Tax measures provided for by the 2024 finance law

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In this article, we will analyze the main measures of the 2024 finance law. This finance law intervenes in a national and international context marked by the economic crisis, the general increase in prices and the continued implementation of the provisions of Framework Law No. 69-19 relating to tax reform in Morocco

I. Measures relating to VAT

1.1. VAT exemption for widely consumed basic products

 The 2024 Finance Law provides for the exemption from VAT of the following operations:

Exemption without right to deduction:

  • School supplies and the raw materials used in their composition;
  • Butter derived from milk of animal origin, excluding other types of butter;
  • Canned sardines, powdered milk and household soap (in pieces or in bars).

Exemption with right of deduction:

  • Water intended for domestic use delivered by public distribution networks, as well as sanitation services provided by sanitation organizations and the rental of water meters;
  • Pharmaceutical products.

Reference legal : Articles 91 92-I-19°&55° et 123 du CGI

1.2. Exemption of capital goods, materials and tools acquired by the Mohammed VI Foundation for Science and Health

The LF 2024 supplemented the provisions of paragraph 17 of article 92-1 of the CGI by the exemption with right of deduction of capital goods, materials and tools acquired by the Mohammed VI foundation of sciences and health created by Law No. 23-23.

Legal referencePaper 92-1-1du CGI 

1.3. Exemption without right to deduct applicable VAT from certain royalties and license fees

LF 2024 provided for the exemption, without right of deduction, from VAT within royalties and license fees included in the tax base for import VAT.

This exemption is granted within the limit of the amount of VAT paid on import for the aforementioned royalties and license fees.

Reference legal : Paper De ETC-prijs bleef dichtbij neutraliteit en ligt dicht bij de 91-daagse EMA. Het kreeg te maken met afwijzing, wat tot afwijzing leidde. De ETC-prijs repliceert echter het koop-op-dips-scenario en er werd een terugval waargenomen in ... du CGI

1.4. Exemption with right to deduct VAT applicable to services related to military equipment and materials

LF 2024 supplemented the provisions of paragraph 52 of article 92-1 by extending the exemption with deduction to maintenance, repair, transformation or modification services which are linked to machines, equipment and military equipment, weapons, ammunition as well as their parts and accessories, acquired by the bodies responsible for national defense, security and the maintenance of public order.

Reference legal : Paper 92-i-52° du CGI

1.5. Gradual alignment of VAT rates at two rates by 2026

The FL 2024 provided for gradual convergence towards two rates: 10% and 20%.

  • Harmonization of the VAT rate applied to water as well as sanitation services and the rental of water meters for professional use, which is currently 7%, increasing it to reach 10% from January 1, 2024.

Legal reference: Articles, 99—B-1° and 247 -XXXXI-A of the CGI

  • Progressive harmonization of the VAT rate applied to electrical energy which is currently 14%, increasing it to reach 20% in 2026:
Year2023202420252026
VAT rate14%16%18%20%

Reference legal; Articles 99 -HAS and 247-XXXXI/-B du CGI 

  • Progressive harmonization of the VAT rate applied to the rental of electricity meters which is currently 7%, raising it to reach 20% in 2026:
Year2023202420252026
VAT rate7%11%15%20%

Legal reference : Articles 99 -HAS et 247-XXXXI-C du CGI

  • Gradual reduction in the VAT rate applicable to the production of electrical energy from renewable energies which is currently 14%, lowering it to reach 10% in 2026:
Year2023202420252026
VAT rate14%12%10%10%

Legal reference: Articles 99-B-1° and 247-XXXII -D of the CGI

  • Progressive harmonization of the VAT rate applicable to refined or agglomerated sugar, including vergeoises, candis and pure sugar syrups not flavored or colored, to the exclusion of all other sweet products not meeting this definition which is currently by 7%, increasing it to reach 10% in 2026:
Year2023202420252026
VAT rate7%8%9%10%

Legal reference: Articles 99-B-1° and 247-XXXXI-E of the CGI

  • Progressive harmonization of the VAT rate applicable to passenger and goods transport operations, excluding urban transport operations and road passenger and goods transport operations, gradually increasing it from 14% to 20% in 2026:
Year2023202420252026
VAT rate14%16%18%20%

