Refund of VAT credit in Morocco: what procedure to follow? 

 

The VAT credit is calculated by the difference between the VAT collected on sales and that deductible on purchases, expenses and fixed assets. In the event that the VAT due is greater than that collected, the company benefits from a VAT credit. However, to be reimbursed, the company must meet certain thresholds. 

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How to file your VAT refund claim? What are the supporting documents? What must be avoided for your application to be admissible? How long will it take you?

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LEC.ma reveals the points to pay attention to 

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The company whose activity is subject to VAT must declare the VAT on its sales or services but also the deductible VAT on its fillers.

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The VAT to be refunded or VAT collected corresponds to the amount of VAT that the company has made its customer pay. This sum must be paid back to the State. It corresponds to a debt for the company.  

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The VAT to be deducted or deductible VAT corresponds to the amount of VAT that the company has paid when purchasing goods. This   sum may be deducted from the VAT due. 

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LEC.ma reveals some tips for obtaining a refund of your VAT credit and the method to follow!

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1- Submit a request to the local tax department on which the beneficiary depends:

 

• The refund request referred to in 1° of article 103 of the CGI which concerns operations carried out under the benefit of the exemptions and/or the suspensive regime provided for in articles 92 and 94 of the CGI, must be formulated on or according to a form drawn up by the Administration, and filed with the local tax service on which the beneficiary depends, accompanied by the declaration of turnover referred to in article 111 of the CGI and the supporting documents constituting the reimbursement file provided for in article 25 I 1° and 2° of decree n°2.06.574 of 10 hija 1427 (December 31, 2006) taken for the application of VAT

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• The request for refund of the VAT credit referred to in article 103-2° of the CGI concerning the case of cessation of taxable activity must be established under the conditions provided for in 1° and 2° of I of article 25 of the decree mentioned above and must be accompanied by the declaration of cessation of activity referred to in the second paragraph of article 114 of the General Tax Code.

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• The request for reimbursement made by the companies subject to the tax, which have paid the tax on the occasion of the importation or local acquisition of the goods referred to in article 92-I-6 above and in article 123 -22° must be established under the conditions provided for in 1° and 2° of I of Article 25 of the aforementioned decree.

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• The request for reimbursement referred to in Article 103-4° made by leasing companies wishing to benefit from the right to reimbursement relating to the non-attributable deductible tax credit must be established according to the procedures provided for in 1° and 2° of I of article 25 of the aforementioned decree. The refund request must be filed with the local tax department on which the beneficiary depends, at the end of each quarter of the calendar year for transactions carried out during the past quarter(s).

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• The request for reimbursement referred to in Article 103 bis must be filed quarterly with the local tax department to which the taxable person belongs, during the month following the quarter during which the declaration of turnover shows a credit. tax not chargeable in respect of capital goods.

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This article specifies that the deductible tax credit requested as a refund must not be charged. Taxpayers are required to cancel said credit on the turnover statement for the month or quarter following the quarter having generated a tax credit giving rise to the refund.

 

It should be noted that taxes paid prior to the quarter covered by the refund request are not refundable pursuant to the provisions of this article. Nevertheless, these taxes remain chargeable.

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• The request for reimbursement of the tax charged on the transactions referred to in Articles 92 (I-28°)12 and 247-XII 13 of the General Tax Code must be drawn up on a model form provided for this purpose by the administration and filed with the local tax service on which the beneficiary depends.

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This request must be made within a period not exceeding the year following the quarter for which the reimbursement is requested.

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This period must not exceed one year from the date of issue of the residence permit for the reimbursement relating to the construction of housing with low real estate value provided for in the aforementioned article 247-XII. 12 Transactions for the sale of social housing for main residential use, the surface area of which covers

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2- Present the supporting documents:

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2-1- Proof of turnover:

 

2-1-1 For exports:

 

a) Sales invoices:

 

The sales invoices to be presented are those recorded on the exporter's sales account. In the event of export of products through the intermediary of a commission agent, the seller must deliver to the latter an invoice containing the details and the price of the objects or goods delivered, as well as the indication, either of the name and address of the person on whose behalf the delivery was made to the commission agent, or of the countermark or any other similar sign used by the commission agent to designate this person. For his part, the agent must keep a register identical to that provided for in the preceding paragraph and he must give his principal a certificate valid during the year of its issue and by which he undertakes to pay the tax and the penalties. due, in the event that the goods are not exported.

