Coronavirus: Professionals lament lack of government aid, warn of redundancies

A number of professional bodies have called for the government to assist them considering the financial burden their clients are suffering which are preventing them from paying their fees for services given


A number of professional bodies have called for the government to assist them considering the financial burden their clients are suffering which are preventing them from paying their fees for services given.

The bodies, which represent Malta's lawyers, dentists, architects, accountants and notaries are asking the government for a deferral of income tax, VAT and social security contributions, amongst other measures.

The proposed measures were put forward in a National Strategy Document presented to the government by the Chamber of Advocates, Dental Association of Malta, Kamra tal-Periti, Malta Institute of Accountants and Kunsill Notarili ta' Malta, which together represent around 10,000 professionals and support staff.

"Our practices are pretty much at a standstill. Our clients have been hit hard and the outlook for recovery of their business is bleak. We depend on our clients generating work and paying our fees – we understand that this is a critical time when our clients will require our assistance, and as professionals we will provide it – but they will have difficulty paying for our fees, and we need to be able to support them even in this respect," the bodies said during a meeting with Economy Minister Silvio Schembri.

The bodies carried out a survey amongst their members asking them about the impact of COVID-19 on their business, loss of revenue and depressed cash collection emerging as prime concerns.

"The results of the surveys showed that there is serious concern amongst professionals centring principally around the uncertainties of the duration of the situation and whether there will be state assistance, which in turn places everyone in a situation where it is impossible to plan."

"The anticipated impact on cash flows and future revenues are severe and few will be able to weather the storm unscathed."

The bodies warned that this could leave to recruitment stopping and employees on probation being release across all sectors.

In the case of architects, it is anticipated that in April, 15% of the workforce will be made redundant, the survey indicated.

For lawyers, serious consideration is being given to reduce headcount by around 15% (50% - by one day or less a week); to move to a three- or four-day week (54%); and 63% anticipate that they will revise remuneration packages downward, it showed.

When it comes to accountants, approximately 60% are shifting to a three- or four-day week, or otherwise reducing headcount; 37% are reviewing salary arrangements in a significant manner; and 32% have stopped recruitment.

In terms of loss of revenue, 50% of architects and civil engineers think their revenue will reduce by 30% or more.

Around 52% of accountants are experiencing a critical/very high impact on revenue, while for over 20% of lawyers their loss of revenue has been greater than 80%.

In the case of dentists, while cash collection is not an issue since most of their revenue is collected upon delivery of their services, 85% are forecasting that their revenues will be reduced by more 80%

In light of this, the professional bodies have proposed six immediate measures to help them survive the next three months:

Deferral of payments of provisional and settlement income taxes due to 31 December 2020, with provisional tax based on 2020 estimates effected only in December

Deferral of VAT payments due to 31 December 2020, and facilitation of conversion to a cash-based VAT system for professionals

Deferral of the payment of social security contributions (of self-employed and those attributable to their employees), FSS and MLF to 31 December 2020

Eligibility of self-employed professionals and employees in the sector for (a) moratoria on personal, residential and business loans and credit facilities and (b) access to new credit facilities on “soft” terms to enable professionals bridge the period of crisis

Flexibility to professionals of coming to different arrangements and terms of employment with their employees

Self-employed practitioners and their employees should be eligible for minimum state assistance in terms of their income/salaries. The bodies do not seek to have this measure implemented retroactively, but as of 1 April 2020. This measure would be subject to claw-back provisions, so that if a professional practice still makes a profit at the year-end – then it would have to refund any payments received from government to subsidise salaries and income of self-employed.

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