The Moroccan Finance Law No. 70-19 for 2020 was published in the "Bulletin Officiel" No. 6838 bis of 14 December 2019.

This law, strongly inspired by the recommendations of the national conferences on taxation, aims at giving a new dynamic to the reform process of the Moroccan tax system in order to meet two main imperatives:

– to support the social and economic changes in Morocco;

– fulfilling commitments to bring the system into line with international rules and standards.

I - Corporate tax measures

The purpose of the corporate tax (CIT) measures is:

1 - Revision of the tax regime applicable to companies having the "Casablanca Finance City" (CFC) status. A new tax regime is applicable to the taxable income of service companies having the CFC status and to the dividends distributed by the said companies, namely (i) total exemption from corporate income tax during the first five consecutive fiscal years starting from the first fiscal year of granting of the above-mentioned status and (ii) taxation at the specific rate of 15% beyond this period.

The new provisions apply to companies having obtained CFC status as from 1 January 2020.

2 - Gradual convergence towards a single rate for the turnover of industrial companies, both for local and export sales. This convergence is reflected in the reduction of the marginal rate of the corporate tax scale from 31% to 28% for the local turnover of industrial companies and in the increase of the rate of the capped scale from 17.50% to 20% for their export turnover.

These provisions are applicable for fiscal years beginning as of 1 January 2020.

3 - Amendment of the tax regime of companies carrying out service outsourcing activities, inside or outside the integrated industrial platforms dedicated to these activities. The purpose of the amendments is to maintain the benefits granted to these companies provided that they carry out their activities in accordance with the provisions contained in the laws and regulations in force. These advantages consist of (i) total exemption from corporate income tax for the first five (5) consecutive fiscal years from the date on which they start their operations and (ii) taxation at the rates of the scale capped at 20% after this period.

These provisions are applicable for fiscal years beginning as of 1 January 2020.

4 - The extension of the scope of the tax incentive scheme relating to the restructuring of groups of companies, provided for in Articles 20 bis and 161 bis-I of the General Tax Code (CGI), to the transfer of intangible and financial assets.

These provisions are applicable for fiscal years beginning as of 1 January 2020.

 

II - Income Tax (IT) measures

1 - IT measures relating to professional income:

– An allowance of 25% applicable to the taxable base corresponding to the turnover achieved, by mobile payment, by individuals with professional income determined according to the simplified net result or lump-sum profit system;

– Increase in the limits of the annual turnover achieved by a taxpayer whose professional income is determined according to the lump-sum profit system from (i) MAD 1,000,000 to MAD 2,000,000 for commercial, industrial and artisanal activities and to ship-owners for fishing and from (ii) MAD 250,000 to MAD 500,000 for service providers and professions and income of a repetitive nature referred to in article 30-2° of the CGI;

– Exclusion of the taxpayers subject to the lump-sum profit scheme or the self-employment tax system from the provisions of article 145 of the CGI relating to accounting obligations.

These provisions apply to incomes generated as from 1 January 2020.

2 - Measures relating to the income tax on other income

Concerning income and land profits:

– Amendment of the tax generating event for property income (the tax is due on property income actually received by the taxpayers concerned);

– Exemption, under certain conditions, of transactions for the sale of a real estate property occupied as a principal residence by its owner, before the expiry of the 6-year period;

– Exemption of transfers free of charge of immovable property or real estate rights belonging to associations recognized as being in the public interest and registered in the name of individuals.

Regarding income and profits from movable capital:

– Increase the cap of the sums invested within the framework of the stock savings plan and the company savings plan from MAD 600,000 to MAD 2,000,000;

– Implementation of a permanent tax neutrality in terms of income tax on the contribution of capital securities held by individuals to a holding company subject to income tax and resident in Morocco.

V - Measures common to CIT and IT

The main measures common to CIT and IT are:

Amendment to the export tax regime. The five-year exemption for export turnover is abolished and the tax rate is increased from 17.50% to 20% for export turnover. The new rate of 20% applies to fiscal years beginning as of 1 January 2020. As a transitional measure, exporting companies having carried out their first export operation before 1 January 2020 continue to benefit from the five-year exemption, until the expiry of the period of five consecutive years starting from the financial year during which their first export operation was carried out.

Amendment of the tax regime for export processing zones, now called "industrial acceleration zones". A specific rate of 15% for CIT or 20% for IT will be uniformly applied to overall profits without distinction between local and export turnover, starting from the sixth year following the five-year exemption period. The tax regime currently in force remains applicable to companies operating in industrial acceleration zones before 31 December 2020 until the 20-year period covered by the specific rate of 8.75% is exhausted.

Amendment of the rates of the minimum contribution (MC). These amendments provide for (i) maintaining the normal rate of the MC at 0.50% and (ii) the introduction of an increased rate set at 0.60%, when, beyond the exemption period, the current result excluding depreciation is declared negative by the company, for two consecutive financial years.