Author: SME Chamber
Late Payment Fee Directive – A framework for protection against consequences of late payments
The Minister for the Economy, Investment and Small Businesses, Hon Chris Cardona, addressed an information session regarding the transposition of the Late Payment Fee Directive (2011/7/EU), hosted by GRTU.
The directive seeks to create a framework to address the growing concern of business-to-business payments and payments by the government or public authorities to businesses, where such payments are effected beyond the agreed due date or remain overdue. This, as we are all aware, causes burdens on business undertakings, particularly small business, causing stress on cash-flow and at times resulting in bankruptcy.
The Directive helps ensure the proper functioning of the internal market by limiting and harmonising payment terms, permitting suppliers to claim compensation, and allow interest in the event of late payment. This directive does not apply for transactions between consumers, interest in connection with other payments such as the laws on cheques and bills of exchange, and payments made as compensation for damages including payment from an insurance company.
Public authorities have to pay for the goods and services that they procure within 30 calendar days following the receipt of invoice. Enterprises are automatically entitled to claim interest for late payment and able to obtain a minimum fixed amount of €40 as compensation for recovery costs, with the possibility of claiming all remaining reasonable recovery costs. The rate of interest for late payment between undertakings is agreed between the undertakings. If there is no such agreement, or in cases where the transaction is between a business and a public authority, the applicable interest rate is at least at 8% plus the ECB reference rate.
A payment period should be fixed in the contract in the case of business-to-business transactions. This period should not exceed 60 days unless this is expressly agreed in the contract and it is not grossly unfair to the creditor. Interests are due the day following the end of the fixed period.
The new measures of the directive are obligatory for public authorities yet optional for enterprises. Indeed one of the main concerns voiced by business representatives was that the nature of the market itself may be challenging to affect the benefits of the directive in cases of business-to-business transactions, since this may result in debtors to opt for other suppliers. Indeed this is a concern that as the Directive stands, will have to be addressed by the market itself. However it does provide a basis to act as a framework to such agreements even though it will not be the solution to all problems.
GRTU calls for the Commuted Parking Scheme Fund to be used for the creation of new parking opportunities
During an MCESD meeting specifically held on GRTU’s request the Minister for Transport and Infrastructure Joe Mizzi explained details about the new public transport operator and service. These included details on the acquisition by the new company, the investment it will carry out, the 15 year subsidy given by the Government and the increased service it is expected to result in.
In his intervention GRTU President Paul Abela explained that public transport is very important for our members and in fact members in the localities were transport service was poor saw their business affected as a result. Mr Abela said we should look at transport in a holistic manner because the new service provider will have little impact if our roads are still plagued with the problem of traffic congestion and parking issues.
GRTU President said that a Park and Ride system accompanied by a circular bus in the busiest localities is very important and Government should use funds from the Commuted Parking Scheme specifically for such cases and to create new parking facilities, even in conjunction with the private sector.
Paul Abela confirmed as GRTU President – GRTU holds successful Annual General Meeting
GRTU has today held its first Executive Council meeting during which Paul Abela has been confirmed as GRTU Presidentfor the year 2015.
The Executive Council also elected GRTU’s 6 Vice Presidents as follows:
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Vice President – Policy and Strategy |
Philip Fenech |
Tourism, Hospitality and Leisure, Business Consultancy Services |
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Vice president – Finance and Administration |
Marcel Mizzi |
E-Commerce, Web & Software Developer |
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Vice President – Sections |
Joan Haber |
Manufacturer of Artistic Crafts & Ceramic Goods, Event Organizer, Crafts Council Representative |
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Vice President – Districts and Localities |
Sergio Camilleri |
PetrolStation owner, Auto Parts, Auto Dealer, Rent a Car & Panel Beater |
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Vice President – International Relations |
Michael Galea |
Auto Dealer, Importer & Repairs, Auto Service Station, Marketing Advisor & Real Estate |
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Vice President – Training and Development |
Mario Debono
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Pharmacy Owner, Pharmaceutical Importer, Healthcare IT Provider & Property Developer |
Amongst its 18 Council Members, representing diverse economic operators within GRTU, GRTU is this year welcoming two new Members on its Executive Council, Mr Alfred Fenech of Sterling Jewellers and Mr Christian Vassallo of Vassallo Group. GRTU’s Memberson the Executive Council for the year 2015 are:
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Azzopardi Emanuel |
Laundry & Dry Clean, Upholstery & Carpet Cleaning |
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Cutajar Patrick |
IT Consultant |
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Fenech Alfred |
Jewellery Importer, Manufacturer & Retailer & Restauranteur |
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Fenech Azzopardi Therese |
Retailer & Manufacturer of Furs & Leather Wear, Importer & Retailer of Swimwear |
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Galea Stephen |
President Socjeta` Vitikultura, Agriculture, Farmer & Vine Grower |
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Gauci Noel |
Renewable Energy, Culinary Products |
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Vella Josette |
Importer & Retailer of Quality Giftware, Furniture and Fine Arts |
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Vella Salvu |
Cargo Haulier (Burdnar), Customs Clearance Agent & Forwarder, Shipping & Travel Agent & VRT |
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Vassallo Christian |
Construction, Real Estate, Elderly Care, Furniture, Hospitality & Catering |
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Zammit Carmel |
Cargo Haulier (Burdnar) |
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Zerafa Joseph |
Hifi, TV & Domestic Electronic Equipment Importer & Retailer |
Last Sunday the 18thof January GRTU successfully held its Annual General Meeting during which Paul Abela made an introduction of what this year meant for GRTU and that even though this was once again a very challenging year it was also a successful year.