 

b) Export Notice:

 

Exporters wishing to benefit from reimbursement must submit, in support of the exit declaration, export notices stamped by the Customs and Indirect Tax Administration. In the case of shipments by parcel post, the exporter must produce deposit receipts at the post office. In the absence of the documents listed above, the exporter must exceptionally produce the export certificates issued by the ADII, which guarantee the actual export of the products for which the refund is requested.

 

c) Invoice statements

 

Export notices and copies of sales invoices should be summarized on separate statements.

 

These statements are served by establishing the distinction between the different types of products and operations according to the tax rate applicable to them.

 

For exporters of services, including international carriers, they are asked, as proof of their export turnover, to produce:

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• copies of contracts made with foreign countries;

• sales invoices, these sales invoices must include the number and date of the temporary admission in the case of export of goods placed under the suspensive customs regime;

• bank statements and credit advice;

• documents endorsed by the foreign exchange office, notice of transfer of currency by the bank to its customers (model called form II or form III) or by any other organization authorized for this purpose justifying the repatriation of currency.

 

2-1-2- For exempt local sales:

 

a) Invoices and sales records:

 

Like the exporters, the beneficiaries of the reimbursement must produce copies of the sales invoices justifying the declared turnover which in fact constitutes the reimbursement ceiling. These copies of invoices must be summarized on a statement by type of product.

 

b) Certificates of exemption:

 

To claim reimbursement of value added tax, suppliers of companies exporting products or services benefiting from the suspended purchase of VAT under the provisions of article 94 of the CGI, must present a copy of the nominative certificate issued to their client by the local tax department.

 

Similarly, suppliers of companies benefiting from VAT exemption with formality under article 92 of the CGI, must also present a copy of the exemption certificate.

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2-2- Justification of purchases:

 

The right to reimbursement of value added tax constitutes, where provided for, the extension of the right of deduction referred to in article 101 of the CGI. This is the value added tax charged on the elements of the price of transactions giving rise to the right to reimbursement.

 

This is the VAT charged on all the components of the cost price:

 

• raw materials ;

• the packages ;

• provision of services;

• overhead costs ;

• investments.

 

Cannot benefit from the reimbursement, the taxes which are excluded from the right of deduction listed in article 106 of the CGI

 

Thus does not open the right to deduct, the tax having burdened:

 

1°-goods, products, materials and services not used for operational purposes;

2°-buildings and premises unrelated to operations;

3°-passenger transport vehicles, excluding those used for the purposes of public transport or the collective transport of company personnel;

4°-petroleum products not used as fuels, raw materials or process agents, excluding:

 

• diesel fuel used for the operating needs of collective road transport vehicles for people and goods as well as the road transport of goods carried out by taxable persons on their own behalf and by their own means;

• diesel fuel used for operating passenger and freight rail vehicles;

• diesel and kerosene used for air transport needs.

 

5°-purchases and services of a charitable nature;

6°-mission, reception or representation expenses;

7°-The provision of services rendered by any canvassing agent or insurance broker on the basis of contracts provided by him to an insurance company;

8°-deliveries and sales other than for consumption on site, relating to wines and alcoholic beverages, as well as deliveries and sales of all works or articles, other than tools, made wholly or partly of gold, platinum or silver.

 

2-2-1 Direct import:

 

For products imported directly by the beneficiaries of the reimbursement, the payment of the value added tax on entry into Morocco is justified by the production of the purchase invoices and the import declaration as well as the receipts from the customs and a statement containing the references of each import.

 

This is a document drawn up on the basis of the receipts issued by the ADII and the establishment of which does not appear to pose any particular problem.

