2023 finance law in Morocco: specific measures for corporation tax (IS)
The Finance Law for the 2023 budget year as adopted by the House of Representatives and the House of Councillors, was published in the Official Bulletin N°7154 bis dated December 23, 2022.
What is a Finance Law?
The finance law is thelegislative act by which the Parliament vote on state budget. It authorizes the executive power to collect thetax and to engage public expenses for a specified period, and may contain other provisions relating to public finances. She is the main expression of the tax consent.
LEC.mareveals the measures specific to corporate tax (IS) of the Finance Law 2023
Revision of corporate tax rates as part of the gradual convergence towards a unified rate
Before the finance law for the 2023 budget year, article 19 of the CGI provided that corporation tax (IS) was calculated, according to the amount of profit made, the nature of activity or the economic sector. concerned, according to several different rates set at 10%, 15%, 20%, 26%, 31% and 37%.
As part of the continued implementation of the provisions of Framework Law No. 69.19 on tax reform, the LF 2023 instituted a comprehensive reform of CIT rates to give a clear view of the system of this tax according to a progressive methodology over four (4) years.
Thus, article 19 of the CGI has set the target CIT rates as follows:
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20%, as the unified common law target rate applicable to all companies;
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35%, as the target rate applicable to companies whose net profit amount is equal to or greater than 100 million dirhams;
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40%, as the target rate applicable to credit institutions and similar organizations, Bank Al Maghrib, the Caisse de depot et de gestion and insurance and reinsurance companies.
The provisions of article 19 of the aforementioned CGI provide that the rate of 35% does not apply:
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service companies benefiting from the “Casablanca Finance City” tax regime;
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companies operating in industrial acceleration zones;
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to companies created on or after January 1, 2023, with the exception of public establishments and companies and their subsidiaries in accordance with the laws and regulations in force, which undertake under an agreement signed with the State to invest an amount of at least one billion and five hundred million (1,500,000,000) dirhams for a period of five (5) years from the date of signature of this agreement.
This exclusion applies on condition that the companies concerned invest the aforementioned amount in tangible fixed assets and that they keep these fixed assets for at least ten (10) years, starting from the date of their acquisition.
The companies concerned must submit to the tax authorities a statement including, in particular, the total amount invested for each financial year and the nature of the fixed assets relating to the activity which was the subject of the investment as well as the date and the price of their acquisition, according to a model established by the administration to be attached to the declaration of the tax result provided for in article 20-I of the CGI.
They must also enclose a copy of this agreement with the declaration of taxable income for the first financial year during which the agreement was signed.
These companies will be subject to the 20% rate for financial years beginning on or after January 1, 2023.
Concernant la démarche progressive retenue pour _cc781905-5cde- 3194-bb3b-136bad5cf58d_la mise en œuvre des taux d'IS mentioned above, the provisions of article 247XXXVII of the CGIIS have set the rates applicable during the period of the CGIIS from January 1, 2023 to December 31, 2026.
Thus, article 247XXXVII of the CGI provides that the CIT rates of 10%, 15%, 20%, 26%, 31% and 37% in force before January 1, 2023, will be increased, reduced or maintained, according to the case, for each of the fiscal years beginning during the period from January 1, 2023 to December 31, 2026 mentioned above.
The installments due, for each financial year beginning during this period, will be calculated according to the corporate tax rates applicable to this financial year.
Good to know : In order to comply with the legislation in force, it is important to consult the Finance Act. The chartered accountant is the best ally to advise you on this subject. A chartered accountant is a liberal professional whose activity is governed by la law (15-89). To exercise his activity, a chartered accountant must beregistered on the board of the Order of Chartered Accountants.
Gradual reduction of the withholding tax rate on income from shares, shares and similar income
Before the finance law for the 2023 budget year, article 19IV of the CGI provided that the rate of corporation tax (IS) deducted at source on the amount of income from shares, shares and similar income was calculated at the rate of 15%.
In order to mitigate the impact of the increase in corporate tax rates as part of the overall reform of the rates of this tax, the LF 2023 amended the provisions of article 19IV of the CGI in order to reduce the corporate tax rate (IS) withheld at source on the amount of income from shares, shares and similar income from 15% to 10%, and this, according to the same progressive approach over four (4) years.
Thus, the provisions of article 247-XXXVII-C of the CGI provide that the rate of tax withheld at source
15% will be gradually reduced, for proceeds from shares, shares and similar income
distributed and from the profits made for each fiscal year beginning during the period from January 1, 2023 to December 31, 2026, as follows:
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13.75% for the fiscal year beginning on or after January 1, 2023;
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12.50% for the fiscal year beginning on or after January 1, 2024;
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11.25% for the fiscal year beginning on or after January 1, 2025;
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10% for the fiscal year beginning on or after January 1, 2026.
