The Temporary COVID-19 Wage Subsidy Scheme, enacted through an emergency measure passed Tuesday by the Irish Legislature, will refund distressed companies for up to €410 ($452) of an employee's average weekly pay, the Revenue Commissioners said Wednesday. Revenue will administer the program because it will refund the wages through the system usually used to withhold income and payroll taxes from employee paychecks.
The program a previous arrangement that paid idled workers €203 a week regardless of whether they were still employed, according to the authority.
Revenue said the program aims to keep employees on the payroll and prepare the economy to bounce back when the pandemic is over.
"The Temporary Wage Subsidy Scheme will be available to employers who keep employees on the payroll throughout the COVID-19 pandemic, meaning employers can retain links with employees for when business picks up after the crisis," the tax authority said.
To qualify, businesses must demonstrate that their revenue has dropped 25% because of the outbreak. While the Irish tax authority encouraged companies to pay the difference between the €410 payment and the employees' usual salary, it will also apply to companies that slash wages, it said
Employees do not need to pay income and social insurance tax on the subsidized payments, and the latter tax is also reduced on their remaining salary, the tax authority said.
Around the world, governments are looking for ways to pump as much cash into their economies as possible, while the new coronavirus keeps citizens away from shops, restaurants and other businesses. Many economists not only fear the dramatic drop in activity and spike in unemployment, but how the sudden disruption will sever relationships among lenders, suppliers, employers and employees, dampening the rebound once the pandemic is over.
The U.S. Senate on Wednesday night approved a $2 trillion package that included loans to small businesses, rebate checks to most Americans and expanded payouts for the unemployed. The House of Representatives is expected to approve the legislation Friday.
Ireland Revenue did not respond to requests for further comment. The administration said that next month it would issue more guidance on how the program will shift to payments based on 70% of an employees' normal wage.
--Editing by Neil Cohen.
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