The 2024 Finance Law introduces a set of crucial measures that reshape the tax landscape for Moroccan taxpayers. Discover the implications in this short summary which briefly presents the tax provisions brought about by this law.
I) Value added tax (VAT)
We are starting with VAT as 2024 is clearly the year of change for the VAT regime in Morocco with many important changes.
1) Withholding of VAT (WHT) :
This measure is probably the one that will have the broader tax implications for taxpayers in Morocco as it will impact how customers contract and pay their suppliers.
WHT on capital goods and taxable works:
⚠️ VAT will now be withheld at source by customers for all suppliers of taxable capital goods and works, who do not prove tax regularity by providing a certificate of tax regularity issued by the tax administration dating from less than 6 months.
Exceptions: Public sector entities will be exempted from this withholding obligation.
WHT on services:
⚠️ Withholding of 75% of the VAT amount for service providers by customers from public sector entities and for individuals dealing with private sector entities.
⚠️ 100% withholding if there is no certificate of tax regularity from suppliers.
Exceptions to the WHT rules:
- Electric power and water distributed publicly.
- Sanitation and meter rental.
- Telecom operators.
- Insurance brokerage agents.
- Transactions ≤ 5,000 MAD (limit 50,000 MAD/month/supplier).
VAT credit refund:
No doubt to compensate for the impact on taxpayers’ cash flow, the finance law provides for the restitution of VAT credit following deduction at source. The operating mode and its effectiveness will remain to be clarified.
2) Other Measures related to VAT
Changes to VAT measures:
| Conservation of Investment Assets (PP&E) | The law reinstates the obligation to keep investment goods in a capital account for 60 months, under penalty of reimbursement to the Treasury of the initial advantage. |
| VAT for Digital service providers and E-Commerce | The 2024 Finance Law targets online services provided by foreign suppliers to local consumers to include them into VAT’s scope. |
| Solidarity of Management for VAT purposes | The law establishes solidarity for the collection and payment of VAT, involving any person exercising administrative or management functions and any effective beneficiary of unpaid VAT. |
| VAT Self-Assessment and deduction | This new optional regime allows entities subject to VAT to calculate this tax on their out-of-scope or exempt purchases, simultaneously allowing them to deduct it. |
| Tax Regime for Real Estate Rentals and Investment Exemptions: | Clarification of the VAT rules for the rental of non-equipped premises for professional use, they are subject to VAT when their acquisition or construction was made with deduction or exemption from this tax. |
Rearrangement of VAT Rates:
| Gradual reduction of the rate from 14% to 10%.
12% from January 1, 2024, 10% from January 1, 2025. |
Insurance-related services | 📉 |
| Reduction from 7 to 10% | Water from public networks, sanitation, rental of water meters (excluding certain operations). | 📈 |
| Progressive alignment of the VAT rate
16% from January 1, 2024, 18% from January 1, 2025, 20% from January 1, 2026. |
Electricity | 📈 |
| Progressive alignment of the VAT rate
11% from January 1, 2024, 15% from January 1, 2025, 20% from January 1, 2026. |
Rental of electricity meters | 📈 |
| Gradual reduction from 14% to 10%.
12% from January 1, 2024, 10% from January 1, 2025. |
Renewable energy sold by producers: | 📉 |
| Gradual increase from 7% to 10%.
8% from January 1, 2024, 9% from January 1, 2025, 10% from January 1, 2026. |
Refined sugar | 📈 |
| Increase from 7% to 10%. | Economy cars | 📈 |
| 10% reduction over 3 years:
13% from January 1, 2024, 12% from January 1, 2025, 10% from January 1, 2026. |
Urban and road transport of passengers and goods | 📉 |
| Increase to 20% over 3 years:
16% from January 1, 2024, 19% from January 1, 2025, 20% from January 1, 2026. |
Other transport (excluding urban and road) | 📈 |
Exemptions of VAT
Common Consumer Products:
With right of deduction: pharmaceutical products, Domestic water, Sanitation services.
Without right of deduction: Butter, Powdered milk, Canned sardines, Household soap, School supplies.
Mohammed VI Foundation:
The Mohammed VI Foundation for Science and Health benefits from a VAT exemption with right of deduction.
Cooperatives:
Cooperatives offering services related to agriculture benefit from an exemption under regulated conditions.
Operating concessions upon import:
The VAT exemption is established up to the amount of VAT liquidated upon importation for the royalties and rights granted.
II) Corporate taxes (CT)
Clarification of the conditions for reducing the CT rate from 35% to 20%:
Clarification on the conditions for transition of the Corporate Tax rate from 35% to 20%. The application of the reduced rate of 20% is conditional on maintaining the net profit below one hundred million (100,000,000) dirhams for three (3) consecutive financial years. However, this rule does not apply if the net profit exceeding the threshold results from non-current operations.
Mohammed VI Foundation for Science and Health
The 2024 Finance Law grants a permanent exemption from Corporate Tax (IS) to the Mohammed VI Foundation for Science and Health for all of its activities, operations and the resulting income.
Donations from taxpayers subject to CT, whether in cash or in kind, allocated to the Mohammed VI Foundation for Science and Health, are deductible for tax purposes.
