Unlisted shares: the tax authorities have an eye on you
«By March 31 of each year, the tax result declaration and other reportings accompanying the balance sheet are not the only ones that need to be filed!», warns El Mehdi Fakir, chartered accountant, partner at the AdValue A&C firm. Many taxpayers as individuals often forget to perform a required formality in case of transfer of shares not listed on the stock exchange. As a matter of fact, they do register the deeds with the Tax Department (DGI). This digitalized formality is exempted from duties. But this is not the end of the story. These persons are also obliged to file an online declaration concerning these transactions, at the latest on March 31 of the year following the completion of the sale (article 84-I of the General Tax Code). Based on the information at our disposal, many persons are convinced that the administrative formalities do end with the registration of the transfer deeds. But the tax administration monitors things closely. Through the use of data, the Administration has all the necessary means to cross-check and trace the transfer of these types of shares. For that matter, many taxpayers have been reminded and asked to file a tax return, otherwise they may be taxed automatically. The return must be made on the basis of the tax administration’s printed template or via its website.
The tax returns must be accompanied by the payment of the income tax set at 20% of the value added. Electronic filing relates to unlisted securities held in Morocco as well as abroad. It should be remembered that thousands of citizens had regularized their status with the Foreign Exchange Office by declaring their financial and property assets held abroad and by paying a contribution in full discharge of liabilities. In case of partial or complete sale of these assets, transferors must inform the tax administration by paying the income tax that is here again set at 20% of the value added. A rate that depends on international tax treaties.
The tax return must contain some information including the date of transfer, the name of the intermediary, the nature of the transaction, the number of securities sold, the transfer price obviously, the total transfer price, and the transfer expenses. The tax return must also include the acquisition price per unit, the weighted average cost, the total acquisition price, and other information. In case of impairment loss, the transferor must also report it.
Who is targeted by this procedure?
Clearly, all civil and commercial transactions except those that are traded on a stock exchange are concerned by the reporting requirement. In short, it concerns thousands of transactions carried out each year that are off the radar of the tax authorities and that represent a large tax potential. Nontrading companies and unlisted commercial corporations other than predominantly real estate companies and tax-transparent real estate companies are therefore concerned. In fact, thousands of transactions are carried out each year, some of which by way of inheritance. But many initiators of these transactions ignore that the securities other than those listed on the stock exchange are not targeted by the taxation. In the end, targeted are all the transfers that are carried out outside the stock exchange that has less than 80 companies listed.
Hassan EL ARIF