Reference legal : Articles 99-A et 247-XXXXI- F du CGI

  • Progressive harmonization of the rate applicable to urban transport operations and passenger and goods transport operations by road, decreasing it gradually from 14% to 10% by 2026:
Year2023202420252026
VAT rate14%13%12%10%

Reference legal : Articles 99-B-1° et 247-XXXXI-G du CGI

  • Progressive harmonization of the VAT rate applicable to the services provided by any directing agent or insurance broker for contracts brought by him to an insurance company, currently 14%, decreasing it to reach 10% in 2025:
Year2023202420252026
VAT rate14%12%10%10%

Reference legal : Articles 99-B-2° et 247-XXXXI-H du CGI

  • Harmonization of the VAT rate applicable to economy cars and all products and materials used in their manufacture as well as assembly services for said economy cars, currently 7%, increasing it to reach 10%.

Legal reference: Article 99-B-1° of the CGI

1.6. Extension of the scope of VAT to cover services provided remotely.

The LF 2024 supplemented article 88 of the CGI in order to broaden the scope of application of VAT to cover services provided remotely by non-resident companies to customers established on the national territory.

Thus, a transaction is also deemed to be carried out in Morocco when the service is provided remotely in a dematerialized manner by a non-resident person who does not have an establishment in Morocco to a client:

➤ having its headquarters, establishment or tax domicile in Morocco;

➤ residing occasionally in Morocco.

By service provided remotely in a dematerialized manner, we mean any service rendered through a remote communication tool, including intangible goods and other intangible goods.

Legal reference: Articles 88-2° and 115 bis of the CGI

Reporting obligations:

In the absence of accreditation of a tax representative in Morocco, the suppliers concerned must register on the electronic platform dedicated to this purpose to obtain a tax identifier.

They must also subscribe, on the said platform, before the expiration of each month, the declaration of the turnover achieved in Morocco in respect of the aforementioned services provided to non-taxable customers during the previous month and pay, at the same time, the corresponding tax without right of deduction.

The terms of application of these provisions will be established by regulation.

Legal reference: Articles 88-2° and 115 bis of the CGI

1.7. Clarification of the VAT imposition of rentals of buildings not equipped for professional use

The LF 2024 provided for the compulsory taxation of rentals of buildings not equipped for professional use. Currently, said rentals are subject to VAT, upon formal option.

Thus, rentals relating to premises not equipped for professional use acquired or built with the right to deduction or exemption from VAT will be obligatorily taxable.
Legal reference: Article 89-1-10°-a) of the CGI

1.8. Harmonization of the 15% penalty applicable in the event of late filing of a credit declaration

Article 204 – Sanction for breaches of reporting obligations

Before 2024LF 2024
When the turnover declaration referred to in articles 110 and 111 is filed outside the prescribed deadline, but includes a tax credit, said credit is reduced by 15%.When the turnover declaration referred to in articles 110 and 111 is filed outside the prescribed deadline, but includes a tax credit, the taxpayer is liable to a fine of 15% of the amount of VAT for the period or tax credit for this period, with a minimum of 500 DHS

1.9. Institution of a sanction in the event of non-compliance with the foreclosure deadline

Article 204 – Sanction for violations of the right to deduction deadline

Before 2024LF 2024
In the event of non-exercise of the right to deduct within one year, the sanction is the loss of the right to deduct VAT.When the right to deduction is not exercised within the one-year period provided for in article 101-3° of the CGI, the taxpayer is liable to a fine of 15% of the amount of deductible VAT, with a minimum of 500 DHS.

1.10. Institution of a new VAT reverse charge regime

The LF 2024 supplemented the provisions of the CGI by article 125 quinquies by providing for the establishment of a new VAT reverse charge regime for purchases of goods and services made from suppliers located outside the scope of application. VAT or exempt without right to deduct VAT.

