What is a carryforward deficit?
What are the rules in Morocco on loss carryforwards?
What are the carryforward deficits refused by Moroccan tax rules?
What are the carryforward deficits refused by Moroccan tax rules?
In which cases can carryforward deficits be lost?
Taxation is one of the important tools at the disposal of the public authorities which makes it possible to direct the economic policy of the country towards growth and economic and social progress.
The Moroccan tax system has undergone several reforms. The main ones are:
- The VAT reform in 2005
- Drafting of the general tax code in 2007
- The corporate tax reform in 2008
- The income tax reform in 2010
These reforms and adjustments have helped Morocco to have a modern and efficient tax system.
The Moroccan tax system is made up of various texts of laws which impose tax on the Moroccan taxpayer, through the general tax code, so it is based on various administrative provisions through circular note 717 of the tax administration and various annual circulars, in addition to these provisions, the Moroccan tax system can be based on the jurisprudence which comes from the decisions of justice.
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Definition: What is a loss carryforward?
Deficits that can be carried forward are the deficits made by a company, subject to IR or CIT and that the texts allow it to carry forward.
The general principle is that a company which realizes deficits only begins to pay tax on its profits once it has absorbed its accumulated deficits.
What are the rules in Morocco on loss carryforwards?
Deficit carry forward is provided for in article 12 of the general tax code, which specifies that the accounting deficit can be deducted to the following accounting year. In the event that the result of the following financial year is insufficient to deduct all or part of the deficit of the previous financial year, the deficit or the remainder may be deducted from the following financial years, up to the fourth financial year following the financial year deficit.
It should be noted that the deficit must come from an actual loss of the same company.
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What are the carryforward deficits refused in Morocco?
Tax rules in Morocco do not allow losses to be carried forward in the following cases:
- The case of a corrective statement filed by the company that does not contain the loss;
- The case of a loss from an establishment operated outside Moroccan territory.
In which cases can carryforward deficits be lost?
The deficit is lost in the following cases:
- When selling a loss-making company, the acquirer does not have the right to charge loss carryforwards to its own profits.
- During the merger of the company, the imputation of the deficit cannot benefit the absorbing company.
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