 

To benefit from the reimbursement provided for in Article 103 bis, the purchase invoices for capital goods, materials and tools, import declarations and customs receipts must be drawn up in the name of the beneficiary, indicating the payment of the related value added tax. In the case of several imports, a statement must be attached to the aforementioned documents mentioning, for each import, the number of the import declaration, the number and date of the customs receipt confirming the final payment of the duties and the exact nature of the capital goods, materials and tools, the value retained for the calculation of the VAT and the amount of that which has been paid.

 

2-2-2 Shopping inside:

 

For purchases in Morocco, the beneficiaries of the refund must attach to their file, in addition to the statement of purchases, all purchase invoices in Morocco or memoirs made with tax paid, as well as those made with suspension or exemption from VAT. supported by copies of the corresponding exemption certificates.

 

The original of the purchase invoices must include all the indications and references such as those required for deduction.

 

Therefore, all purchases for which the beneficiaries do not provide the original invoice or if the invoice is incomplete, must be formally excluded from reimbursement.

 

In practice, if the required justifications are subsequently produced, they will be the subject of a new request for reimbursement to be submitted within one year from the date of submission of the rejection statements.

 

In principle, the presentation of the original purchase invoice is required.

 

Failing this, the beneficiary of the refund must:

 

- produce a copy of the purchase invoice;

- attach the original of the supplier's invoice.

 

The service proceeds to the reconciliation of the original and the copy of the purchase invoice and the liquidating agent affixes on the said copy, the mention “seen in conformity” followed by his name and his signature.

 

To benefit from the reimbursement provided for in article 103 bis, local purchases must be justified by invoices for the purchase of capital goods, materials and tools or the memoranda and provisional statements of construction work giving rise to the right to reimbursement, accompanied, in in the case of several acquisitions, a summary statement including the reference to the invoices or memoranda, the tax identification number of the supplier, the exact nature of the goods acquired, the amount excluding tax, the amount of the corresponding VAT as well as the reference and the terms of payment relating to such invoices or briefs.

 

Persons carrying out the social housing operations referred to in Articles 92 (I-28°) and 247-XII of the General Tax Code must also provide proof of their purchases of goods and services referred to in Article 25 of Decree No. °2-06-57415 taken for the application of the following documents:

 

- certified copy of the building permit accompanied by the construction plan; - certified copy of the residence permit;

- certified copy of the sales contract.

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3- What to avoid for your application to be admissible

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In order for the request not to be rejected, partially or totally, the following reasons for rejection should be avoided.

 

Indeed, following the filing of the request for reimbursement, the taxpayer can receive, from the competent department, a detailed statement of the taxes rejected.

 

The reasons leading to the partial or total rejection of the taxes requested for reimbursement are mainly the following:

 

3-1- Foreclosure:

 

This is the case of late filing of the application:persons fulfilling the conditions required to benefit from reimbursement must apply for it, on pain of foreclosure, within a period not exceeding one year following the expiration of the quarter for which reimbursement is requested.

 

This is also the case for foreclosed taxes:certain invoices are foreclosed with regard to reimbursement of value added tax when the right to deduct arises on a date prior to the year following the quarter for which the reimbursement is requested. The related taxes do not give right to reimbursement.

 

The amount of these taxes must not, therefore, be deducted from the amount of the tax collected, at the level of the liquidation sheet.

 

These invoices are the subject of a statement sent, for information, to taxpayers by registered letter in the same way as the rejection statements.

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3-2- Other reasons for rejection:

 

- Shopping inside:

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• Invoice not presented;

• Irregular invoice (not meeting commercial standards);

• Delivery note not accepted;

• Duplicate ;

• Absence of identification number;

• Invoice number: missing-overloaded-or added afterwards (without certification);

• Date of establishment of invoices: missing-overloaded-or added afterwards;

• Invoice prior to the identification of the company or the effective date of the option provided for by article 90 of the CGI;

• Beneficiary's name: missing - overload - added a posteriori (without certification);

• Invoice issued in the name of a third party;

• Absence of designation of the equipment;

• Imprecise destination of the products or services (mixed use);