In her presentation of the Annual Report GRTU CEO Abigail Psaila Mamo presented an overview of the work undertaken by GRTU in 2014 and amongst other things explained the important wins GRTU achieved during the year:
1. Shift from Eco Tax
Through its efforts for Budget 2015 GRTU committed Government to shift electrical and electronic equipment from Eco Tax to the Waste of Electrical and Electronic Equipment. This is something GRTU has been insisting on for a number of years and we therefore consider this as a very big win. Much rests on the implementation of this commitment and GRTU will be following it up closely in 2015.
2. Tackling Unfair Competition
Also through its efforts for Budget 2015 GRTU committed Government to increase drastically its enforcement system to tackle the issue of unfair competition. The first action started at the end of 2014 and enforcement will be escalated in 2015. This is another big win for GRTU and GRTU will continue monitoring implementation in 2015.
3. Access to Finance
Thanks to GRTU’s efforts the authorities, the banks and other entities started offering cheaper financing options for SMEs and the Government committed to implement GRTU’s request to have a development bank. This is just the tip of the iceberg however GRTU is confident that the situation will continue to improve during 2015. This especially GRTU has convinced the MCCAA to investigate GRTU’s claims. The investigation will be conducted during 2015 according to the priorities identified by GRTU and its members.
4. Valletta Shop Scheme
GRTU successfully renegotiated the original Valletta Shop Scheme that would give an increased and longer title of lease to tenants. GRTU will continue negotiating on this Scheme in 2015 so that it ensures a high take-up.
5. Reduction in Excise duty on Tyres
GRTU has successfully negotiated a better deal for importers of large tyres, from what was announced in Budget 2015, by convincing the authorities to introduce a cap on larger tyres as well as better payment terms for the excise due. GRTU estimates that the change negotiated will result in a 50% reduction in excise due from importers of large tyres.
6. Smart card compensation
GRTU won a reimbursement for owners that have purchased a smart card machine during 2013 and 2014 in view of the change in policy. The reimbursement is capped and GRTU will be in charge of administering the reimbursement process in 2015.
7. Stalling increases in port charges
GRTU has so far successfully managed to stall further increases imposed by the VGT. Pressure to increase the charges is however constant and GRTU is ready to escalate its action.
8. Online directory by MCA
As part of the E-Commerce strategy GRTU proposed the setting up of an online directory and this was set up by the MCA. This we feel is a first important step in making the online world more accessible and to small businesses.
9. Sections
2 new sections have joined the GRTU in 2014 and the GRTU has reached an agreement that safeguards the livelihood of Gas Distributors for the years to come.
10. PVPFS and GRTU Approved Schemes
In 2014 GRTU was able to quantify the final results and benefits reaped from the Schemes that emanated from the PV Section. GRTU regards both Schemes as success stories which it will seek to replicate in other areas and sections. GRTU waits expectantly to see the GRTU Approved recognized on a national level in 2015.
Members present for the AGM were also given the opportunity to raise any issues and some members expressed their concern on the current high fuel prices. They emphasised that coupled with the high licensing fees on commercial vehicles, these were heavily decreasing the competitivity of Maltese enterprises.
GRTU welcomes Air Malta’s determination to restructure and appeals for responsibility
Air Malta has strengthened its resolve to take the difficult and necessary decisions to save the national airline which will also ensure a positive outcome for the country. This was the reaction of the airlines’ chairwoman Ms Maria Micallef after receiving the news of Cyprus Airways demise by the European Commission.
GRTU is in full support of Air Malta’s restructuring and it appeals to the various stakeholders involved to be reasonable and
understanding to the situation, because if the airline does not show future sustainability it could follow in the footsteps of Cyprus Airways.
Air Malta plays an important role not only for the stakeholders direct involved but also for the tourism industry that thrives from the business generated by the airline. These stakeholders must accept this change in the airlines operations as a new beginning to make it sustainable again so that they can benefit from its survival.
GRTU successfully secures a better deal on tyre excise
GRTU met Hon Minister Edward Scicluna to discuss its concerns in relation to the new excise duty imposed on tyres as per Budget 2015.
Prior to the meeting GRTU analysed how the addition of the excise would impact different types of operators and the impact was indeed significant:
1. Large tyre importers
GRTU estimated that a company importing large commercial tyres on a regular basis (6 times a year) would have normally paid around €7K in taxes (Eco Tax and VAT) a year, while with the new Excise tax they would pay around €70K a year in taxes (excise and VAT on excise).
2. Freight forwarders
A large enterprise in this sector would change around 300 tyres a year. Up to the end of 2014 the enterprise would have paid an estimate of €1.6K in taxes (Eco Tax and VAT) while with the new system the tax element would increase to €17K (Excise + VAT).
