Finance Bill 2024: Tax solidarity for all!

While the withholding tax brought many people out into the streets last year, this time it is VAT tax solidarity that is likely to have many shaking their heads. Article 183-A-VI-2e of the 2024 Finance Bill institutes the principle of fiscal solidarity with regard to the obligation to declare and pay VAT to the Treasury for any person directly or indirectly exercising a function of administration or management of the company. This strong tax provision therefore applies to CEOs, managing directors, deputy managing directors, CFOs, chief accountants, and others.

The introduction of the principle of tax solidarity between a company and its managers or beneficial owners is intended to combat tax evasion and avoidance. This goal is clearly stated in the presentation note of the Finance Bill, but the wording of the provision is cause for concern. “Before the notion of tax solidarity between managers can be activated, it must first be proven that VAT revenues have indeed been misappropriated. Only legal action will be able to determine whether the tax has been collected and used for an expense, such as the purchase of land, for example”, explains a tax expert, who added: “We also need to investigate whether the company is not merely dead, or whether it has cash-flow problems because a large client owes it money. Does this mean the authorities should sanction such a company?”

On another point, this tax expert points out that “a manager can only be held liable for private funds if the courts prove that he or she is actually responsible for a tax offence. Why doesn’t the Administration go after the company that employs this manager, especially if it has assets?”. The Public Debt Collection Code also provides for other means of getting taxpayers to pay their taxes. These include the formidable weapon of the notifications to third party holders, which has already proved its worth and can even be extended to customers of companies with tax debts. Indeed, the tax authorities can summon a customer to pay funds owed to the supplier to cover tax claims. Clearly, however, lawmakers are adding a new tool to the means of collection.

Hassan EL ARIF