Thus, by way of derogation from the provisions of Articles 87, 89 and 91, the taxable customer may declare and pay VAT on purchases of goods and services made from suppliers located outside the scope of application of the tax or who are exempt from it without right of deduction, excluding land purchase operations and agricultural products.

Legal reference: Article 125 quinquies of the CGI

1.11. Institution of the principle of solidarity for business leaders

The LF 2024 supplemented the provisions of article 182 of the CGI by the institution of the principle of solidarity of company managers.

Thus, in the event of breaches of the declaration and payment obligations provided for by the CGI in matters of VAT, any person responsible for the financial or administrative management of the company or any effective beneficiary of the amount of unpaid VAT remains jointly and severally liable. Unpaid VAT, penalties and related surcharges.

The application of this provision is suspended for the period going from the date of filing of the legal action until the date of the delivery of the final judgment having the force of res judicata.

Legal reference: Article 182-II of the CGI

1.12. Establishment of a new withholding tax regime (RAS) for VAT

The LF 2024 supplemented the provisions of article 117 of the CGI by the addition of paragraphs IV & V establishing a new RAS regime in matters of VAT:

i) RAS on operations carried out by “suppliers of capital goods and works” subject to VAT

  • Customers subject to VAT, excluding the State, local authorities, public establishments and other legal entities under public law required to apply regulations relating to public procurement.

RAS of 100% of VAT

 

  •  On title operations carried out by suppliers of capital goods and works taxable persons who do not present to their customers subject to this tax, the certificate justifying their tax regularity dating less than 6 months.

Effective Date : This provision is applicable for operations carried out from July 1, 20.

Legal reference: Articles 117-IV and 247-IV-4° of the CGI

ii)RAS on operations carried out by “service providers” subject to VAT

The planned RAS is carried out under the service provision operations referred to in Article 89-I (5°, 10° and 12°) of the CGI, up to 75%, the list of which will be established by regulation.

These are:

-Installation or installation, repair or repair operations;

– Rentals relating to the premises:

  • furnished or furnished and premises which are equipped for professional use
  • as well as the premises located in the commercial complexes (Mall) including the intangible elements of the goodwill;
  • not equipped for professional use acquired or constructed with benefit of the right of deduction or exemption from VAT.

    -Transport, warehousing, brokerage, rental of things or services, transfers and concessions for the exploitation of patents, rights or brands and, in general, any provision of services;

    -Operations carried out, within the framework of their profession, by natural or legal persons under the professions of:

    • lawyer, interpreter, notary, adel, bailiff;
    • architect, quantity surveyor, surveyor, topographer, surveyor, engineer, consultant, expert in all matters and chartered accountant;
    • Veterinary
Supplier
PP
with certificate
PP
Without certificate
PM
ClientsPrivate law PM and PP RNR/RNS regimeRAS of 75%RAS of 100%NO RAS
State, local authorities, EEP and their subsidiariesRAS of 75%

* The said certificate must justify the tax regularity of the said suppliers with respect to the obligations of declaration and payment of taxes, duties and levies provided for by the CGI, issued by the tax administration for less than 6 months.

Effective Date : This provision is applicable for operations carried out from July 1, 2024.

Operations excluded from the RAS:

  • Sales operations relating to electrical energy and water delivered to public distribution networks;
  • Sanitation services provided to subscribers by organizations responsible for sanitation as well as the rental of water and electricity meters;
  • Sales made and services provided by telecommunications operators;
  • Services provided by any directing agent or insurance broker;
  • Service provision operations whose amount is less than or equal to 5 dirhams, within the limit of 000,00 dirhams per month and per service provider.

In the event of a VAT credit resulting from the application of the aforementioned RAS, reimbursements are liquidated according to the terms defined by regulation.

      Legal reference: Articles 112-II, 117-IV & V and 103-6° of

1.13. Reinstatement of the obligation to conserve movable property (60 months)

The FL 2024 reinstated the obligation to keep movable investment property, which benefited from the purchase with exemption or the right to deduction, in a fixed asset account for a period of 60 months from that of their acquisition.