GRTU argued that the increases on users of large tyres were too hefty and would significantly impact their competitiveness because it will increase their running costs. In addition the excise will also decrease the competitiveness of importers because it will be cheaper to change tyres outside Malta. As such GRTU suggested that the Ministry would cap the maximum amount of Excise that could be due on large tyres.
Another aspect raised by the GRTU was that whereas with the previous system eco tax was paid only once the product is sold, meaning first it is recuperated and then it is paid after, with excise, the payment is due on import. As a mitigating proposal GRTU suggested that importers would be given a longer credit term.
The Ministry accepted GRTU’s arguments and its proposals, agreeing to introduce a capping of tyres over 35kg and it also agreed to a credit term of 3 months. GRTU estimates that these changes will reduce the excise duty burden on large tyre importers by a minimum of 50%.
In addition GRTU emphasised with the Ministry that the excise duty will be even more harmful if enforcement is not effective and GRTU therefore asked for this to be beefed up. As such it suggested that the scanner would be moved on a regular basis to other areas through which importation of goods occur. This was also a proposal the Ministry found acceptable.
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Health and Safety in Construction
The Occupational Health and Safety Authority refers to photos that are intermittently posted on the media showing unsafe construction work practices and feels that it is opportune to clarify various misconceptions.
Photos posted by media – Whilst understanding the general interest of media and civic minded persons in reporting unsafe work practices to media and thus contributing in the prevention of accidents at work, unfortunately such approach will not reach the effectiveness desired if OHSA is not immediately informed. This is being said in view of the fact that most of the time,
photos are published hours and even months after the occurrence of the unsafe work practice, hence leaving the same person/s being exposed to serious and imminent danger in particular when risks of falls from height are concerned. To this end, concerned persons are being urged to immediately inform OHSA in cases where unsafe working situations are noted. OHSA adopts a confidentiality reporting procedure in order to secure the confidentiality of the complainant.
Occupational Health and Safety in Construction Sites –The construction industry is undoubtedly considered as one of the most hazardous work environments, mainly due to the continuous changing of work situations and exposure to risks of falls from height. This can be also confirmed by the number of enforcement actions taken by OHSA in cases where breaches of occupational health and safety legislation have been noted. In view of this matter, OHSA is reminding all duty holders of the legal provisions laid down in the Occupational Health and Safety Authority Act XXVII of 2000 and in particular in L.N. 281 of 2004 – Work Place (Minimum Health and Safety Requirements for Work at Construction Sites) Regulations. L.N. 281 of 2004 lays down the minimum health and safety requirements for work at construction sites which shall be followed by a number of duty holders being the Client, Contractors, Project Supervisors and Workers themselves. The term “client” means any natural or legal person for whom a project is carried out and whom is vested with the most important legal provisions. One of the main duties of the client is to appoint a project supervisor for the design stage and a project supervisor for the construction stage. Such appointment shall be made in respect of every project. The client may assume such roles, however, in order to do so one must be competent in matters pertaining to occupational health and safety. In cases where work is scheduled to last longer than thirty working days and on which more than twenty workers are occupied simultaneously, or on which the volume of work is scheduled to exceed five hundred person-days, the Project Supervisor shall submit the Construction Notification Form to OHSA at least four calendar weeks before work starts. Project Supervisors are vested with a number of other duties which shall be followed in particular those pertaining to the compilation of the required occupational health and safety documents and the coordination of the implementation of the general principles of prevention and safety.Being a complex subject, occupational health and safety requires the cooperation of stakeholders and duty holders. Healthier and safer workplaces can only be achieved if all duty holders recognise that it is in their best interest to adhere to their duties imposed by occupational health and safety legislation. Whilst recognising the pivotal role OHSA has to maintain compliance with occupational health and safety legislation, it would be unreasonable to expect OHSA to be physically present in all workplaces at all times. This has been reflected in the legislation both on a local and European level, where in the case of construction works, the client has been endowed with the main and ultimate responsibility to ensure the appropriate management of health and safety. This is also clearly reflected in L.N. 281 of 2004 which stipulates that the appointment of Project Supervisors (as laid down in the same legislation), does not relieve the client from his legal responsibilities.On finding a breach of health and safety legislation, OHSA will take the necessary and appropriate legal action. It is worthy to point out that legal action will invariably be taken against clients. For this reason, it will be in the client’s best interest to appoint reputable project supervisors and contractors who have the necessary capabilities and technical knowledge to perform well and safely the task to be entrusted to them. This essentially means that when evaluating quotations, the client should not automatically choose the cheapest one, unless it can be shown that adequate safety control measures will be taken.
Tougher penalties for breaches of Occupational Health and Safety legislation – Whilst acknowledging the importance of establishing a risk preventive culture through education channels, OHSA is currently working on dramatically increasing the penalties to be handed out in cases where occupational health and safety legislation is being breached. This approach will be reflected in an increase in the maximum fines and imprisonment terms. The intention of such approach is to deter duty holders from breaching occupational health and safety legislation.

