Payment Terms: The Government excludes Very Small Enterprises

The Competition Council has issued an opinion concerning draft law No. 69-21 relating to payment terms. This text will modify and complete the Commercial Code. The Head of Government, Aziz Akhannouch, is required by the law governing the Competition Council to seek the opinion of the latter, in particular on matters related to prices. The regulator gave a “favorable” opinion, but it’s “subject to reviewing” Articles 1, 2, and 3 of the draft law. Its proposals are based on “competition concerns”. The proposals of the Competition Council  also aim to “improve” the legislation so as to make it “more effective”.

• A single applicable law, regardless of the amount of the invoice
The draft law relating to payment terms has set a threshold of 10,000 Dirhams (MAD) for invoices. It excludes VSEs on the pretext that “most of their invoices are below” 10,000 Dirhams. The administrative “practice” consisting in “splitting the invoices will lead to” a reduction in the amounts to be claimed within the deadlines since the amounts in question will be below the legal threshold, with the perverse effect of accentuating “the exclusion of VSEs” to whom the Government and its branches are financially indebted. “The application of the law to all invoices, regardless of their amounts”  must be the principle. The Council, which consulted the tax authorities among others , calls for alignment with a tax rule: “All invoices, regardless of their amounts, must be declared for the calculation of VAT”.

• Reducing the reporting period from one year to three months
It is a question of harmonizing invoice processing rules to calculate taxes. Only the debtor company “declares annually” to the tax authorities “its unpaid bills or invoices paid late”. This mechanism “ignores” the creditors who are “issuers of these same invoices” when they have a hole in their cash flow! Hence the importance of “reviewing the frequency of declarations of invoices”. Their filing must “be reduced from one year to one quarter”. It is planned to digitize invoices received and issued. The goal is to counter “false invoices”.

• Protecting creditors from bad payers
The Competition Council recommends recognizing “to creditors the possibility of obtaining proof from the tax authorities”, such as a certificate of non- payment , and this, each time a fine is issued. This document will support the requests for “compensations for delays” filed in court. It will also serve as an “additional means of pressure” on bad payers. Another proposal consists in “implementing and generalizing the GID (integrated expenditure management) system for all State-Owned Entities of an administrative nature”. Companies and State-Owned Entities  (SOEs) which intervene in the market are called upon to “digitalize their purchasing procedures”, in order  to ensure better “traceability of the exact dates of receipt, invoicing, and payment”.
It is also recommended to “change the public procurement regulations applicable to SOEs”. Purchasing regulations “adapted to the specificities of their activities and operations” are essential.

• Reviewing the system of monetary sanctions
It is planned to adjust financial penalties to the amounts of invoices. The Council cites the cases of non-declaration, late declaration, and incomplete or insufficient declaration. The penalty will be based on a percentage of the invoice amount instead of a fixed fine, which is a way of taking into account the size of the penalized company as well. The goal is to deter the company and not to put hir in financial difficulties. The law on freedom of prices and competition also adopts the principle of the proportionality of sanctions. The proceeds of the fine must be allocated to a special entrepreneurship account. Nonetheless, the draft law on payment terms “is unclear as to its end use.” The regulator proposes “to insert this special account in the Appropriations Bill and to define its operating mechanisms”.

Faiçal FAQUIHI