Morocco Implements Major Tax Changes for 2024, Including VAT Exemptions on Essential Goods

VAT aimed at adjusting the exemptions and applicable rates. It emerges from the 2024 Finance Act that certain basic mass consumption products, such as school supplies, butter derived from animal milk, canned sardines, powdered milk and household soap can also be exempt from VAT, indicates Hespress. Sales of these products will be exempt without the right to deduction and with the right to deduction. The VAT exemption is also extended to services provided remotely by non-resident companies to customers located on national territory. This extension applies when the customer has its registered office, establishment or tax domicile in Morocco, or resides occasionally in the country, it is specified. It is also planned to gradually harmonize the VAT rates by 2026. The various sectors concerned include water, electricity, electricity production from renewable energies, refined sugar, transport operations, insurance brokerage services and economical cars.

Corporate Income Tax (CIT). Adjustments to frame the application of the 35% CIT rate will be made in 2024. Companies realizing a net fiscal result of less than 100 MMDH for 3 consecutive fiscal years of the application of the 20% rate, when the net profit reaches or exceeds this amount following non-recurring income consisting of the disposal of fixed assets are not affected by this measure. The 2024 Finance Act also provides for a permanent exemption from CIT - a provision added to Article 6-I-A of the General Tax Code (CGI) - for the Mohammed VI Foundation for Science and Health. This measure is in line with the promotion of the activities and operations of this foundation created under Law No. 23-23.

Income Tax (IR). The 2024 Finance Act brings significant adjustments, including the deductibility of social security contributions to the Mandatory Health Insurance and Retirement scheme for professionals, self-employed workers and non-salaried persons subject to IR under the actual net or simplified net income regime. The annual global income tax returns filed from January 1, 2024 are affected by this measure. As for the flat-rate deduction rate applicable to gross fees granted to artists, it will increase from 40% to 50%.

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What about the measures relating to registration fees? The 2024 Finance Act will bring substantial reforms, particularly in the context of acts of allocation of premises or land by cooperatives and housing associations to their members. The alignment of registration fee rates represents a major advance, implementing the common law proportional rates currently in force, i.e. 4% for premises and 5% for land, it is noted.