The Moroccan General Directorate of Taxation (DGI) has issued an overview of the main tax measures of the Finance Law for 2023. The main measures are summarized as follows.
One of the main measures of the Finance Law for 2023 is for the introduction of a new simplified corporate income tax rate system that includes:
The overview also provides that the higher corporate income tax rate of 35% does not apply to:
These companies will be subject to the 20% rate from 1 January 2023. However, the overview also notes that the Finance Law for 2023 includes measures for a transition to the simplified corporate income tax rate system over a period of four years, with the rates of 10%, 15%, 20%, 26%, 31%, and 37% increased, reduced, or maintained as the case may be, during the period 2023 to 2026
The transition measures provide the following:
The Finance Law for 2023 also provides for a reduction in the 15% tax rate on income from shares and profit distributions as follows:
Income from shares and distributions out of profits realized in financial years beginning before 1 January 2023 remain subject to the 15% rate.
Before the Finance Law for 2023, all service companies with CFC status could benefit from total exemption from corporate tax for five years from the date of obtaining CFC status, even if they had previously enjoyed a similar benefit. In order to rationalize tax incentives and direct the five-year exemption towards newly created target companies, a limit is introduced to provide that the total exemption may apply for the first 60 months following the date of their incorporation.
Further, considering the increase in the tax rate from 15% to 20% for service companies with CFC status, said service companies are allowed to constitute provisions for deductible investments, within the limit of 25% of taxable profit after loss carryforward and before tax. The investment must be made in equity securities that must be kept for at least four years. The rate allowed for the constitution of provisions for investments is increased from 7.7% to 25.0% over the period 2023 to 2026 to maintain an effective tax rate of 15%, considering the gradual increase in the applicable corporate tax rate.
Financial companies are excluded from benefiting from the tax advantages of Industrial Acceleration Zones, including credit institutions and insurance and reinsurance companies. This is in line with the exclusion of such financial companies from CFC regimes benefits in the Finance Law for 2021.
The 70% exemption (reduction) on net gains from the sale of fixed assets that are reinvested as provided in the Finance Law for 2022, with the exception of gains from the sale of land and buildings, is extended to fiscal years beginning in 2023, 2024, and 2025.
The normal rate of the minimum contribution is reduced to 0.25% for all companies, and the minimum contribution rate is reduced to 0.15% for operations carried out by commercial enterprises in respect of sales relating to certain basic products. Further, the minimum contribution rate for liberal professions is reduced from 6% to 4%.
The withholding tax exemptions provided for dividends and similar distributions by companies with CFC status, except financial companies, and by companies established in Industrial Acceleration Zones are rationalized. This includes that the exemptions are limited to dividends and other income from foreign equity investments distributed to non-residents.
The social solidarity contribution on profits and income in 2022 is extended so that it also applies in 2023, 2024, and 2025. As first provided by the Finance Law for 2022, progressive contributions rates of 1.5% to 5.0% apply on net profits of MAD 1 million or more.
The Finance law for 2023 also contains various measures regarding personal income tax, VAT, and others.