Minimum contribution: Be careful when calculating advance payments
The clarifications issued by the General Tax Directorate (DGI) are important in that they not only define the start of the minimum contribution exemption counter, but also have a bearing on corporate income tax instalments.
Newly-created entities with a profitable taxable income remain liable for corporate income tax, even though they are exempt from the minimum assessment. Exemption from the minimum assessment does not exempt these companies from payment of corporate income tax in the event of profitable taxable income during the exemption period. In the latter case, the amount of corporate income tax is calculated without taking into account the amount of the minimum assessment for the year, even if this is less than the minimum assessment. On the other hand, in the event of a deficit, no tax will be paid during the exemption period, i.e. 36 months from the date of commencement of operations, up to a maximum of 60 months from the date of incorporation of the company. However, once the statutory exemption period has expired, these companies must pay the higher of the minimum contribution and the corporate income tax. “It should also be pointed out that concession-holding companies are not eligible for exemption from the minimum contribution”, explained Younes El Fachtali, chartered accountant and member of the Cercle des Fiscalistes du Maroc ( Circle of Moroccan Tax Experts).
After the exemption period, and in accordance with the provisions of Article 144 of the General Tax Code (CGI), the amount of tax due by companies, other than non-resident companies taxed on a flat-rate basis in accordance with the provisions of Article 16 of the CGI, cannot be less than a minimum assessment calculated on the basis of sales and other income in accordance with the provisions of Article 144 – I B of the CGI Code.
“Attention must be paid to the expiry of the period of exemption from the minimum assessment. Indeed, the last financial year will be the reference year for the n+1 financial year in terms of corporate income tax instalments. The amount of the theoretical minimum contribution must be calculated and compared with the corporate income tax. The higher amount will be the basis for calculating the instalments ” , warns Youness El Fachtali, a chartered accountant and member of the Cercle des Fiscalistes du Maroc ( Circle of Moroccan tax specialists).According to article 170-III of the CGI, the reference year for companies temporarily exempt from minimum assessment is the last year for which these exemptions were applied.
Consequently, advance payments in respect of the current fiscal year will be determined on the basis of the tax or minimum contribution that should have been paid by the company, taking into account the tax rate to which it would have been subject had it not benefited from the temporary exemption. Similarly, and in order to avoid differences of interpretation as to the rate to be applied in calculating the said advance payments, Finance Act no. 70-15 for 2015 specified that these advance payments are calculated by applying the tax rates to which the companies concerned are subject in respect of the current financial year.
Hassan EL ARIF
