Lapid presents payment reforms for small businesses

The recommendations that came out of the study included setting hard deadlines for making payments.

April 3, 2014 02:36
1 minute read.
Finance Minister Yair Lapid.

Lapid looking sharp 370. (photo credit: Marc Israel Sellem/The Jerusalem Post)

Finance Minister Yair Lapid on Wednesday announced a series of reforms to the system of paying government suppliers that he hopes to advance in order to help small and medium businesses.

According to a ministry study conducted between January 2012 and June 2013, 67 percent of state payments to suppliers were late.

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The recommendations that came out of the study included setting hard deadlines for making payments (within 24 days of delivery for orders under NIS 50,000, which account for 85% of orders and within 30 days for orders over NIS 50,000), creating an online system for billing and creating standard operating procedures for late payments.

The government would be forced to pay interest on payments that overshot the deadlines.

Lapid said the recommendations should be in effect by the first quarter of 2015, except for the late payment procedures, which would need until the end of 2015.

The government was also working to make government contracts more easily accessible to SMBs (small and medium businesses), reduce red tape and increase the pool of loans available for SMBs.

Small and medium businesses constitute about 99% of businesses registered in Israel, accounting for nearly half of GDP and 55% of private sector jobs, said Lapid, who unveiled the plan at the fifth Meda-conference Small and Medium Business conference.

Federation of Israeli Chambers of Commerce president Uriel Lynn dismissed the plans as too little, too late, saying it was easier to talk about what the government did not do instead of what it did.

Corporate taxes, he complained, had risen in recent years from 24% to 26.5%, and taxes on dividends increased from 25% to 30%. While struggling businesses had to pay the taxes, he said, the government was lavishing a handful of large companies with tens of billions of shekels worth of benefits.

Dror Atari, chairman of Israel’s maintenance companies union, chimed in that “regulation is turning Israel into a country that is not good to work in.”

He offered one particularly intriguing suggestion for the hundreds of small businesses that could not afford offices.

“They don’t have money for offices.

They work from coffee shops,” he said.

His conclusion? Coffee should be a tax-deductible business expense.

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