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03 July 2009
Tax Reduction in Event of Capital Increase
Clarification of Offshore Holdings Regime
Withdrawal of Deduction on Capital Gains
Irrevocability of Corporate Tax Option
Reduction of Scope of Application of Simplified Regime
Value Added Tax
Mandatory Online Tax Returns
New Auditing Prerogatives on Transfer Costs
The Finance Act 2009 continues the harmonization of Moroccan tax legislation and aims to centralize all tax legislation into a single document, the General Tax Code. This update looks at the main changes introduced by the act.
Companies incorporated in Morocco before January 1 2009 benefit from a 20% corporate tax reduction on any capital increase made between January 1 2009 and December 31 2010. Such reduction is subject to conditions relating to the type of contribution to the capital and the stability of the capital over a five-year period. This tax reduction is limited to companies whose turnover during the last four tax years was below Dh50 million excluding value added tax (approximately €4.5 million).
The act specifies that companies benefiting from the Moroccan offshore holdings regime, which includes tax incentives, may deal only with foreign securities.
Capital gains on the sale or withdrawal of tangible or intangible fixed assets of an enterprise no longer benefit from any deduction. This applies to corporate income tax as well as personal income tax.
In order to simplify tax return procedures, the choice of a partnership (eg, a limited partnership) to opt for the corporate tax regime is irrevocable.
The act extends the 50% corporate tax reduction granted to real estate developers which conclude an agreement with the state for the construction of social housing for two consecutive tax years from January 1 2008.
In addition, in order to increase the number of potential beneficiaries of the tax reduction granted to real estate developers involved in building university accommodation, which includes a taxation rate of 17.5% on lease revenues, the size of the eligible projects has been reduced from 250 rooms to 150 rooms. Real estate access for individuals is facilitated by the possibility of deducting the interest on loans for the purchase or construction of real estate as a main residence from their total revenue.
Initially, there was no time limit for the deduction of interest. As a result, the deduction was subject to the four-year statute of limitation. The deduction has now been limited to a period of seven years from the date on which the building permit is issued. After the seven-year period, if the tax authorities consider that the housing is not used as a main residence or the building has not been completed, the tax authorities can make a tax adjustment, including penalties. However, if the conditions are met, the individuals benefit from a tax reduction for the outstanding interest to be paid.
Taxpayers whose annual turnover exceeds the following amounts are now excluded from choosing the simplified net regime for professional revenue: (i) Dh2 million (€180,000) for business professions, industrial or artisanal activities and fishing boat owners; and (ii) Dh500,000 (€45,000) for service providers, self-employed persons' earnings or earnings which are repeated and cannot be considered as farming revenue or as securities revenue.
Taxpayers whose annual turnover exceeds the following amounts are now excluded from choosing the simplified net regime for profits: (i) Dh1 million (€90,000) for business professions, industrial or artisanal activities and fishing boats owners; and (ii) Dh250,000 (€22,400) for service providers, self-employed persons' earnings or earnings which are repeated and cannot be considered as farming revenue or as securities revenue.
The exemption on domestic sales of pharmaceutical drugs with regulated prices and sugar no longer applies to taxpayers whose turnover exceeds Dh2 million (€180,000).
Moreover, the value added tax exemption for imports of pharmaceutical drugs is now available to a larger number of drugs, in particular drugs to fight cancer and hepatitis.
The rate of registration fees has been reduced with regard to the incorporation and capital increase of companies and economic interest groupings from 1.5% to 1%.
Tax returns and tax payments will have to be carried out online from January 1 2010 for companies whose turnover exceeds Dh100 million (€8.96 million), and from January 1 2011 for companies whose turnover exceeds Dh50 million (€4.5 million).
The act introduces an obligation to provide information at the request of the tax authorities. The aim is to obtain the following information:
The act makes several modifications concerning tax proceedings. In particular, it provides that it is forbidden to bring action before a court while making a claim to the Local Taxation Commission or the National Tax Appeals Commission.
Moreover, the General Tax Code now expressly provides that the taxpayer can ask for additional time in the event of a tax adjustment, subject to sufficient guarantees.
For further information on this topic please contact Jean-Jacques Lecat at CMS Bureau Francis Lefebvre's Paris office by telephone (+33 1 4738 5500), fax (+33 1 4738 5555) or email (firstname.lastname@example.org or email@example.com). Alternatively, contact Wilfried Le Bihan at CMS Bureau Francis Lefebvre's Casablanca office by telephone (+212 522 27 77 18), fax (+212 522 48 14 78) or email (firstname.lastname@example.org).
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