• Failure to comply with the provisions of Articles 102 and 112 of the CGI (entry in a fixed asset account);

• Building materials in large quantities whose allocation is not justified by the company;

• Absence of payment references or incomplete payment references;

• In the absence of a receipt stamp for payment in cash, to be deducted from the reimbursable amount;

• Absence of the date of acceptance of the bill (debit regime);

• Invoices not paid in full (partial rejection);

• In case of option: Deadline of one month not respected (article 90 of the CGI);

• Advance deductions (to be reintegrated under the next file);

• Credit note or rebate passed as an invoice (to be reintegrated twice);

• Unapplied credit or refund to be reinstated (Article 106);

• Transactions excluded from the right to deduction and therefore to reimbursement (article 106 of the CGI), these are in particular taxes having been imposed on:

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- goods, products, materials and services not used for operational needs,

- buildings and premises unrelated to operations;

- petroleum products not used as fuels, raw materials or manufacturing agents, excluding:

 

• diesel fuel used for the operating needs of collective road transport vehicles for people and goods as well as the road transport of goods carried out by taxable persons on their own behalf and by their own means;

• diesel fuel used for operating passenger and freight rail vehicles;

• purchases and services of a charitable nature;

• mission, reception or representation expenses;

• the transactions listed in article 99-3°-b;

• sales and delivery operations relating to the products, works and articles referred to in Article 100, namely, deliveries and sales other than for consumption on the premises, relating to wines and alcoholic beverages, are subject to value added tax at the rate of one hundred (100) dirhams per hectolitre;

• Deliveries and sales of any works or articles, other than tools, made wholly or partly of gold, platinum or silver;

 

For purchases prior to 2016, is deductible, and therefore refundable, only up to 50% of its amount, the tax having charged purchases, works or services whose amount is equal to or greater than ten thousand (10,000) dirhams, and whose payment is not justified by non-endorsable crossed check, commercial paper, magnetic means of payment, bank transfer, electronic process or by compensation with a debt with regard to the same person, provided that this compensation is carried out on the basis of documents duly dated and signed by the parties concerned and confirming acceptance of the principle of compensation.

 

As of January 1, 2016, VAT is deductible, and therefore refundable, only within the limit of ten thousand (10,000) DHS including tax for purchases, works or services per day and per supplier and this, within the limit one hundred thousand (100,000) DHS including VAT of said purchases per month and per supplier. This provision is applicable from January 1, 2016 to payments by means other than those provided for in Article 106-II of the CGI.

 

- Import purchases:

 

• Discrepancy between the DUM number and the one on the receipt;

• Absence of a copy of the import purchase invoice;

• Absence of the import declaration;

• Absence of the original VAT payment receipt;

• Handwritten receipt not certified by customs.

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4- The fate of the reimbursement request: liquidation

 

Refunds of value added tax provided for in 1°, 2°, 3° and 4° of article 103 of the General Tax Code are liquidated within a maximum period of three (3) months from the date of filing. of the admissible and complete application.

 

Consequently, within the meaning of the law, the liquidation of the request is materialized by a decision of refund, and this independently of the effective refund of the amount of the tax.

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The latter must imperatively be deducted by the person liable for the carryover credit of the month or quarter during which the transfer of the amount of the reimbursement took place.

 

To this end, the taxpayer is informed that the liquidator inspector will ensure compliance with the regularization that he will have to make at the level of the declaration of turnover following the collection of the amount of the reimbursement.

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4-1- Reimbursement ceiling:

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Refunds are liquidated within the limit of the amount of value added tax calculated fictitiously on the basis of the turnover declared for the period in question, under the operations benefiting from the refund provided for in article 103 of the CGI

 

When the amount of tax to be refunded is less than the limit set above, the difference constitutes a remainder of the ceiling that can be carried over to the following period(s).

 

This limit is adjusted according to the tax exemptions obtained, where applicable, under Articles 92 and 94 of the CGI, taking into account the amount of fictitious taxes relating to exemptions, temporary admissions and suspended purchases.

