Assistance Measures for Small Companies and Tourism Sector Companies Are Not Flexible Enough
The Chamber has turned to the Ministry of Economic Affairs and Communication and Company Estonia in relation to the assistance measure for partial compensation of the damages of small companies and tourism sector. We found several issues in the assistance measures regarding equal treatment and flexibility of assistance.
Assistance measures must be transparent and ensure equal treatment
In the opinion of the Chamber, the assistance measures for small companies and tourism sector companies do not comply with the general conditions of assistance measures, according to which allocating assistance must be transparent and non-discriminatory and must ensure equal treatment of and fair competition within the target group. First and foremost, a question arises if the assistance ensures equal treatment of persons who belong in the target group and if allocating the assistance is transparent.
Upon identifying equal treatment and transparency, it is unclear which criteria or reasoning is taken as the basis for developing the conditions for receiving assistance. The regulation does not have an explanatory memorandum, which would help to understand the conditions of the measure better.
As far as is known to the Chamber, no business organisations have been involved in the development of the measure. For example, the Chamber was not included in their development, although it is the largest organisation that represents small companies. We consider it reasonable that assistance measures are developed in cooperation with the business organisations, or at least feedback is requested from them regarding the planned measures.
Granting assistance is too inflexible
In the Chamber’s opinion, the conditions for receiving the assistance should be more flexible and consist of several conditions, whereas the applicant for the support should not have to meet all the criteria. A similar solution has been used for, for example, the salary compensation, where the assistance recipient must meet two of the three conditions. Such solution would help to ensure a more equal treatment of entrepreneurs, because failure to meet one of the conditions does not exclude the applicant from receiving assistance.
Support for partial compensation of losses of small entrepreneurs
In the Chamber’s opinion, the measure aimed at small companies should be more flexible and targeted. As the target group of the measure is very large and the total volume of the assistance is only 10 million euros, the assistance should first and foremost be allocated to the entrepreneurs who are negatively impacted by the crisis. Furthermore, allocating the assistance should be connected previously paid labour taxes, similarly to the assistance measure of the tourism sector entrepreneurs.
According to the current conditions, a small entrepreneur whose last year’s turnover was 21,000 euros and who paid labour taxes in the amount of 1,000 euros can receive assistance in the amount of 3,000 euros. At the same time, a small company with a turnover of 150,000 euros last year whose turnover has decreased by 95% during the crisis and who has paid labour taxes in the amount of 10,000 euros cannot receive the assistance. Thus, small companies who have contributed more to the state budget and who are very negatively impacted by the crisis may be refused the assistance. In the case of such examples, equal treatment of and fair competition among entrepreneurs is not ensured.
Tying assistance to labour taxes a possible solution
In the opinion of the Chamber, the conditions of paying assistance to small entrepreneurs could be tied to the labour taxes paid during the previous year. A situation where the assistance granted to small entrepreneurs exceeds the labour taxes paid to the state during the previous year should be avoided, unless the case involves a starting company.
Furthermore, the current limit of turnover up to 100,000 euros after which the assistance cannot be applied for, should be increased. As the target group of the measure is very large and the total budget of the assistance measure is only 10 million euros, the criterion for the decrease of the turnover, which currently is 30 percent, should be increased as well. As a result of the change, entrepreneurs whose turnover has been impacted the most by the crisis could benefit from the assistance.
Furthermore, we consider it to be a reasonable solution that there would be more conditions for receiving the assistance than there are now, but entrepreneurs should not be subject to meeting all the conditions simultaneously. For example, volume of turnover, decrease of the turnover during crisis as well as labour taxes paid to the state could be the conditions. If a small company meets two conditions out of three, they should be eligible to receive the assistance.
Assistance for partial compensation of losses of tourism sector companies
The assistance measure for tourism sector companies is better targeted than the measure for small companies. It is also positive that one of the conditions for applying for the support is the labour taxes paid to the state.
Furthermore, the conditions of this assistance measure could be more flexible. For example, if it would be possible to add an additional condition to the measures to establish that entrepreneurs will receive the assistance if they meet two criteria out of three, entrepreneurs with turnover over three million euros could also receive the assistance as they currently cannot.