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POLITICS

Swedish government offers tax deferral to businesses

High energy prices and high inflation are hitting Sweden's businesses hard. With energy price subsidies for these consumers delayed, the government is now extending existing tax deferral schemes implemented during the pandemic to ease the pressure.

Swedish government offers tax deferral to businesses
Finance Minister Elisabeth Svantesson and Energy and Business Minister Ebba Busch at a press conference on Thursday. Photo: Marko Säävälä/TT

Finance Minister Elisabeth Svantesson and Energy and Business Minister Ebba Busch announced the scheme at a press conference on Thursday.

“Many, many companies are now struggling with their liquidity,” Svantesson said.

The deferral scheme is similar to that proposed by the previous government in order to ease the effects of the Covid-19 pandemic on companies, which was due to run out in February. The government has now proposed extending this scheme, allowing companies to delay their tax payments.

“These proposals will make things easier for many businesses,” Svantesson said.

The tax deferral scheme is not, Busch explained, being introduced as a replacement for the energy price subsidy for businesses which was supposed to be paid out “before Christmas” and which has now been withdrawn temporarily while the government figures out how it can be introduced without breaking EU law.

“No, rather this is a measure we’ve been looking at for a while, which should be seen as a complement,” she said.

According to rough estimates, the government believes that around 12,000 companies will apply for tax deferral, which would mean around 16 billion kronor in tax payments being delayed until a later date.

Företagarna, Sweden’s largest organisation of business owners representing around 60,000 companies across different branches, has welcomed the move, despite also voicing criticism that it’s just pushing these problems further into the future.

“It’s a loan and all loans need to be paid back over time,” Företagarna’s CEO Günther Mårder said.

Företagarna did, however, agree that the scheme will be necessary for some businesses to survive.

“Most companies going under are doing so because of liquidity problems, and this new measure will strengthen liquidity in the short-term,” Mårder said, adding that the measure could “save businesses”.

However, with many businesses already owing back taxes delayed during the pandemic, Mårder believes this could just be adding to the mountain of debt already faced by some companies.

“It means it will be record-breakingly difficult to get over this hump,” he said. “What they’re doing now is pushing problems into the future, and of course, that’s also a solution.”

The Confederation of Swedish Enterprise is positive towards the government’s proposal, adding that the many Swedish companies are currently in a difficult situation.

“Since the repayment of bottleneck revenues [energy price subsidies] is delayed, it is good and fair that companies have the opportunity to extend their tax deferrals,” Jonas Frycklund, vice chief finance officer of the Confederation of Swedish Enterprise wrote in a statement.

“This will lower the risk of having to let employees go unnecessarily.”

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BUSINESS

Faroe Islands restrict Russian access to its ports

Denmark's autonomous Faroe Islands said on Thursday that Russian access to its North Atlantic ports would be restricted to vessels dedicated exclusively to fishing, in response to Russia's invasion of Ukraine.

Faroe Islands restrict Russian access to its ports

“Only fishing vessels exclusively conducting fisheries under the bilateral agreement between the Faroe Islands and Russia will be allowed to enter
Faroese ports,” the government said.

“The activities of Russian fishing vessels in port will be restricted to crew change, bunkering, provisioning, landing and transshipment.”

Maintenance services will be prohibited and the purchase of goods restricted.

The Faroese government is trying to reduce Russian activities at its ports due to the risk of espionage and following criticism over the renewal of the bilateral fisheries accord at the end of November.

The agreement, renewed annually since 1977, lays out quotas on several species — including cod, haddock, whiting and herring — in the Barents Sea for Faroese fishermen and off the Faroe Islands for Russians.

According to the fisheries ministry, the fish caught under the accord accounts for five percent of gross domestic product.

Home to some 54,000 inhabitants and located between Scotland and Iceland, the Faroe Islands have been largely autonomous from Denmark since 1948.

They are highly dependent on fishing and have an autonomous commercial policy.

Russia has become a key commercial partner of the Faroes since they and neighbouring Iceland fell out with the European Union — including Denmark — between 2010 and 2014 over mackerel and herring quotas.

An EU embargo on Faroese fish harmed the economy of the territory, which then turned to other markets.

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