the exceptional defence levy on landlords who make a voluntary rent reduction. This contribution is 3% of 75% of the rent.
The differentiation of these bills from the similar laws that entered into force during the previous curfew period is that they concern only undertakings with a complete partial suspension of work as a result of the measures against COVID-19 and not all undertakings. They apply to natural and legal persons.
During the session, POVEK expressed reservations about the effectiveness of the incentives, since the participation is voluntary, there are property owners who do not have a tax ID or do not declare rental income or property owners do not have rental contracts with their tenants.
Asked by MPs about the effectiveness of the measure, the Treasury spokeswoman said they were unable to know, since the tax credit would be calculated in the provisional tax return, which should be submitted by July 31, 2021. Asked by MPs about the cost of the measure, he said that in the extreme scenario where all owners claim 50% for three months, the budgetary impact would not exceed 40 million euros.
In response to another question about the possibility of a subsidy from the State of one third of the rent, he said that the total amount of rents declared in the tax section is €650m, so if we are talking about a subsidy of 1/3 the budgetary impact is huge. However, Commission President Christiana Ertokritou stated that this amount relates to the entire 12-month period for all rents and not only to businesses affected by the pandemic and said that these calculations by the Ministry are not targeted. Democratic Forces Platform MP Angelos Votsis has asked the Ministry to finally conduct a paper exercise for the businesses that have been hit.
In a statement, Commission President Christiana Ertokritou said that it is obvious that the UNDP, without targeting, negligently and without being interested in the result, but only the image, has made a suggestion that will not take place.
He said they raised with the Ministry the issue of direct subsidy of rent by the Government so that tenants benefit directly, as opposed to incentives that are on a voluntary basis, while landlords will receive the benefits at a later stage. He added that tenants are now in need of support, but this is not being achieved because the SSP, he said, "has no understanding of the reality and difficulties" that tenants, particularly SMEs, have, which are struggling to keep themselves alive amid a pandemic.
He called on the S.E.C. to make second thoughts and come back with a bill that would directly support the tenant and directly subsidize the rent and relieve tenants, forcing landlords to participate.
DIKO MP Paul Miller said there was his own proposal for a law authorising the Interior Ministry to bring criteria and categorizations of all those people in need of support, saying all other proposals conflict with the constitution.
He also said that the Finance Committee would try towards such a proposal, but it would be more appropriate and with fewer obstacles if this proposal came from the government's side to avoid constitutional problems or allegations of the state's inability to cope with the economic impact.
In a statement, DISY MP Onufrios Koullas said that the Ministry of Finance quite rightly and wisely set its budgetary capacity at €200m, which is, as he said, a huge amount in difficult circumstances, to give sponsorships to all businesses according to the reduction in turnover. He added that if this money were given only to those who rent business premises, there would be huge reactions from all other businesses. He also said with this sponsorship of the S.E.C. a company can cover any operating costs of the business. Beyond that, he said, there are also these tax incentives so that there is a reduction in rents, where possible, through a voluntary agreement.
ACPL MEP Aristos Damianou said that unfortunately the debate and the answers given confirm the conclusion that the proposals are not capable of addressing the major problem of rents in a period of lockdown. He added that there is little impact this proposal has on real needs.
He said the ACPL supports the government's adoption of a tripartite approach with a rent subsidy and a temporary arrangement involving both the landlord and the tenant. He added that this proposal and the original proposal unfortunately suffer because they are not binding, while many do not declare the properties they rent so they will not benefit from the credit.
Solidarity MP Michalis Giorgis said the build-up of rents is a ticking time bomb on the foundations of many particularly small businesses that have lost incomes and the government's arrangements do not help either tenants or landlords. He called on the ICIC to consider both its position and a more sustainable solution for rent subsidy in the cost-sharing logic between the state, tenant and landlord.
In a statement, Angelos Votsis MP noted the fact that the Ministry was unable to provide data on the effectiveness of the measure when it was implemented in the previous period. He added that this measure is completely ineffective and does not solve the problem. He recalled a proposal submitted and not accepted by the Government for the payment of 1/3 of the rent by the state, 1/3 by the landlord and 1/3 by the tenant. He added that the cost to the state is not prohibitive since EUR 600 million is the amount of rent collected for all businesses and premises. If half of them, he added, are the ones that have been affected, we are talking about EUR 25 million which if shared by 1/3 will be EUR 8 million the cost to the state.
Eyenews/AFP
