Accounting and tax treatment of disbursements in Morocco

Accounting and tax treatment of disbursements in Morocco

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  • Definition of disbursements 
  • How to properly manage disbursements?
  • What legal framework for disbursements?
  • What is the accounting treatment of disbursements?
  • What is the tax treatment of disbursements?

Disbursements are expenses that the company incurs on behalf of its customers, and which are then billed to them.

Definition of disbursements

The disbursements correspond to all the expenses incurred by the company on behalf of its customers, and which will then be invoiced to the latter. They can include different types of expenses: travel expenses, purchases of raw materials or supplies, subcontracting expenses, etc.

It is important to distinguish disbursements from general expenses, which are expenses related to the operation of the business and which are not directly billed to customers.

Disbursement management

The management of disbursements requires rigorous organization on the part of the company. It must put in place clear procedures to ensure the traceability of expenses incurred on behalf of its customers.

First, it is important to clearly distinguish disbursements from other types of expenses. Disbursements must be identified as soon as they are incurred and must be invoiced directly to the client.

It is also recommended to keep separate accounts for disbursements, in order to facilitate the management of these expenses and their invoicing to clients.

It is also essential to set up a system for validating disbursements. This system must make it possible to check that the expenses incurred on behalf of the customers are well justified and in accordance with the established estimates.

Finally, it is important to monitor disbursements regularly to ensure that they are billed to clients and that payments are collected.

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What is the legal framework for disbursements?

The management of disbursements is regulated by law. The applicable rules vary according to the nature of the disbursements incurred.

In general, disbursements should be billed to the client at their actual cost, with no profit margin for the business. The company must also justify the disbursements to its customers by providing them with receipts.

In the event of a dispute with a client concerning the invoicing of disbursements, it is recommended to refer to the contractual provisions in force, as well as to the applicable legal rules.

Accounting treatment of disbursements in Morocco 

The disbursements paid by the supplier do not constitute a purchase charge and are not considered as turnover when invoicing the customer.

As disbursements are invoiced without profit margin, they are not subject to VAT when re-invoiced to the client.

The Moroccan accounting plan provides for the recognition of disbursements in the item “Receivables from current assets”, in the “Other debtors” section.

1.How to account for disbursements during the purchase?

When purchasing or paying disbursements, the following accounts are to be used:

  • In debit you will post the amount in the account "3488 - Miscellaneous debtors"
  • In credit you will post the amount in the account "5141 - Bank or 5161 - Cash desk)

2.How to account for disbursements when invoicing the client?

In order to record the disbursements billed to the end customer, the following accounts are used:

  • Debit: account “3421 – Customers”
  • Credit: account “3488 – Miscellaneous debtors”

Thus, the account "3488 – Miscellaneous debtors" should be settled with the customer's billing.

Tax treatment of disbursements in Morocco
1.In terms of IS:

Disbursements are considered expenses incurred on behalf of others. Therefore, they are not an expense of the company. Therefore, their billing to the customer is not considered revenue.

In conclusion, disbursements have no impact on the company's results, which constitute the basis for calculating corporate tax.

2.In terms of VAT:

Disbursements are outside the scope of the VAT base.

The following elements may call into question this qualification in terms of VAT:

  • Disbursements are charged with a margin.
  • Disbursements are accounted for as business purchases (expense).
  • Disbursements are not clearly distinguished from corporate overhead.

These cases could call into question the very nature of the disbursements, and therefore their qualification as charges. This requalification has the following consequences:

  • In terms of VAT: Their re-invoicing to the customer would be considered as the company's turnover, subject to VAT.
  • In terms of corporate tax: The margin made on disbursements would be a result of the company subject to corporate tax

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