In the absence of conservation of said goods during the aforementioned period, the beneficiary of the deduction or the exemption purchase is required to repay to the Treasury a sum equal to the amount of the tax initially deducted or having been the subject of exemption under of said property, reduced, as the case may be, by one sixtieth per month or fraction of a month elapsed since the date of acquisition of the movable property.

The regularized VAT gives the seller the right to deduction within the limit of the VAT invoiced when it is sold as second-hand goods, in accordance with article 125 bis of the CGI.

Excluded from this measure are transfers of movable property carried out by credit institutions and similar organizations as part of leasing or leasing operations. “Ijara Mountahia Bitamlik”.

 Legal reference: Articles 102 and 104-II of the CGI

1.14. Fixing the list of fishing gear and nets intended for maritime fishing professionals

The LF 2024 provides the list of fishing gear and nets intended for maritime fishing professionals which benefit from the application of the 10% rate with regard to VAT.

 Legal reference: Article 99-B of the CGI

1.15. Need for guarantees to benefit from VAT exemption on investment goods

The FL 2024 supplemented the provisions of paragraph 6° of article 92-I with the need to grant guarantees to benefit from the VAT exemption

on investment goods with the exception of exemptions contained in agreements signed with the State.

 Legal reference: Article 92-I-6° of the CGI

II. Measures relating to the IS

2.1. Supervision of the application of the 35% corporate tax rate

The LF 2024 supplemented the provisions of paragraph B of article 19-I of the CGI by the non-application of the provisions which exclude companies which achieve a net tax result less than 100 MMAD for 3 consecutive years, from the application of the rate of 20% when the net profit is equal to or greater than this amount realized following non-current income consisting of proceeds from the sale of fixed assets.

 Legal reference: Article 19-IB of the CGI

III. Measures relating to IR

3.1. Deductibility of social security contributions for professionals, self-employed persons and self-employed workers

Before 2024, personnel costs relating to withdrawals made by the operator of a sole proprietorship, or the managing members of de facto companies, joint ventures, general partnerships and limited partnerships were not deductible from professional income.

The LF 2024 established the right to deduct from the tax base for professional IR social contributions to the Compulsory Health Insurance system (law no. 98-15) and retirement (law no. 99-15) in benefit of professionals, self-employed workers and self-employed persons subject to IR according to the real or simplified net profit regime (RNR/RNS).

Effective Date : Annual declarations of total income subscribed from 01/01/2024

 Legal reference: Article 35 of the CGI

3.2. Increase in the flat-rate reduction rate applicable to fees granted to artists

The LF 2024 revised upwards the flat-rate reduction rate applicable to the gross fees granted

to artists working individually or forming troupes by increasing it from 40% to 50%.

Please note that these fees, after reduction, are subject to withholding tax at the rate of 30% (non-exempt).

 Legal reference: Article 60-II of the CGI  

3.3. Clarification of the methods for determining the taxable land profit in the event of transfer of buildings acquired by inheritance

The LF 2024 specifies that in the absence of a market value of the buildings, on the day of the death of the deceased, recorded on the inventory drawn up by the heirs and the acquisition value to be retained is the market value of the buildings on the day of the death of the deceased. of custody, which is declared by the taxpayer

without taking into account any act of joint ownership or other acts established after the death of the deceased.

Legal reference: Article 65-II of the CGI

3.4. Clarification of the methods for determining the movable profit upon the transfer of transferable securities acquired by inheritance

Like what is planned for land profits, the LF 2024 established the methods of determining

movable profits upon transfer of securities acquired by inheritance :

  •  either the market value of the said securities and securities, on the day of the death of the deceased, recorded in the inventory drawn up by the heirs;
  •  or, failing that, the market value of the buildings on the day of the death of the deceased, which is declared by the taxpayer without taking into account any deed of joint ownership or other acts established after the death of the deceased.

 Legal reference: Article 70 of the CGI

3.5. Improvement and simplification of the procedure for examining the entire tax situation of individuals

With the aim of ensuring the alignment of income tax declarations with the indicators relating to the expenses of individuals and their assets and liquid assets, it is proposed to improve the procedure for examining the the entire tax situation of individuals.

