New law will target late payers
The Ministry of Finance together with the Ministry of Development are working on new regulations that, in their view, will significantly improve the condition of numerous Polish enterprises. The recently prepared bill on “amendments to certain acts for the purpose of introducing facilitations for entrepreneurs in fiscal and commercial law” focuses on the issue of payment delays and companies that do not pay their dues on time.
Invoices that are settled way past their due date constitute an everyday problem for many entrepreneurs in Poland. Clients delay making payments as long as possible, which obviously is not good news for companies selling goods and services. In a recently conducted survey carried out for National Debt Register, as many as 81% of respondents admitted they are forced to face late payers. Payment defaults have negative impact on cash flow of any business. What is more, an entrepreneur who issues an invoice has an obligation to settle the tax arising out of it even before they receive any money.
Newly drafted legal provisions introduce solutions that will discourage businesses from withholding payments. A company who does not settle an invoice will not be entitled to treat this invoice as tax deductible expense. In other words, they will not be able to lower their income tax. The company which issued the invoice, on the other hand, will be allowed to reduce their tax basis by the invoiced amount. The rule will apply to invoices that are over 120 days past their due date.
The idea was met with positive reactions on the part of business owners. Over half of the people reviewing the late payment solutions stated they will benefit from the changes. The bill has already gone through the consultations stage. Deputy Prime Minister and Minister of Finance and of Development during the recent 590 Congress expressed belief that new legal provisions will be passed through the Parliament before the Christmas break.