Banks around the world have increased lending by 10% since the start of the Covid-19 pandemic to help businesses survive, reveals a new study by UHY, the international accounting and consultancy network*.

UHY’s study of 24 major economies shows banks increased overall lending to businesses by an additional USD3.3trillion in the last twelve months alone, as governments flood lending markets with money to help businesses through pandemic disruption.

Outstanding lending to businesses across the ten biggest global economies hit a total of USD32.7trillion last year, an increase of USD3.1trillion (10.5%), compared to USD29.6trillion of outstanding loans a year earlier.

Chinese businesses have experienced the largest increase in value of bank lending out of the world’s leading economies. In China alone, outstanding loans to businesses increased by USD1.8trillion (11%), reaching a total of USD16.04trillion last year, up from USD 14.27trillion the year before.  The People’s Bank of China established its small business loans programme in February, offering low-cost funds to commercial banks to lend to businesses.

UHY’s study found that as well as China, other BRIC countries also experienced a particularly large increase in bank lending in the last year – a 12% increase on average. Brazilian banks increased their business lending by 18% (USD46.3billion), topping the table in UHY’s study with the largest percentage increase in lending.

BRIC countries outpaced the G7 (9% growth in lending on average), as countries such as Canada saw a decrease in total lending to businesses through the pandemic (-0.3%). G7 countries added an extra USD1.2trillion to outstanding loans, reaching a total of USD15trillion last year.

The eight major EU economies in UHY’s study are lagging behind other world economies in increasing lending, adding only 5% to outstanding bank lending last year. Outstanding lending stood at USD4.9trillion last year, up from USD4.7trillion in the previous twelve months. Countries including Poland (-3%) and Ireland (-7%) have seen a decrease in the value of outstanding bank credit to businesses compared to pre-Covid.  

Growth in bank lending has been largely driven by Government-backed Covid loan schemes.

The UK’s Covid loan schemes, including Coronavirus Business Interruption and Bounceback loan schemes have already provided USD95billion to struggling businesses. The Economic Injury Disaster Loans and Paycheck Protection programmes in the US have approved over USD719billion in lending to small and large businesses.

In contrast, the Irish government only launched its COVID-19 Credit Guarantee Scheme in September 2020. As a result, unlike the majority of other countries in this study, Ireland saw its total outstanding lending to businesses fall over the Coronavirus period.   

UHY member firm UHY Farrelly Dawe White Limited in Ireland adds that some SMEs in Ireland are relatively averse to taking on debt and therefore the levels of lending, even with this new government scheme, are unlikely to grow as quickly as in some other countries.

UHY says some countries in this study may not have gone far enough to provide Government backed support to businesses.  Pakistan, the Philippines, Russia and Vietnam have stimulated lending but have not gone as far as some other countries in implementing a Government-backed, guaranteed coronavirus loans package for businesses to access.

This lack of a Government guarantee on lending is likely to have constrained commercial banks’ approach to emergency Covid-driven lending. These banks were forced to underwrite loans far more conservatively and slowly as they were taking the full risk of defaults, unlike banks in countries like the UK and US for example.

Whilst these countries have developed other measures, including payment deferrals and tax holidays, a lack of Government guaranteed cash support for businesses affected by Covid-19 could result in higher levels of insolvencies and job losses.

Dennis Petri, Chair of UHY International, says: “Governments worldwide have clearly learnt lessons from the credit crunch and global financial crisis of 2008 and moved phenomenally quickly to roll out large-scale lending packages. These have served as a lifeline for many businesses.”

“The past year has seen some of the biggest spending ever by Governments across the globe. That intervention has allowed commercial banks to get lending into the market at an unprecedented rate to prevent a catastrophic loss of jobs and an even greater economic crisis.”

“The economic impact of the pandemic has lasted longer than anyone expected, with even the strongest economies facing a long uphill journey. As the hopes of a quick recovery fade, Government-backed business loan schemes will need to be extended until restrictions are lifted.”

“The news of a vaccine provides a light of the end of the tunnel. But with many businesses still not able to return to ‘normal’ operating levels, Governments need to provide as much support as possible to ensure businesses stay afloat until then.”

Banks have increased lending to businesses by 10%, adding USD3.3trillion to total outstanding loans in the last twelve months

*Current figures are outstanding loans to businesses at last available date

Notes for Editors

UHY global press contact: Leigh Lyons on +44 20 7767 2624

Email: l.lyons@uhy.com – www.uhy.com

Nick Mattison or Richard Crossan

Mattison Public Relations

+44 20 7645 3631

+44 74 4637 5555

Email: richard.crossan@mattison.co.uk

New member firm in St Lucia joins the UHY network

Global accountancy network UHY extends its coverage within the Americas by appointing A. P. Walcott & Associates in St Lucia, Eastern Caribbean. The firm is in the process of adopting the UHY branding.

