Moroccan Tax administration published a circular note on April 22nd, 2020 in which it clarifies the tax treatment that should be applied to the allowances allocated by the employers facing difficulties due to the spread of the COVID-19 pandemic, to their employees who are in are in provisional arrest of work.
The circular note sets the eligibility conditions that must be satisfied by employers to benefit from this tax regime. First, the company’s situation must meet the criteria defined by regulation to be deemed as a firm in difficulty. Also, the employee must be temporarily unable to perform his duties.
The note also specifies that, in order to assess the rate of decline in activity, a comparison will be made between the turnovers carried out during the same period of 2019 and 2020.
From a legal perspective, it is explained that the allowance served to suspended employees falls within the framework of the “family assistance indemnity” provided for in article 57-2° of the General Tax Code.
The Tax Administration has also set forth in the released note, that the allowance’s amount should not exceed 50% of average net after-tax salary. It is also stated that the lump sum of 2,000 MAD granted by the CNSS must be included in the calculation of the 50% cap.
The deductibility of the compensation granted is possible within the limit of the duration of the state of health emergency justifying the employee’s temporary cessation of work.
Moreover, employers wishing to benefit from this tax arrangement must deliver to the Tax Administration, at the end of each month, a statement of information on the basis of a model drawn up by the administration using the latest submitted annual payroll declaration. Employer must join this statement the evidence of his eligibility, and the data relating to the served allowance with their calculation’s method.
The information provided by the contributor through electronic means will allow the Tax Administration to operate an initial compliance check. Further investigations will then be carried out in order to verify factual data and conciliate it with the information exchanged with other organizations. False declarations will be penalized by the payment of additional duties, including penalties and surcharges, and possibly even the application of other sanctions provided for by the laws and regulations in force.
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NAZALI TAX & LEGAL |