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Law360 (March 17, 2020, 5:04 PM EDT) -- New Zealand will reintroduce depreciation deductions for commercial buildings as part of a NZ$2.8 billion ($1.7 billion) relief package meant to support businesses struggling with the fallout of the new coronavirus, the Inland Revenue Department said Tuesday.
The depreciation deductions will apply to investments in existing and new commercial buildings, including hotels and motels, the department said. The deductions, available to businesses immediately in an attempt to boost cash-flow and encourage investments, will cost the government NZ$2.1 billion, according to an official estimate.
The relief plan also calls for expanding low-value asset deductions. For one year starting in April, businesses can expense asset purchases up to $5,000 from $500, the department said. The expansion is expected to cost NZ$667 million.
Other smaller provisions in the plan call for waiving interest on late payments of tax and for increasing to NZ$5,000 from NZ$2,500 the amount of tax businesses have to pay before also being subject to the country's provisional tax, based on expected profits.
A spokesperson for the Inland Revenue Department did not immediately respond to questions on the plan from Law360.
The tax plan is part of a larger NZ$12.1 billion relief plan that includes wage subsidies for workers and spending to help fight COVID-19. As of Tuesday, there were 12 confirmed cases of the novel coronavirus in the country, said the Ministry of Health.
"The global economic impact of COVID-19 on New Zealand's economy is going to be significant, so we are acting now to soften that impact," Minister of Finance Grant Robertson said on Tuesday in announcing the relief plan, one of the world's largest.
On Tuesday the European Union announced a temporary state-aid regime allowing companies to receive up to €500,000 ($550,000) in subsidies in the form of deferred tax payments and public guarantees to help companies facing a liquidity crunch.
And as of Monday, over 30 countries have offered struggling businesses some kind of VAT relief, according to Richard Asquith, vice president of global indirect tax at Avalara Inc., a tax-filing software company.
--Additional reporting by Matt Thompson and Alex M. Parker. Editing by Vincent Sherry.
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