Viewpoint: Fouad Lahgazi

The Finance Law of 2018 has laid out a number of new procedures that are set to further digitalise and simplify existing provisions, and bring the kingdom’s tax regime up to speed with international regulations. Taxpayers and entities operating in sectors that have yet to be defined by regulations are obliged to adopt a billing software system that meets the technical criteria determined by the administration.

Furthermore, they must meet the requirements provided for in Paragraphs III and IV of Article 145 of the General Tax Code of Morocco. This offers taxpayers the opportunity to ask tax authorities to rule on the tax regime applicable to their situation with regard to the legislative provisions of the General Tax Code. Notably, these requests concern legal and financial arrangements related to the investment projects to be carried out, restructuring transactions of group companies based in the country, as well as transactions to be carried out between companies located in Morocco that have indirect or direct dependency links. This procedure will allow entities to ask tax authorities for a statement of the factual situation, with the exception of cases that are the subject of litigation.

The new tax regime enables electronic exchange with the tax authorities. The Finance Law requires taxpayers and entities to register an email address with a service provider and receive tax notifications via email. However, in order to benefit from exemptions, taxpayers and entities must possess a Common Enterprise Identifier number. To further propel digitalisation, taxpayers will be obliged to keep accounts in electronic format for the fiscal years beginning on or after January 1, 2018, in accordance with the provisions of Article 145-I of the General Tax Code. Therefore, all accounting documents are to be provided electronically at the beginning of the control operations.

Moreover, the new tax regime simplifies reporting procedures for companies that decide to transfer their head office or fiscal domicile. Prior to this, the transfer of a registered office or principal establishment located in Morocco, or the change of fiscal domicile was to be submitted within 30 days following the date of said transfer or change to the tax inspector from the place where the company was initially taxed.

The Finance Law of 2018 provides for the filing of the head office or fiscal domicile’s transfer declaration to the tax inspector of the new head office or fiscal domicile. Furthermore, the Law establishes the obligation for certain entities to provide tax authorities with the information required for the application of international tax treaties signed by the Moroccan government, allowing an automatic exchange of information for tax purposes. This particularly concerns credit institutions and similar organisations, insurance and reinsurance companies, as well as any other financial institutions.

These entities are now obliged to submit information regarding their capital gains income, account balances, warranty redemption values, and capitalisation and investment agreements of the same nature, as well as information on any other source of income. At the same time, the information collected by the tax authorities from the aforementioned establishments may be communicated to the tax authorities of the countries that have entered into agreements with Morocco, in accordance with the procedures laid down by the regulation.

The Finance Law of 2018 includes some additional provisions. First, account audits must now start within a period not exceeding five working days from the start date of the audit. Second, starting on January 1, 2018 the statute of limitation will be suspended between the date of the filing of the judicial appeal and the expiry of three months following the date of notification of the judicial decision. Third, the reporting period in case of lost accounting documents has been extended from 15 to 30 days. Fourth, a Dh100 (€9.26) threshold has been introduced for amounts issued for state taxes. Lastly, the mechanisms of rectification procedures have been improved in line with international best practice.