Law to reduce payment congestion
The document, prepared by the Ministry of Development, Labor and Technology, envisages primarily shortening payment deadlines, but introduces a number of other mechanisms, including the introduction of bad debt relief in PIT and CIT or greater powers for the President of the OCCP to hold companies generating payment bottlenecks accountable.
Important!
According to data from BIG InfoMonitor, in the first quarter of 2019. As many as 49% of all companies waited more than 60 days past the due date to pay their receivables. Particularly affected are the transportation and construction industries – in these sectors as many as 60% of companies have to cope with congestion.
What changes does the law introduce?
Here are the main points of the law that have changed since the beginning of 2020 to prevent payment bottlenecks:
- Reduction of payment deadlines – the deadline for payment in transactions in which the debtor is a public entity has been shortened to 30 days from the date of delivery of the invoice (this change does not apply to medical entities). On the other hand, the deadline for payment in the so-called “payment” has been shortened to a maximum of 60 days. Asymmetric transactions (in which the creditor is an SME company and the debtor is a large enterprise).
- Proving the fairness of the deadline on the part of the debtor – until now it was the creditor who had to prove that the set – too long – deadline for payment was grossly unfair to him. Thanks to a change introduced in the law, the onus is on the debtor – it will be the debtor who will have to prove that the proposed terms regarding the payment term were not unfair to the counterparty.
- New penalties imposed by the OCCP – The President of the Office of Competition and Consumer Protection will be able to impose financial penalties on those entrepreneurs who “stand out” for the greatest delays in paying contractors.
Important!
The amount of penalties is determined by the value of unpaid invoices and the length of delays. Penalties will not affect companies that cannot pay contractors due to the fact that they themselves are awaiting payment from their debtors.
- Bad debt relief in PIT and CIT – the law introduced the possibility of deducting the tax base by the amount of receivables whose payment term exceeded 90 days. It also involves an obligation to increase the tax base for the debtor (as he disposes of funds that he should have paid to the counterparty).
- Higher interest for delays and compensation – another solution is an increase in statutory interest for late transactions (from 9.5% to 11.5%). The purpose of this change is to reduce potential profits from lending at the expense of other companies. So much for the debtor, the creditor, on the other hand, can seek higher compensation for recovery costs. Previously, the amount of any refund was always the same – 40 euros. At the moment, three thresholds have been set, depending on the amount of the cash benefit. 40 euros will be recovered when the amount did not exceed PLN 5,000, 70 euros for receivables less than PLN 50,000 and 100 euros for amounts of PLN 50,000 and above.
Report on payment congestion / payment terms used
The last of the solutions to reduce payment bottlenecks is the necessity for certain entrepreneurs to prepare reports on applicable payment terms – this follows directly from the wording of the already discussed law and applies to the largest companies. They are the ones who, according to data from the European Payments Report, most often use extended payment terms as an unfair form of credit (at the expense of smaller entities).
According to information available on the website of the Ministry of Development, Labor and Technology: “the publication of data on payment practices used creates an opportunity for the largest entrepreneurs to present themselves as reliable contractors.” And what does it look like in practice?
Report on payment congestion / payment terms used
As the new regulations take effect in 2020, it is now – at the beginning of 2021 – that businesses will report for the first time. The deadline for submission of documents is January 31, 2021.
The business.gov.pl portal has launched an e-service that allows users to file a report on payment terms online, without leaving home.
Attention!
Trusted Profile or qualified signature required.
Click on this link , to submit the report to the relevant authority.
Data in the report
Every large company must include the information referred to in Art. 13a para. 4 of the law against excessive delays in commercial transactions . They are:
- The company’s name and its TIN;
- wartość świadczeń pieniężnych otrzymanych oraz spełnionych w poprzednim roku kalendarzowym w terminie:
- Less than 30 days,
- 31 to 60 days,
- 61 to 120 days,
- More than 120 days,
from the date of the invoice or bill,
- the value of cash benefits not received in the previous calendar year within the timeframe specified in the contract and the percentage of these benefits in the total value of cash benefits due to the entity in the year;
- the value of monetary benefits not fulfilled in the previous calendar year within the timeframe specified in the contract, and the percentage of these benefits in the total value of benefits that the company is obligated to fulfill in the year.
As each new piece of legislation can raise doubts and difficulties in proper interpretation, the government portal has also constructed a an accessible list of frequently asked questions with answers – some of the issues present there we have already covered in this article.
