Draft Budget Bill Zombie companies: Tax regularization made easy
This is a procedure that could facilitate the process for inactive companies who want to regularize their situation and declare the transfer of activity to the tax services. Estimated at “several thousand”, according to business councils, these companies will benefit from two major measures which will also allow the tax authorities to clean up these “zombie” companies.
The first measure targets companies who do not engage in any activity and no longer fulfill their tax obligations. As for the second measure, it is dedicated to entities which have not achieved any turnover or which have only paid the minimum contribution for several years. For inactive companies, the Draft Budget Bill provides for the temporary suspension of the application of the automatic taxation procedure (Article 228 of the General Tax Code) via the introduction of a new Article 228 bis. The latter is intended in particular for companies that have not complied with any obligation to declare and pay taxes provided for by the General Tax Code (CGI) for the last three financial years. Article 228 bis also applies to entities that have not carried out any operation or activity during this period according to the information available to the administration. These companies would thus be invited, through a notified letter, to subscribe to the declaration of cessation of activity provided for in Article 150 and this, within thirty days following the date of the receipt of the notification. After this period, the companies would be entered in the register of inactive companies and the automatic taxation procedure provided for in Article 228 would be suspended. However, when the administration finds that an inactive company has carried out operations or resumed the exercise of a taxable activity, such company is removed from the register of inactive companies.
In this case, the tax office initiates the procedure of automatic taxation in the forms provided, even if the limitation period has expired but without such period exceeding 10 years. To make those new procedures rock solid and avoid any fraud, it is also planned to establish the non-deductibility of invoices issued by these inactive companies.
The second major measure provides for a simplified and temporary procedure for companies that have not achieved any turnover, or which have only paid the minimum contribution for the last four closed financial years and which want to cease their activities definitively. These would be invited to subscribe to the declaration of cessation of activity provided for in article 150 of the CGI during the year 2023 and this should exempt them from tax control. These companies should also pay a lump sum tax of 20,000 Dirhams (about 1847 $US) for each non time-barred fiscal year within the time limit of the declaration of total cessation of activity.
Khadija MASMOUDI
