VAT-liable or VAT-exempt entities All under scrutiny!
Entities not subject to VAT or exempt from VAT without the right to a tax deduction will henceforth be under the watchful eye of the tax authorities. The Finance Bill, which has just passed its second reading in the House of Representatives, introduces a new, particularly strict value-added tax reversal liability system which applies to purchases made by VAT-registered companies from suppliers who are either outside the scope of the tax or exempt without the right to deduction, and who consequently issue invoices without including VAT.
Purchases of land and agricultural products are excluded from this scheme. As a reminder, entities invoicing without VAT have the status of «non tax producers», which means that they do not include value-added tax in their invoices because of their tax regime, or because they do not reach the minimum sales threshold of 2 million Dirhams (USD 200,000) to be subject to VAT (in the case of retail traders), or because they are taxed under the Simplified Net Income Regime (RNS) for individual service providers. For sales of less than 500,000 Dirhams ($50,000 USD), the latter are exempt from VAT, with no right of deduction (Article 91 of the General Tax Code, CGI).
Through the 20254 Finance Bill, lawmakers intend to put some order into this state of exception by instituting a new VAT reversal liability system . Customers purchasing from this category of suppliers will now have to mention the amount of this tax on their return. «They will have to calculate this payable VAT and mention it in their monthly or quarterly return, depending on their tax regime», explains Mohamed Chorfi, a chartered accountant and trainer. At the same time, they will have to deduct it. The principle is therefore to calculate the fictitious or theoretical VAT, declare it, and recover it by entering it in the deduction table.
This is a neutral operation, which is obviously not part of sales. According to the practitioner, the aim of this new procedure is to identify suppliers who do not charge VAT. This obligation also applies to persons subject to the Single Professional Contribution – CPU) and to self-employed entrepreneurs.
This provision represents a new means of cross-checking to combat tax fraud. The Finance Bill also introduces a new table dedicated to reverse-charge invoices. With this provision, lawmakers are specifically targeting resellers with sales of less than 2 million Dirhams (200,000 USD), who are therefore not subject to VAT or are outside the scope of application (Article 89 of the General Tax Code), as well as individuals who are exempt without the right to deduction under Article 91. In effect, the tax authorities will have a more effective means of determining whether these suppliers have not exceeded the threshold of 2 million Dirhams (USD 200,000) or 500,000 Dirhams (USD 50,000). In this case, they will be obliged to charge the value-added tax.
Hassan EL ARIF