III) Personal Income Tax (IT)
Deductibility of social security contributions:
The 2024 Finance Law extends the right to deduct social contributions paid under the basic compulsory health insurance (AMO) to professionals, self-employed workers and self-employed persons carrying out a liberal activity.
Clarification of the calculation of Profit from movable capital following an inherited transfer:
In the event of transfer of inherited securities, the acquisition price taken into account is the market value of these securities at the death of the deceased, as recorded in the inventory drawn up by the heirs. In the absence of this information, the taxpayer can declare the market value on the day of the deceased’s death, without taking into account acts of joint ownership or others. In the event of automatic taxation, the taxation is based on the transfer price, due to lack of precise information.
Clarification of the calculation of Land Profit following an inheritance:
Similar to the previous point, the acquisition price of inherited buildings is determined by the market value on the day of the deceased’s death, as recorded in the inventory drawn up by the heirs. In the absence of this information, the taxpayer can declare the market value on the day of the deceased’s death, without consideration of acts of joint ownership or others.
Flat rate reduction on artists’ fees:
The gross amount of fees awarded to artists, whether they work individually or within troupes, will now be subject to a 30% withholding tax. However, a flat-rate reduction of 50% will be applied before this deduction.
IV) Common measures
Principle of the right to error:
The law establishes a system allowing taxpayers to spontaneously correct their tax declarations. They can request from the tax administration a statement of the irregularities noted, then submit a corrective declaration, pay the additional duties without penalties, accompanied by an explanatory note specifying the rectifications made.
Simplification of the abuse of rights procedure:
To simplify the fight against abuse of rights, the 2024 Finance Law removes one level of appeal, now only the national tax appeal commission. Taxpayers can request prior consultation with the administration for potentially abusive transactions.
Improvement of the examination of the tax situation of individuals:
A simplified adversarial procedure is established to ensure the rights of taxpayers, including the sending of an audit notice, an oral debate, a maximum audit duration of 6 months, and communication of adjustments within 3 months following the closing of the audit. control.
Clarification of non-cumulative tax benefits:
The 2024 Finance Law repeals the provisions preventing the accumulation of certain tax advantages, in order to avoid any divergence of interpretation between common law tax advantages and those provided for by the investment charter, thus supporting the tax and investment.
V) Registration rights
Alignment of rates for acts of allocation of premises or land by cooperatives and associations:
The 2024 Finance Law established an alignment of registration fee rates for all acts of allocation of premises and land by cooperatives or associations.
- For built premises intended for residential, commercial, professional or administrative use, the rate increased from 1.5 to 4%.
- As for acts granting bare land, the rate increased from 1.5% to 5%.
- In addition, the transfer of housing to the cooperator after full release of the subscribed capital will be taxed at 4%.
Exemption from registration fees for the Mohammed VI Foundation for Science and Health:
The 2024 Finance Law exempted registration fees for acts related to the activities and operations of the Mohammed VI Health Sciences Foundation created according to Law No. 23-23.
Supervision of acts subject to registration:
Notaries, civil servants exercising notarial functions, Adouls, Hebrew notaries and any person drafting or contributing to the drafting of a deed subject to registration must now respect two obligations:
- Present a certificate prior to the drafting of any act justifying the payment of taxes and duties linked to the building for the year of transfer or transfer, as well as for previous years.
- Include the article numbers relating to the housing tax and the municipal services tax in the documents drawn up.
VII) Other tax measures
Public debt recovery code:
The possibility of electronically sending and notifying public debts to taxpayers is introduced. Provisions are amended to allow the Minister of Finance to grant discounts or moderations on late payment interest and penalties.
Discharge contribution for regularization of assets abroad:
A final contribution is established for the voluntary regularization of assets held abroad before January 1, 2023. It requires the declaration of assets, their repatriation in foreign currency, and the payment of a final contribution varying between 2% and 15% depending on cases.
Voluntary regularization of the tax situation of taxpayers:
A derogatory measure is introduced in 2024 allowing the voluntary regularization of the tax situation of individuals. It concerns profits and taxable income not declared before January 1, 2024, with a contribution set at 5% of liquid assets and acquired goods not declared.
Discharge contribution for check payment incidents:
A final contribution is set at 1.5% of the amount of unpaid checks issued before December 31, 2023, making it possible to avoid penalties relating to payment incidents. The maximum amounts are 10,000 dirhams for individuals and 50,000 dirhams for legal entities.
State assistance for housing support:
The conditions for benefiting from state aid for the main residence are revised, requiring in particular that the accommodation has at least two rooms and is assigned to the main residence for at least five years.
Extension of the amnesty for inactive companies:
The amnesty in favor of inactive companies, established by the 2023 Finance Law, is renewed in 2024.
This summary aims to present to the reader the main tax reforms brought by this law, offering an overview of the major changes made in the Moroccan tax landscape for the current year. For a more detailed and exhaustive analysis, please refer to the Finance Law 2024 and other amended laws. Please note that the information provided here does not constitute tax advice. For specialist and specific advice regarding your financial or tax situation, we strongly recommend that you contact us