Reduction of payment congestion, which negatively affects the financial liquidity of companies and their development – this is to be the effect of the Act to counter congestion, the project of which will be handled by the Sejm this week. The main solutions of the MPiT project are: shortening payment deadlines; the right of the President of UOKiK to prosecute large companies generating the biggest congestion; the obligation for the largest companies to report to MPiT their payment practices; relief for bad debts in PIT and CIT (as in VAT).
"In preparing new regulations, we wanted to put a dam on the payroll. It is difficult to tolerate the present state of affairs in this regard. That is why we decided to prepare new rules. The congestion is damaging our economy. Especially smaller companies that provide goods or services to +large+ business. Delays in payments in such companies are causing liquidity problems. This in turn makes companies that have not been paid, do not pay their suppliers themselves, they lack money to pay or charge. As a last resort, this can even lead to the bankruptcy of a given company," says Minister of Entrepreneurship and Technology Jadwiga Emilewicz.
The President of the Office for Competition and Consumer Protection will impose administrative penalties on companies that are most delaying the regulation of their obligations
Marek Niedużak, Deputy Minister of Enterprise and Technology, responsible for the project, points out:
"The legislative process was preceded by the Green Paper, consultation on it. Before we began writing the draft new rules, we conducted an in-depth diagnosis of the situation. It follows that the problem of congestion is so serious that State interference is justified. Especially when a large company, which has a stable financial situation, uses its position, imposing extended payment dates on weaker counterparties or does not pay them within the agreed deadline".
"In preparing the project, we have modeled on other EU countries (e.g. the UK, France, Ireland, the Netherlands). We will monitor how the tools introduced by the Act work. Experience has shown that companies that have previously used inappropriate practices can try to circumvent our regulations. We will respond to this," he points out.
How is it?
As estimated by 80 to 90% companies in Poland are not paid within the set deadline. In addition, in practice we are dealing with imposing even 180-day payment deadlines.
According to BIG InfoMonitor in March, first quarter of this year percentage of enterprises to which counterparties in the last six months delayed payments by more than 60 days, 49%. In the same period 2018 was it 53%, and in the last quarter of the year 54% The worst in this respect is in construction and transport, in these industries above 60% companies have experienced such problems. Industry comes second: 43% of enterprises in this sector experience problems with contractors’ insolvency.
In turn from the European Payments Report 2017 Almost half of Polish companies are forced to accept long payment deadlines. According to entrepreneurs what fourth the counterparty is behind on payment because it is a form of cheap lending of its business – thus avoiding taking more expensive bank loans.
Large companies are mainly lending at the expense of micro-, small and medium-sized enterprises. This adversely affects the activities of the smallest companies (e.g. causes difficulties in placing new products on the market, leads to reduced turnover and consequently profits).
However, they accept such a situation because they want to maintain a good relationship with counterparties who have a strong position in their industries. At the same time, entrepreneurs who do not receive payment for their goods and services often lack money to regulate their obligations to other market participants.
Key solutions
Reduction – up to the maximum 30 days from the date of delivery of the invoice — time limits for payment in commercial transactions in which the debtor is a public entity (excluding medicinal operators). Reduction to the maximum 60 days – the date of payment in transactions where the creditor is a micro-, small or medium-sized enterprise and the debtor is a large company (so-called asymmetric transaction).
Where an equivalent payment period (e.g. two medium-sized companies) is established between entities that are more than 60 days – in the event of a dispute between them, the debtor and not the creditor will have to prove that the agreed payment deadline was not grossly unfair.
The possibility for the creditor to withdraw or terminate the contract when the time limit for payment has been unduly extended exceeds 120 the days counted from the date of delivery of the invoice or account to the debtor confirming the supply of the goods or the performance of the service, and the fixing of that time limit was grossly unfair to the creditor (in which case the creditor will be able to withdraw from the whole or part of the contract).
Annual transfer by the largest corporate income tax taxable persons (capital groups and companies whose income exceeds annually 50,000,000 EUR), Minister for Economic Affairs (MPiT) reports on their payment deadlines. These reports will be publicly available, which will allow you to learn how big partners carry out their obligations and assess the risk of entering into business relations with them. first Payment practice reports are to be published in 2021 (will provide information on 2020).
The President of the Office for Competition and Consumer Protection will impose administrative penalties on companies that are most delaying the regulation of their obligations.
First, the President of the UOKiK – either on his own initiative or on request – will assess whether there has been an excessive delay, and if so, the penalties will take into account the value of unpaid invoices and the length of delays in payments.
The introduction of provisions aimed at identifying effects in PIT and CIT taxes, the so-called "bad debts" (including the so-called "bad debts"), in the form of a mechanism operating in VAT.
This means that a creditor who will not be paid within the time 90 the days after the expiry of the period specified in the contract or on the invoice, will be able to reduce the tax base by the amount of the claim (in turn the debtor will be required to raise the tax base by the amount he has not paid).
Increase in statutory interest for delays in commercial transactions by two percentage points, i.e. to 11.5%, so that lending at the expense of companies is more expensive than obtaining money from e.g. commercial credit. Only in transactions where the debtor is a medical entity, interest will remain at its current level, i.e.
9.5% Simplification of the safeguard procedure before civil courts in cases of cash claims for commercial transactions where the value of remuneration does not exceed 75,000 PLN.
This means that there will be no need to demonstrate a legal interest in the granting of a security by the court – it is sufficient that the reason for a similar claim and the fact that the claim has not been settled by at least 3 months after the expiry of the payment deadline specified in the invoice or contract.
As a result, once the security is secured, the plaintiff will have a greater guarantee of recovery in the event of a favourable judgment of the court.
Differentiation of compensation for costs incurred for recovery (now such compensation is 40 EUR on any unpaid claim or part thereof).
After the changes they will be designated three thresholds: 40 EUR – where the cash benefit does not exceed 5,000 PLN; 70 EUR – where the cash benefit is higher than 5,000 PLN, but lower than 50,000 PLN; 100 EUR – where the cash benefit is equal to or greater than 50,000 PLN.
In addition, a mechanism was introduced to prevent the abuse of the right to compensation.
At the same time, it was accepted that a public entity would not have to compensate for the costs incurred in recovering the claim when its amount is equal to or higher than the remuneration for the supply of the goods or for the performance of the service.
Complementation of the catalogue of unfair competition acts (in the anti-unfair competition Act) with an action consisting of an unjustified extension of the time limits for payment for the products or services supplied.
The Act amending certain laws to limit payment congestion is to enter into force 1 January 2020.