What is a dividend?
Who decides on the distribution of dividends?
How to pay dividends?
How are distributed dividends taxed?
Definition:
Dividends are sums paid by shareholders in respect of their profits made during the past financial year. Thus, in order to be able to distribute dividends, the general meeting of the company must note the existence of distributable profits.
Dividends are not considered as remuneration, but as income from movable capital (stocks and shares).
How to distribute the dividends?
To be able to distribute dividends to shareholders, the general meeting of the company must note the existence of distributable annual profits, or draw on its reserves. The total amount of dividends paid is then deducted from the company's cash. Even though partners/shareholders are remunerated from dividends, they may decide to pay little or no dividends.
Initially, the profits must be used to cover the deficits of previous years. Then, the profits must be allocated to the elements of required reserves.
Companies are faced with a trade-off between the profits to be distributed to shareholders and those reinvested in society. Too much of a company's resources to reward shareholders can hamper the financing of its future development.
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The distribution of dividends may be decided either at the ordinary general meeting to approve the accounts, or at a subsequent meeting.
Who decides on the distribution of dividends?
The partners/shareholders of the company, meeting in a general meeting, are the only ones authorized to decide on the distribution of dividends, whatever their nature.
The governance body (management or board of directors) generally proposes to the assembly a decision concerning the treatment of the profits of the financial year according to the situation of the company, its strategy and its development plans. The shareholders' meeting nevertheless remains sovereign for this decision.
How are distributed dividends taxed?
According to the provisions of Article 13 of the General Tax Code, proceeds from shares, shares and similar income are subject to withholding tax at the rate of 15%:
Companies that distribute dividends in Morocco must pay a withholding tax on the gross amount of these dividends. To do this, the companies that distribute them must:
Collect the withholding tax on dividends;
Pay the withholding tax to the Public Treasury within 30 days;
Pay partners/shareholders the net amount of withholding tax
Be accompanied and advised.
Delegate your accounting.
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