“The entire industry is at risk,” said CNMI, which expects “several unforeseen but inevitable short-term consequences which will impact the financial health, output continuity and employment rate of small and medium-sized companies, and artisans too, at least for the whole of 2020.” CNMI, the body that organises the Milan Fashion Week, has sent a document outlining a series of policy proposals to the Italian Prime Minister and the country’s economic ministries.

CNMI asks for tax, social security rate cuts

CNMI has asked the government for cuts to the taxes and social security rates of the companies affected by the emergency, and for measures allowing for a unilateral, temporary reduction in working hours for all permanent and fixed-term employees, up to a maximum of 35-40%.  Among CNMI’s proposals there is the financing of a special lay-off fund for the worst-affected companies and the recognition of force majeure status, allowing for a temporary self-reduction in rental leases up to a maximum of 50%, with a concurrent suspension of the civil law consequences that would ordinarily ensue, such as contract rescission, legal actions and court injunctions.  The document also calls for a boosting of growth-stimulation funding, for the setting up of a guarantee fund to help banks reschedule loan repayments, freeze interest payments and either provide or extend credit lines to companies in financial difficulty, and for the introduction of measures that will urge government departments to accelerate payments to companies, in order to inject liquidity directly into the system without resorting to banks. As profitability is expected to slump in 2020, the document also calls for a suspension of the June and November tax payments on account by fashion companies. Also, for the introduction of tax breaks for shifting manufacturing output to Italy, for a doubling of the tax-deduction amount for digital marketing investments, and direct aid measures for SMEs and artisans. According to CNMI, the extension until June 30 2021 of the ‘Patent Box’ measures, giving tax advantages to companies that file for intellectual property rights and patents, would also be extremely important for the fashion industry, as it would enable Italian luxury labels to protect the value of their brands. Equally important would be increasing the rates of R&D investment tax credits: CNMI asks for them to increase from 6% to 12% for design investment in the fashion sector, with a raising of the tax credit cap from €1.5 million to €3 million. According to CNMI, this policy should be valid for three years, and not for 2020 only.