A. P. Walcott & Associates provides a wide range of services to private and corporate clients including audit, tax and finance and business advisory. Client sectors represented include Financial Services, Hospitality, Healthcare, Not-for-profit, Property Development and Construction, Retail and Public Sector and Statutory Corporations. 

Managing partner of A. P. Walcott & Associates, Anthony Walcott, who brings over 20 years public accounting practice experience, comments “Being part of the UHY global network underpins our commitment to deliver quality services. The global presence of the network and the expertise and knowledge shared among UHY’s 8,500 colleagues around the world strengthens our own market position, locally and internationally and will be of great value to our clients and their operations.”

Dennis Petri, chairman of UHY comments: “We are delighted to welcome A.P. Walcott & Associates to the UHY network. Their capabilities extend our footprint in the Americas region where we have members in 22 countries. St Lucia attracts foreign business and investment, and the firm’s market expertise and client service abilities will further strengthen UHY’s capabilities to support clients’ needs in this region.”

UHY liaison office A. P. Walcott & Associates

Contact: Anthony Walcott, Managing Partner on +758 453 2223 awalcott@uhy-lc.com W: www.apwalott.com

UHY global press contact: Leigh Lyons, marketing & business development manager, on +44 20 7767 2624  l.lyons@uhy.com – www.uhy.com

New member firm in South Korea joins the UHY network

We welcome Daeyoung Accounting Corp., our new member firm in South Korea, to the global accountancy network UHY, strengthening our representation in the Asia Pacific region. The firm is in the process of adopting the UHY branding and will soon be known as  UHY Daeyoung Accounting Corp.

Daeyoung Accounting Corp. was established in 2010 and has over 60 professional staff, including 25 CPAs, primarily handling accounting and tax services, particularly for foreign clients doing business in Korea. Industries represented by clients include Packaging, Automotive manufacturing and Real Estate.

The firm offers services in fluent English and provides a wide range of commercial services, including business set up, statutory audit/review, book keeping, tax management and M&A support. A number of the firm’s professionals were formerly with Big 4 firms as auditors, tax specialists and finance/accounting consultants.

Managing partner of Daeyoung Accounting Corp., San Kyu (Sam) Shin comments “Being part of the UHY global network will be of great value to our current and potential clients.  The global presence of the network combined with the expertise and knowledge shared among UHY’s 8,500 colleagues around the world strengthens our own market position, locally and internationally.”

Dennis Petri, chairman of UHY comments: “We are delighted to welcome Daeyoung Accounting Corp. to the UHY network. Their capabilities strengthen our presence in the Asia Pacific region where we have members in 20 countries. South Korea has developed into one of the world’s major economies. Manufacturing accounts for a significant segment and the country exports a range of goods including vehicles, chemicals, and integrated circuits (microchips).  We believe the firm’s knowledge and expertise should present a very good fit for our network”.

UHY liaison office Daeyoung Accounting Corp.

Contact San Kyu (Sam) Shin Managing Partner on +82 32-427 3210 or +82 10 8955 3047 skshin@daeyoungcpa.com  W: http://www.daeyoungcpa.co.kr/  

UHY global press contact: Leigh Lyons, marketing & business development manager, on +44 20 7767 2624  l.lyons@uhy.com – www.uhy.com

There is pressure on governments worldwide to cut taxes to help the tourism industry, with a new study by UHY, the international accountancy network showing that Covid-driven cuts to tourism taxes have so far reduced a tourist’s typical daily spend on tax by just 1%, from 15% to 14%.

In its study covering 25 countries, UHY measured the tax paid on a number of everyday purchases by tourists – one night in a four-star hotel in a major tourist city (USD150), a meal for two in a restaurant (USD75) and a bottle of wine (USD30).

UHY’s study found that while the UK, Ireland, Germany and China have been quick to make significant tax cuts to aid the tourism industry, 21 of 25 countries in the study have not yet made any cuts. The firm says that governments should consider accelerating tax cuts to help their tourism economies.

Temporary cuts to Value Added Tax (VAT) and other sales taxes for the tourism industry during the pandemic have caused the UK’s average tax on typical tourist spending to reduce from 21.1% to just 7.8%. This saw the UK fall from the third-highest of 25 countries for tourist taxes pre-Covid, to 21^st today.

UHY says that there is significant scope for central and local governments around the world to stimulate demand for tourist businesses by cutting taxes on consumption, alcohol duties and local taxes in tourist cities.

