Draft Budget Bill: Major reform of corporate tax begins
A big step will be taken this year in terms of implementing the goals of the framework law on tax reform. The Government has chosen to initiate a comprehensive corporate tax reform and to introduce changes in the income tax while continuing to lower the minimum contribution rates. In the case of the corporate tax in particular, the changes will be made gradually over a four-year period. The government’s proposals exceed the expectations of employers, and this, even if major corporations, those who make super-profits, will pay more.
Improving the current tax system will notably involve eliminating the variability of the proportional normal rate depending on the tax result. Added to this is the completion of convergence towards unified rates by eliminating the gap between those applicable to local and export turnover for all companies subject to the corporate tax. The government also wants to improve the contribution of large companies making a net profit of more than 100 million Dirhams (MAD) (9 million USDs), including those carrying out regulated activities or in a situation of monopoly or oligopoly, and this, regardless of the location of the company. The Draft Budget Bill also talks about improving the tax contribution of credit institutions and similar bodies as well as insurance and reinsurance companies. Given the difficult economic situation, the social solidarity contribution will be renewed for the years 2023, 2024, and 2025. In any case, the General Confederation of Moroccan Enterprises (CGEM) has asked for the non-renewal of this surcharge to be validated.
With particular regard to the corporate tax over the next four years, the rates will experience changes to reach certain target rates. The rate is 20% as the normal common law rate applicable to all companies whose net profit is less than 100 million Dirhams, both in terms of local and export turnover. Even companies located in Casablanca Finance City and in industrial acceleration zones are concerned. The gap between the current rates and the target rate will be covered gradually over four years. For example, companies subject to a 31% corporate tax rate will benefit from a reduction of 2.75 points this year. For companies whose net profit is equal to or greater than 100 million Dirhams, the targeted corporate tax rate is 35%. A rate of 40% is scheduled for credit institutions and similar bodies. The same is true for the central bank (Bank Al–Maghrib), the Caisse de dépôt et de gestion (CDG), as well as insurance and reinsurance companies. To mitigate the increase, a gradual reduction, over four years, would be granted in terms of the rate of withholding tax on the proceeds from stocks, shares, and similar income. The goal is to go from 15% to 10% over 4 years. The government’s proposal involves the revision of the specific rate of 20% applicable to the income of certain companies and its replacement by the rate of the tax scale. This specific rate of 20% will nevertheless be maintained for a transitional two-year period to allow the enterprises concerned to transform themselves into companies and therefore to benefit from the common law rate of 20% provided for in terms of corporate tax .
Khadija MASMOUDI