 

As regards temporary admissions (AT), the fictitious tax relating thereto is obtained by applying the normal rate of 20% to the value of the goods admitted in AT.

 

This regularization must be carried out at the level of each quarter, by subtracting from the reimbursement ceiling, the amount of the aforementioned fictitious taxes.

 

4-2- Amount to be refunded:

 

The amount of the refund is equal to the amount of taxes requested for refund less the rejected taxes and the foreclosed taxes and increased, if applicable, by the tax credit for the previous period.

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The amount to be reimbursed depends on two situations:

 

•Ceiling higher than the amount to be reimbursed:in this case, the amount obtained is reimbursed in full and the difference constitutes a balance of the ceiling to be carried over to the following period;

 

• Ceiling lower than the amount to be reimbursed:The refund is made up to the ceiling limit and the difference constitutes a tax credit to be carried over to the following period.

 

4-3- Reimbursements with specific liquidation procedures:

 

Although these types of reimbursement follow the same terms developed above, they are characterized by certain particularities that differentiate them.

 

•Reimbursement for the acquisition of capital goods:

 

In accordance with the provisions of article 103-3° of the CGI, taxpayers who have paid the tax for the acquisition of capital goods within 36 months of the start of activity, benefit from the reimbursement of the amount of VAT paid.

 

It is in fact a pure and simple refund of the amount corresponding to the tax paid and which is not limited by the refund ceiling developed above.

 

This amount must be affected by the pro rata deduction applied by the taxpayer.

 

Article 103bis introduced by the finance law for the year 2016 provides that refunds of tax credit relating to investment goods are liquidated, within thirty (30) days from the date of filing of the request for reimbursement, within the limit of the amount of value added tax on the said capital goods. The determination of the amounts to be refunded is carried out by the liquidator inspector using a model form drawn up by the administration entitled “state of liquidation of VAT on investment”. Liquidated reimbursements are the subject of decisions by the Minister in charge of finance or the person delegated by him for this purpose and give rise to the establishment of a reimbursement order.

 

•Reimbursement under leasing transactions:

 

Leasing companies benefit from the right to reimbursement relating to the tax credit arising from 1 January 2008 in accordance with the provisions of articles 103-4° and 125 (VI) of the CGI

 

In this specific case, it is the tax payable for a quarter that acts as the reimbursement ceiling. Thus, the refunds requested are liquidated up to the amount of the value added tax credit deductible for the same quarter.

 

•Reimbursement in the event of cessation of activity:

 

The taxable person who ceases his activity, subject to value added tax, is required to declare the debtor customers within thirty (30) days following the date of cessation of activity and to pay the corresponding tax. Also, to enable it to benefit from the deductions of the tax having burdened the elements of the cost price of the sales relating to these debtor customers or of that whose chargeable event has not yet occurred, the legislator has provided in article 103 of the CGI, the reimbursement, in the event of termination, of the tax credit resulting from the application of the offset rule. This reimbursement cannot under any circumstances be greater than the authorized deductions for which the triggering event occurred after the date of termination.

 

•Reimbursement for housing construction operations with low real estate value:

 

Real estate developers who build housing with a low real estate value exempt from VAT under the provisions of article 247-XII of the CGI, benefit from the right to reimbursement of the VAT charged on the cost of the construction of said housing.

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To benefit from the reimbursement and in accordance with the regulatory provisions provided for in article 10 of decree n° 2.06.574 of 10 hija 1427 (December 31, 2006) taken for the application of the value added tax, the property developer concerned must deposit a request drawn up on a model form provided by the administration to the local service on which it depends.

 

The filing of the said application must be made within one year from the date of issue of the residence permit. The real estate developers concerned must attach to their reimbursement requests, in addition to the documents justifying the purchases, the following documents:

 

- certified copy of the building permit accompanied by the construction plan;

- certified copy of the residence permit;

- certified copy of the co-ownership regulations;

- certified copy of the sales contracts.

 

The property developers concerned must keep separate accounts for the construction operations of premises for residential use referred to in Article 247-XII of the said code.