The procedure provides:

  •  Sending an examination notice and the taxpayer charter;
  •  The duration of the examination should not exceed 6 months;
  • The establishment of an oral and contradictory debate;
  • Informing the taxpayer of the closure of the examination;
  •  Communication of the letter of notification of adjustments within 3 months from the closing date of the examination.

The modifications provided for by the FL 2024 for the improvement of the examination procedure relate in particular to the following points:

  •  Clarification of the target of the procedure for examining the entire situation by replacing the taxpayer(s) with “Natural person(s).
  • Clarification of the purpose of the verification by specifying that it concerns the consistency between the person's income and their expenses and liquid assets. For liquid assets, the examination may extend to liquid assets deposited in the bank accounts of the interested party or in those of any other person linked to them, when the said natural person is the beneficial owner of the said accounts.
  •  The administration can automatically assign a tax identifier to unidentified persons and carry out an assessment of their overall annual income and set the place of taxation at the address appearing on the CNIE or on the residence permit.

Legal reference: Articles 29 & 216 of the CGI

IV. Measures relating to registration rights

4.1. Alignment of registration fee rates applicable to acts of allocation of premises or land by cooperatives and housing associations to their members

The LF 2024 aligned the rates of registration fees for all acts of allocation of premises and land by cooperatives or associations by applying the proportional rates of common law currently in force, i.e. 4% (premises) or 5% (Lands).

Before 20242024
The allocation of built premises (whatever the use)1.50%4%
Acts and agreements granting bare land1.50%5%
The transfer of his accommodation to the cooperator after full release of the subscribed capital200 DHS (compliance with conditions) 4% (failing this)4%

Effective Date : The provisions of articles 133-IF-1° and 133-IG-3° are applicable to acts established from 01/01/2024.

 Legal reference: Articles 133-IF-1° and 133-IG-3° of the CGI

4.2. Exemption from registration fees for the acts of the Mohammed VI Foundation of Sciences and Health

The LF 2024 established the exemption of the Mohammed VI Foundation of Sciences and Health created by law 23-23 (BO AR 7213 of 17/07/23 and BO FR 7228 of 07/09/23) from the rights of registration of acts relating to its activity and operations.

 Legal reference: Article 129-III of the CGI

4.3. Supervision of acts subject to registration

The FL 2024 established two obligations for notaries, civil servants exercising notarial functions,

Adouls, Hebrew notaries, and any person having drafted or contributed to the drafting of a deed subject to registration:

  • Presentation of a certificate, before the drafting of any act, justifying the payment of taxes relating to the building for the year of transfer or transfer, as well as for previous years;
  •  Inclusion of the article numbers of the housing tax and the municipal services tax in the acts drawn up.

Effective Date : This measure applies to documents established from 01/01/2024.

 Legal reference: Article 139-IV of the CGI

V. Common Measures

5.1. Institution of the principle of the right to error to allow taxpayers to spontaneously correct their tax declarations

The LF 2024 established a new system allowing taxpayers to be granted " the right to error " to be able to regularize their tax situation and spontaneously rectify the irregularities noted in their tax declarations.

Methods of rectification:

– Ask the tax administration for a summary of the irregularities noted in their declarations;

– Submit a corrective declaration and an explanatory note;

– Voluntarily pay the additional fees payable.

The corrective declaration should be accompanied by an explanatory note drawn up by an auditor (if CA≥50 million), a chartered accountant or a chartered accountant other than the one responsible for keeping the taxpayer's accounts (if CA<50 million). million).

Legal reference: Article 221 bis -IV of the CGI

5.2. Simplification of the procedure relating to the establishment of abuse of rights

LF 2024 repealed article 226-bis of the CGI and consequently, the elimination of recourse to the advisory appeal commission for abuse of rights and retention of a single level of appeal before the CNRF.

It should be remembered that the administration can only invoke the notion of abuse of rights within the framework of a contradictory tax audit procedure, which ensures respect for the right to defense and the right of appeal before the CNRF and courts.

