The job bonus: Botched tax circular?

What tax treatment should apply to the 1,500 Dirham (USD 150) employment support bonus just launched by the Government? This is the big question on the minds of the tax professionals consulted by L’Economiste. «Is the employment bonus an operating subsidy or an operating grant? It is therefore understood to include VAT at the rate of 20%. This means that the bonus will be accounted for as operating income, and is therefore subject to VAT under ordinary law. For tax purposes, therefore, the bonus will be reduced by a 250 dirham VAT. The Minister of Employment grants a subsidy, while the Minister of Finance collects, at the very least, 20%», explains Mohamadi El Yacoubi, President of the « Cercle des Fiscalistes « (Tax Specialists think tank). According to a chartered accountant, circular number 717 from the General Tax Directorate is clear about the tax treatment of subsidies. «The circular explicitly excludes from VAT only investment subsidies».

If one takes into account the position of the two practitioners, the Government should have introduced a bonus of 1,800 dirhams including tax. «At that point, it would have been clear to companies that the operating bonus is 1,500 Dirhams», adds El Yacoubi. Unless the tax authorities clarify their position, the accounting of this bonus will give practitioners a headache.

The support bonus was officially launched about a month ago as part of the Awrach II program, which is moving upmarket. It is an incentive grant designed to boost job creation.

An agreement was signed between members of the Government and the Director General of the Caisse Nationale de Sécurité Sociale (CNSS), setting out the terms and conditions for awarding the bonus. Worth 1,500 Dirhams per month, the subsidy will be paid for nine months by the CNSS to each beneficiary recruited.

The aim of the subsidy is to enable people who are having difficulty being recruited to gain work experience over a minimum period of 12 months, to enhance their technical and interpersonal skills, and thus increase their chances of finding a lasting job.

Two transitional tax measures to support employment

The employment support bonus is not the only measure introduced by the Government for 2023. One should also mention the extension of the income tax exemption period for newly recruited employees. This measure was due to expire on December 31, 2022. The measure consists in exempting from income tax the gross monthly salary, capped at 10,000 dirhams (USD 1,000), paid by companies created between January 1, 2015 and December 31, 2022, up to a limit of 10 employees. To benefit from this scheme, and employee must be recruited under a permanent employment contract. In addition, recruitment must take place within the first two years following the start-up date of the company, association, or cooperative. Since the entry into force of the 2023 Finance Law, this measure now targets enterprises created between January 1, 2015 and December 31, 2026 (Article 57-20 of the General Tax Code, CGI).

Hassan EL ARIF