Small businesses may have problems accessing financial aid.

Small businesses may have problems accessing financial aid.

02-02-2021Gemma Andreu

Thousands of business owners could be left without Government financial aid because of the strict tax requirements set out in the Law on Subsidies.

VAT, Personal Income Tax and Social Security payments were collected last December, but many of the small business owners who’ve been suffering from financial problems since the pandemic began are not aware of these tax obligations, because the coronavirus has left them without income.

"If they do not change the Law on Subsidies, half of the employers will not be able to access the aid because they’ve not been able to make these payments," said Pimeco President Antoni Fuster.

Current payment

The law stipulates that only those who are up to date with their VAT, Personal Income Tax and Social Security payments can receive subsidies, which could create problems for small business owners who’ve stopped paying Social Security contributions in recent months.

Employers have to sign a statement confirming that they’re up to date with those payments when they apply for aid, but if they haven’t paid at the time they sign the declaration, they could be accused of falsifying documents, so many agencies refuse to apply for aid on behalf of their representatives.

The Council says it’s a bureaucratic problem that can be solved if the employer proves that he has asked to defer the debt or to pay it in instalments. That would be considered a renegotiation of the debt, which would allow him to sign the declaration without causing legal problems.

Current payment

The Consell de Mallorca insists that business owners must obtain certification that a debt postponement or instalment plan has been requested prior to applying for aid to ensure that the grant can be awarded and the documentation verified.

The IP has submitted a proposal in Parliament asking the Government to amend the Subsidies Act so that employers are required to be up to date with their tax obligations prior to March 14 when the State of Emergency was declared.

"If this exception is not included, those who have financial problems won’t be able to receive aid," said Josep Melià.


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