Notes accompanying the 2024 Finance Bill

In order to encourage tax transparency and effectively combat false invoices, it is proposed to implement two new VAT withholding mechanisms, namely:

Withholding tax on transactions carried out by suppliers of goods and services subject to VAT

 

This withholding tax will be levied by the liable customers on the amount of VAT due for taxable transactions carried out by suppliers of goods and services who do not present to these customers the certificate justifying their tax compliance with the obligations to declare and pay the taxes, duties and fees provided for by the general tax code, issued electronically by the tax administration less than three (3) months ago.

However, the State, local authorities, as well as public establishments and other legal entities under public law required, under the legislation and regulations in force, to apply the regulations relating to public procurement, are not required to carry out the aforementioned withholding tax.

Withholding tax on transactions carried out by VAT-registered service providers

 

This withholding tax will be levied on service transactions referred to in Article 89-1 (50, 100 and 120) of the French General Tax Code (CGI), the list of which is established by regulation, up to the amount of VAT per:

a) the State, local authorities and public establishments and enterprises and their subsidiaries as well as other public bodies which pay the remuneration for said services to the persons subject to it; ;

b) Private legal entities subject to taxation and taxable natural persons whose income is determined according to the actual net profit regime or the simplified net profit regime, who pay remuneration for said services to taxable natural persons who have submitted the certificate proving their tax compliance with the obligations to declare and pay the taxes, duties, and levies provided for in the General Tax Code. If said certificate is not submitted, withholding tax is levied at a rate of 100% of the amount of this tax.

The following are excluded from withholding tax:

• sales operations relating to electricity and water delivered to networks

public distribution; ;

• sanitation services provided to subscribers by the organizations responsible for

sanitation as well as the rental of water and electricity meters; ;

• sales made and services provided by telecommunications operators; ;

• the services provided by any insurance agent,

• and other transactions whose amount is less than or equal to five thousand (5,000) dirhams, up to a limit of fifty thousand (50,000) dirhams per month and by suppliers of goods, works and services.

The amount of the withholding tax referred to above must be paid to the tax administration's tax collector during the month following the month of payment to the supplier. Each payment must be accompanied by a receipt, using a template established by the administration. Amounts withheld by government agencies and public accountants are paid directly to the public accountants under the authority of the General Treasury of the Kingdom. Any tax credit resulting from the application of said withholding tax will be refunded to the supplier concerned.