SUMMARY OF THE MAIN TAX MEAUSURES INTRODUCED BY THE MOROCCAN FINANCIAL BILL 2023
The government has published the Finance Bill 2023, introducing various changes summarized as follows:
- Corporate income tax;
- Value Added Tax;
- Individual income tax;
- Other measures.
- Progressive revision of the CIT rates
The main objective of this measure is to gradually convergence towards a unified common CIT rate of 20%.
The current rates will be yearly increased or decreased, as the case may be, from January 1st, 2023 to December 31st, 2026.
The target CIT rates are the following:
- 35% for companies with a net profit of more than MAD 100 million (excluding companies established in THE Industrial Acceleration Zone or in Casablanca Finance City…)
- 40% for credit and insurance companies
- Progressive revision of the WHT rate on dividends
The Financial Bill 2023 provides for the reduction of the WHT rate on dividends by 1,25% each year between 2023 and 2026 to 10% instead of 15%.
- Amendment of the tax regime applicable to real estate investment trusts (OPCI)
The amendments related to the tax regime applicable to real estate investment trusts introduced by the Financial Bill 2023 are the following:
- 40% deduction applied to dividends distributed by the real estate investment trusts (instead of 60% deduction applied previously).
- Introduction of the permanent tax incentive allowing the deferral of the payment of CIT or PIT on the capital gain realized on the contribution to real estate investment trusts (until the partial or total disposal of the securities received in consideration of the contribution).
- Exclusion of financial companies from the benefit of the tax incentives granted to companies established in an industrial acceleration zone
The Finance Bill 2023 excludes the following financial companies from the benefit of the tax incentives granted to companies established in an industrial acceleration zone:
- credit institutions; and
- insurance and re-insurance undertakings and insurance intermediaries.
- Gradual reduction of minimum contribution rates
The Finance Bill 2023 includes a reduction of the minimum contribution rates from 6% to 4%, from 0.5% to 0.25% and from 0,25% to 0,15%.
- Extension of social solidarity contribution on profits and income
The Finance Bill 2023 extends the social and solidarity contribution for the next 3 years (2023, 2024 and 2025).
- Revision of the VAT rate applicable to liberal professions
The Finance Bill 2023 submits the operations carried out by liberal professions such as lawyers, interpreters, notaries, bailiffs and veterinarians will be subject to the standard VAT rate of 20% instead of the current 10%.
- Reduction of the tax burden on employees and pensioners
The 2023 Finance Bill includes these various measures:
- increasing the rate of deduction of expenses inherent to the function or employment from 20% to 25% for gross annual incomes exceeding MAD 78 000 with an increase in the ceiling of deduction from MAD 30 000 to MAD 35 000, and from 20% to 35% for gross annual incomes less than or equal to MAD 78 000; and
- increasing the rate of the fixed allowance applicable to pensions and life annuities from 60% to 70% on the gross taxable amount of the said income not exceeding MAD 168 000.
- Revision of the WHT rate applicable to remunerations and allowances paid to third parties
The Finance Bill 2023 introduces:
- a 30% WHT on payments made to teachers other than permanent staff by education or training institutions (instead of the current rate of 17%);
- A 30% WHT on payments made to doctors not subject to professional tax;
- A 20% WHT on payments made to doctors subject to professional tax ;
- A 20% WHT on payments made to persons subject to corporation tax or income tax under the real or simplified net income regime.
- Purchase of contributions and premiums for individual or group pension insurance contracts
The Finance Bill 2023 includes the following amendments related to individual or group pension insurance contracts:
- the reduction of the age requirement for the insured from 50 to 45 years;
- increasing the rate of the allowance applied to the taxable capital paid out at the end of the contract from 40% to 70% for the amount less than or equal to MAD 168,000 and applying 40% for the the remainder;
- Application of a WHT of 15% on the gross amount of premiums and contributions related to the aforementioned contracts made before the insured’s 45th birthday and the 8th birthday of the contract.
- Amendment of the tax regime applicable to Self-Entrepreneur (auto-entrepreneur)
The annual turnover exceeding MAD 80 000 realized by a self-entrepreneur with the same client will be subject to a WHT at the rate of 15%.
- Amendment of definition of real estate rich companies (société à preponderance immobilière)
The Finance Bill 2023 amends the definition of a company with a preponderance of real estate assets as those whose gross assets consist of at least 50% of the value of real estate or shares issued by real estate companies or other companies with a preponderance of real estate assets, which are not used by these companies for their own industrial, commercial, handicraft or agricultural operations, for the exercise of a liberal profession or for the accommodation of their employees.
NAZALI TAX & LEGAL
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