Even in the countries that have cut taxes on tourism, extensions will almost certainly be needed until the sector begins to recover. The UK’s 5% VAT rate for the leisure and hospitality sector is set to expire and return to 20% at the end of March 2021, while China’s zero VAT rate ends on December 31 2020. Germany has already announced that its temporary 7% VAT rate will not return to its usual 19% until July 2021. Ireland has temporarily cut its VAT rate for hospitality and tourism businesses from 13.5% to 9% until December 2021.

The tourist industry has been among those worst-hit by Covid, with restrictions on travel set to continue for at least several more months. The International Civil Aviation Authority reported in May that the pandemic is likely to have reduced air passenger numbers by 1 billion by the end of September 2020. This has caused substantial knock-on effects for sectors including hotels, restaurants and visitor attractions.

Dennis Petri, Chair of UHY, says: “The tourism industry is critically important in a huge number of economies and many governments could do more to help it through one of the most difficult periods it has ever faced.”

“A few countries have done their level best to jump start their tourist economies, but tourism businesses worldwide are still crying out for assistance. With Covid still a major issue globally and travel restrictions set to stay in place for months yet, time is running out to help some of these businesses.”

“While normalising travel might not yet be possible for most countries, cutting the tax burden on tourism businesses could be done very quickly. Even where that has been done already, it will likely need to be extended.”

“This is not only a national government issue – local and regional governments could also do more to help. Many tourist cities levy specific taxes on hotel rooms and suspending those charges for a period would lift a little more of the burden from tourists and the hospitality industry.”

UHY says that Europe (11.3%) has lower taxes than the global average on tourism. Some European countries that rely relatively heavily on their tourism industries have among the lowest tourist taxes in UHY’s study, including Spain (10%) and France (11.6%).

Cuts to tourism taxes have reduced tax from 15% to 14% of a tourist’s typical daily spend

Notes for Editors

UHY global press contact: Leigh Lyons on +44 20 7767 2624

Email: l.lyons@uhy.com – www.uhy.com

Nick Mattison or Richard Crossan

Mattison Public Relations

+44 20 7645 3631

+44 74 4637 5555

Email: richard.crossan@mattison.co.uk

About UHY

Established in 1986 and based in London, UK, UHY is a leading network of independent audit, accounting, tax and consulting firms with offices in over 330 major business centres across 100 countries.

Our staff members, over 8,500 strong, are proud to be part of the 17th largest international accounting and consultancy network. Each member of UHY is a legally separate and independent firm. For further information on UHY please go to www.uhy.com.

UHY is a member of the Forum of Firms, an association of international networks of accounting firms. For additional information on the Forum of Firms, visit www.forumoffirms.org

The average tax paid by individuals around the world when purchasing a new home has now reached almost 5%, with some major economies charging more than 10% shows a new study by UHY, the international accountancy network.

UHY’s study shows that the average tax charged worldwide on the purchase of a home worth USD150,000 has now reached 4.51% – a cost of USD6,771 even for a relatively modest home (see table below).

The average tax paid on a home purchase has risen quickly in recent years. A previous study of property taxes by UHY, in 2013, found that G7 countries charged an average of 2.29% tax on the purchase of a home worth USD150,000. This has now risen to an average of 3.57% in 2020.

The study also shows that several major developed economies now charge tax worth more than 10% on the purchase of a home worth USD150,000, including Spain (14.85%), Belgium (11.66%) and Japan (11%).

However, the impact of coronavirus on property prices worldwide may force more countries to make emergency cuts to taxes on housing purchases to keep property transactions moving. The UK was recently forced to make a temporary cut to property transaction taxes in an attempt to revive the market.

UHY says that more countries could now look at making similar cuts, especially if the UK’s reforms prove successful in reviving the market.

UHY says that property transaction taxes are often seen by Governments as an attractive tax to cut when seeking economic stimulus. While they make up a relatively small proportion of overall tax receipts compared to major taxes like income tax and VAT, residential property transactions create broader economic activity such as spending on refurbishment and white goods when people move home.

UHY says that in the longer term the cost to Governments worldwide of the coronavirus pandemic could result in pressure to increase property taxes. A combination of lower tax revenues and expensive economic stimulus measures will leave many countries with major budget deficits that will need to be addressed.

It adds that while increasing property taxes may be an attractive source of revenue for governments, discouraging property purchases can reduce labour market mobility as there will be a tax charge each time a property owner moves and buys a new home.

High property taxes can also distort the market by discouraging older homeowners from downsizing as this would result in a tax charge on the purchase of their new smaller home. Some commentators have also argued that high property taxes disincentivise homeowners from selling properties when housing markets overheat and buying again once prices have fallen. This removes a key mechanism for preventing property bubbles forming.