 Legal reference: Article 226 Bis of the CGI

5.3. Elimination of the principle of non-cumulation of tax advantages

The LF 2024 repealed the provisions of article 165 of the CGI providing for the non-cumulation of certain tax advantages with any other advantage provided for by other legislative provisions, in order to avoid divergences of interpretation as to the application of this principle.

Legal reference: Article 165 of the CGI

VI. Miscellaneous measures

6.1. Reinstatement of the measure relating to the voluntary regularization of the tax situation of taxpayers

The FL 2024 reinstated the measure relating to the voluntary regularization of the tax situation of taxpayers.
This regularization concerns individuals, in respect of their profits and taxable income, who are in an irregular situation with regard to tax obligations concerning:

-liquid assets deposited in bank accounts or/and held in fiat currency in the form of bank notes;

– movable or immovable property acquired and not intended for professional use;

-Advances in current accounts of associates or in accounts of the operator and loans granted to

third.

-The contribution rate is set at 5%. The persons concerned have a period ranging from January 1, 2024 until December 31, 2024 to subscribe to the declaration and pay the aforementioned contribution.

Legal reference: Article 7 of the FL 2024 

6.2. Institution of the final contribution relating to the spontaneous regularization of assets and cash held abroad

LF 2024 reintroduced the discharge contribution relating to spontaneous regularization for assets and cash held abroad before January 1, 2023, by natural and legal persons having a residence, head office or tax domicile in Morocco.

To benefit from this measure, the persons concerned are required to declare their assets and cash held abroad, repatriate foreign currency cash as well as the income and products generated by said cash and transfer at least 25% of this cash to the foreign exchange market in Morocco and pay the contribution according to the following rates:

- 10% the acquisition value for real estate, financial assets, transferable securities and other capital or debt securities held abroad;

- 5% for liquid assets in foreign currencies repatriated to Morocco and deposited in foreign currency or convertible dirham accounts;

- 2% for foreign currency liquidity repatriated to Morocco and sold on the exchange market against the dirham.

For people who have already benefited from the final contribution, the rates are reduced to 15%, 7,5% and 3% respectively.
The regularization deadline is set between January 1, 2024 and December 31, 2024.

6.3. Renewal of the possibility of regularizing the tax situation of taxpayers who have made no turnover or who have paid only the minimum of the minimum contribution

The LF 2024 renewed for 2024 article 247-XXXVIII of the CGI introduced by the LF 2023 relating to the regularization of the tax situation of taxpayers who have made no turnover or who have paid only the minimum minimum contribution.

Measurement reminder:

Taxpayers who have not generated any turnover or who have paid the minimum contribution for the last 4 financial years can benefit from exemption from tax inspection, under the following conditions:

  • Subscription to the declaration of total cessation of activity provided for in article 150 during the year 2024;
  • The spontaneous payment, within the same deadline of the aforementioned declaration, of a lump sum amount of corporate tax or income tax as the case may be, of five thousand (5.000) dirhams, for each non-prescribed financial year .

Legal reference Article 247-XXXVIII of the CGI

6.4. Reinstatement of the final contribution for fines relating to check payment incidents

The LF 2024 established a discharge contribution for financial fines relating to payment incidents, whatever their classification, and which have not been regularized, concerning checks presented for payment no later than 31/12/2023.

The rate of the final contribution is set at 1,5% of the amount of checks, subject to incidents, presented for payment no later than 31/12/2023.

The contribution ceiling is set at 10.000 DH for individuals and 50.000 DH for legal entities regardless of the number of incidents.

Payment of this contribution is made once during the year 2024 and exempts the persons concerned from penalties relating to non-regularized payment incidents for checks issued before December 31, 2023.

Legal reference: Article 8 bis of the FL 2024

6.5. Public Debt Recovery Code

The LF 2024 established the possibility of sending and notifying, by electronic process, to the electronic address communicated by taxpayers to the administration, and generalized the possibility granted to the Minister responsible for finance, or to its delegate, to grant discounts or moderations relating to late payment interest, surcharges, penalties and recovery costs relating to public debts.

Legal reference: Article 9 of the FL 2024

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