2023-09-22 19:05:20
Finance News Weekly: Law No. 69-21 on payment deadlines, which came into force in July 2023, has the main objective of providing a solution to late payment characterizing contractual relations between commercial partners. What reading do you make of it? What are the other main contributions of this new law?
Azzelarab Zaoudi Mougani : This new law could have significant implications and repercussions on commercial practices between businesses in Morocco, if only to deter unfavorable practices regarding late payment. By setting a default payment deadline of 60 days, the law sets a clear standard for commercial transactions and imposes fines for failure to meet these deadlines, providing an incentive for companies to honor their financial obligations to their partners. Among the other main contributions of the law, we find the precise definition of the payment period, which is set by default at 60 days, unless otherwise agreed between the parties, from the date of issue of the invoice. When the deadline is defined in the contract, it cannot exceed 120 days from the date of issue of the invoice. Furthermore, the law establishes a maximum deadline for issuing the invoice, namely the last day of the month in which the goods were delivered or the services were rendered.
If the invoice is not issued within this period, the payment period begins to run from the end of the month of receipt of the goods or performance of the services. In the event that the parties agree on monthly transactions, these deadlines begin from the first day of the following month. However, exemptions are envisaged for certain sectors with seasonal particularities, making it possible to set different deadlines, but limited to 180 days. The entry into force of Law No. 69-21 on payment deadlines, in July 2023 in Morocco, will not be uniform, but progressive, taking into account the size of companies, in order to allow adaptation in gentleness to the new rules. For large companies, those with a turnover excluding taxes of more than 50 million dirhams (MDH), the law applied from July 2023. It will impact all invoices issued from this date. The timetable then provides for an extension of the application of the law to medium-sized companies, those with a turnover of between 10 million dirhams and 50 million dirhams, from January 2024. Finally, small companies, those generating a turnover of business located between 2 MDH and 10 MDH, will be affected from January 2025.
FNH: Some experts say that this law acts as a shield to protect SMEs which are the first to suffer from the extension of payment deadlines. Is this observation true? What do you think ?
A. Z. M. : The observation that Law No. 69-21 acts as a shield to protect SMEs is largely true. SMEs are often the most vulnerable to payment delays, because they have less financial flexibility to deal with cash flow challenges. This law sets a default payment deadline of 60 days, which considerably reduces the risk of late payment for SMEs. Additionally, the fines provided by law for failure to meet payment deadlines serve as a disincentive for large companies who might be tempted to delay payments. This indirectly protects SMEs by encouraging a culture of punctual payment. However, it is essential to note that the success of this protection will depend on the strict application of the law and the effectiveness of the redress mechanisms in the event of a violation. SMEs must also be well informed of their rights under this law to fully benefit from it. Ultimately, the law aims to establish a culture of respecting payment deadlines within Moroccan companies, thus promoting more equitable and sustainable commercial relations.
FNH: Do you think that this new law will resolve the problem of payment deadlines in general?
A. Z. M. : The new law on payment deadlines in Morocco represents a positive step forward in resolving the persistent problem of late payments. However, it is important to note that this law, while important, cannot alone guarantee a complete solution. Its success will largely depend on its effective implementation and the active collaboration of companies to meet the agreed deadlines. This law introduces clear provisions, including well-defined payment deadlines and dissuasive fines in the event of non-compliance. However, it cannot eliminate the problem entirely, as it relies on companies’ voluntary buy-in and ability to meet established deadlines. Effectively addressing the issue of late payment will require raising awareness among businesses of the importance of timely payment, encouraging a culture of on-time payment, and putting in place effective redress mechanisms in the event of violations. Ultimately, the law is an essential tool, but it will need to be complemented by other initiatives to bring about real change in business practices in Morocco.
The law provides for fines in the event of non-compliance with its provisions, calculated according to the key rate of Bank Al-Maghrib, increased by 0.85% per month or fraction of a month of additional delay. These fines are applied to the unpaid amount within the prescribed deadlines, for each invoice in dirhams, VAT included. Companies must pay these fines spontaneously when submitting their declaration to the General Directorate of Taxes. Significant financial penalties are also provided for in the event of delays or non-payment of penalties, as well as for non-declaration or delay in submitting it. The amounts of the fines vary depending on the annual turnover excluding VAT of the company, ranging from 5,000 DH for companies with a turnover of between 2 MDH and 10 MDH, to 250,000 DH for those with a turnover of Annual business exceeds 500 MDH. A fine of 5,000 DH is also applicable in the event of incomplete declaration.
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