Dennis Petri, Chairman of UHY International, says: “Taxing property purchases is one way to increase tax receipts to address the costs of coronavirus. However, that could hit ordinary people the hardest on what is likely to be the biggest investment they will ever make.”

“It has been argued that raising property taxes helps to deflate property bubbles, but their track record in doing that is patchy at best. They also make it more difficult for people to move to areas where their skills are more in demand, impacting economic productivity.”

UHY tax professionals studied tax data for individuals purchasing a house worth USD150,000, USD1 million and USD2 million in 27 countries across its international network, including all members of the G7, as well as key emerging economies.

Spain, Belgium and Japan all tax a USD150,000 purchase over 10%

UHY’s findings show that Spain is the developed economy with the highest levels of taxation on property purchases, levying 14.85% on a purchase of a property worth USD150,000, and 13% on properties worth USD1 million and USD2 million.

While the Spanish government has set the national rate of property transfer tax at 7%, many provinces have much higher rates – up to 11% in some cases. When Stamp Duty and other local taxes are added, the overall tax bill can be close to 15% in some regions.

Belgium is the second-highest developed economy for property taxes in UHY’s study, averaging 11.66% nationwide – although homebuyers in Brussels and Wallonia pay even more, at 12.5%. Japan also levies very high property transfer taxes, applying its 8% consumption tax (equivalent to VAT) on all residential property purchases. This is in addition to a real estate acquisition tax of 3%.

UK targets tax at higher-value home purchases

UHY’s study shows that since the Chancellor raised the Stamp Duty threshold in the Summer Budget, a homebuyer in the UK pays just USD19,300 in Stamp Duty on a purchase of a home worth USD1 million, compared with a European average of USD45,294 (see table below). The effective Stamp Duty rate was 3% before the emergency cuts.

The cut to Stamp Duty, which will last until the end of March 2021, is aimed at stimulating the residential property market following a sharp drop in transactions during the coronavirus outbreak.

UHY explains that although the Stamp Duty cut will help ordinary people buying lower-value properties, it does leave buyers of properties worth USD 2 million and up paying more tax in the UK than in most other countries. Homebuyers of a property worth USD 2 million still pay 5.78% in Stamp Duty, putting the UK ahead of Germany (5.38%) and Italy (0.63%) and an average for the US of 0.39%.

“The newly announced cut to Stamp Duty is an encouraging sign for the housing market and should boost property purchases and the associated economic activity.” Says Andrew Snowdon, Partner and Head of Tax at UHY Hacker Young in the UK.

United States among the most generous to USD2 million homebuyers

UHY’s study shows that rates of tax on a purchase of a home worth USD2 million across the United States average just 0.39%, while Russia levy no tax at all on purchases of residential property, regardless of value.

Italy also charges less than 1% tax on the purchase of a USD2 million home. These figures are far lower than the average rate charged in G7 countries (4.49%) or in the BRICs economies (3.56%).

UHY explains that low property taxes can act as a significant attraction for high net worth individuals, ensuring that key creators of employment, especially in emerging economies like Russia, are less likely to move overseas.

Nikolay Litvinov, Director of Audit and Consulting at UHY Yans-Audit in Russia, says: “Russian property buyers continue to benefit from the most buyer-friendly tax regime in the world. That goes for both ordinary families buying their first home, and for high net worth individuals purchasing luxury property.”

All 27 countries ranked by the amount and the percentage of tax paid on a purchase of a USD150,000 property – Spain, Bangladesh, Belgium and Japan all above 10%

All 27 countries ranked by the amount and the percentage of tax paid on a purchase of a USD1 million property – UK Stamp Duty regime much tougher on USD1 million purchases

All 27 countries ranked by the amount and the percentage of tax paid on a purchase of a USD2 million property – USD2 million homebuyers in the US pay virtually zero tax

Notes for Editors

UHY global press contact: Leigh Lyons on +44 20 7767 2624

Email: l.lyons@uhy.com – www.uhy.com

Nick Mattison or Richard Crossan

Mattison Public Relations

+44 20 7645 3631

+44 74 4637 5555

Email: richard.crossan@mattison.co.uk

About UHY

Established in 1986 and based in London, UK, UHY is a leading network of independent audit, accounting, tax and consulting firms with offices in over 330 major business centres across 100 countries.

Our staff members, over 8,500 strong, are proud to be part of the 17th largest international accounting and consultancy network. Each member of UHY is a legally separate and independent firm. For further information on UHY please go to www.uhy.com.

UHY is a member of the Forum of Firms, an association of international networks of accounting firms. For additional information on the Forum of Firms, visit www.forumoffirms.org