In this sense, proceeds from shares, shares and similar income distributed and coming from profits made in respect of financial years opened before January 1, 2023, remain subject to the rate of 15%.
In addition, article 247XXXVIIC of the CGI provides that the income from shares, shares and similar income distributed is considered to have been deducted from the oldest financial years.
Limitation of the five-year corporate tax exemption provided for companies with obtain le obtained bb3b-136bad5cf58d_CFC aux first sixty months following their date of creation
Before the finance law for the 2023 budget year, all service companies with CFC status could benefit from total exemption from corporate tax for five years from the date of obtaining said status, even whether they had previously enjoyed a similar benefit.
In order to rationalize tax incentives, in accordance with the provisions of the framework law on tax reform and to direct said five-year exemption towards newly created target companies, the LF 2023 has instituted a measure aimed at limiting the application of the total exemption from corporate tax granted to companies with "Casablanca Finance City" status at the end of the first 60 months following the date of their incorporation.
Institution of the possibility of constituting provisions for investment in favor of companies having obtained CFC status
Before the finance law for the 2023 budget year, service companies with CFC status were subject to corporate tax at the specific rate of 15%.
Following the increase in the rate applicable to these companies from 15% to 20%, as part of the overall reform of the aforementioned CIT rates, and in order to safeguard the competitiveness and attractiveness of this division, the LF 2023 modified the provisions of article 10IIIC of the CGI, in order to institute a measure allowing said service companies to constitute provisions for deductible investments, within the limit of 25% of taxable profit after loss carryforward and before tax.
As such, the investment must be made in equity securities, during the accounting year following that of the constitution of the aforementioned provisions and the company concerned must keep the securities acquired for at least four (4) years, from the date of their acquisition.
It must also enter the provision for investment in the liabilities of the balance sheet, under a special heading, fait ressortir par90-cc58d 5cde-3194-bb3b-136bad5cf58d_exercice le montant de chaque _cc781905-5cde-3194-bb3b -136bad5cf58d_dotation et souscrire auprès de l'administration fiscale un état selon un modèle établi par l administration, to be attached to the declaration of taxable income.
The provision or part of the provision not used in accordance with its purpose within the period referred to above is reported by the company or, failing that, automatically by the administration, without recourse to the procedures for rectification of the taxable base. , in the fiscal year for which it was incorporated.
By way of derogation from the provisions relating to limitation periods, if the financial year for which the provision or part of the provision must be reported is prescribed, the adjustment is made to the first financial year of the non-prescribed period.
Furthermore, given the gradual approach over four years adopted for raising the specific rate of corporate tax applicable to service companies with CFC status and in order to maintain an effective tax rate of 15% in favor of these companies , Article 247XXXVIIE of the CGI set the limits of the rates allowed for the constitution of provisions for investment for each financial year beginning during the period from January 1, 2023 to December 31, 2026, as follows:
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7.70% for the fiscal year beginning on or after January 1, 2023;
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14.30% for the fiscal year beginning on or after January 1, 2024;
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20% for the fiscal year beginning on or after January 1, 2025;
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25% for the fiscal year beginning on or after January 1, 2026.
Rationalisation des avantages fiscaux des zones d'accélération industrielle (ZAI) accordés aux entreprises financières
Certaines entreprises financières installées dans les zones d'accélération industrielles (ZAI) bénéficiaient des avantages fiscaux prévus in favor of these areas, while similar companies providing the same services to these areas are subject to the rules of common law.
In order to ensure tax fairness in the treatment of said companies, the LF 2023 a excludes financial companies from benefiting from the tax advantages of these areas, in harmony with what a_cc781905-5cde-3194 -bb3b-136bad5cf58d_été provided for by the LF 2021 for financial companies with CFC status. These are the following financial companies:
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credit institutions having this quality, in accordance with the legislation in force;
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and insurance and reinsurance companies having this quality, in accordance with the
legislation.
Extension of the deadline for benefiting from the 70% deduction applied to the net capital gain realized on the sale of fixed assets
The LF 2022 a supplemented the provisions of article 247 of the CGI by a paragraph XXXV providing for a transitional and derogatory measure aimed at encouraging the reinvestment of the total amount of proceeds from the sale, net of tax, of certain items of fixed assets, made for the year 2022.
This measure is aimed at the institution for the benefit of companies of a 70% reduction applicable on the net capital gain realized on the occasion of the sale of fixed assets, with the exception of land and buildings, under of the fiscal year beginning in 2022.
In order to further encourage companies to reinvest the total amount of proceeds from the sale of fixed assets, the LF 2023 a extended the deadline for application of this measure for fiscal years beginning on during the years 2023, 2024 and 2025.
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