Morocco Implements New VAT Withholding Rules for Businesses

According to a DGI press release, legal entities and individuals whose income is determined under the actual net income or simplified net income regime, who pay remuneration for service provision to taxable individuals who have presented the certificate justifying their tax compliance with respect to the declaration and payment obligations of taxes, duties and taxes provided for in the General Tax Code (CGI), are required to withhold at source 75% of the amount of VAT, for the operations of service provision referred to in Article 89-I (5°, 10° and 12°) of the CGI appearing on List B annexed to Decree No. 2-06-574 for the application of VAT. In the event that they do not present the certificate of regularity available online at the Simpl-Attestations online service on the DGI Internet Portal, the withholding at source will be made at the rate of 100% of the amount of VAT.

Construction companies that source from suppliers, particularly of cement, sand, concrete, iron, plumbing, electricity, air conditioning, etc., have the obligation to ensure the tax compliance of these suppliers. They must ask them to present the tax compliance certificate, as long as it is acquisition operations carried out as part of the execution of construction work operations. Otherwise, these companies are required to withhold at source in accordance with the provisions of Article 117-IV of the CGI by issuing their supplier, upon request, a document attesting to the withholding at source. However, the State, local authorities and public institutions and other legal entities under public law with the obligation to apply the regulations on public procurement are not required to make this withholding at source.

As for taxable persons for VAT, who source from suppliers of equipment and construction work, they must withhold the total amount of VAT due on the taxable operations carried out with these suppliers, when the latter do not present them with a certificate issued by the Tax Administration, dated less than six (6) months, justifying their tax compliance with respect to the declaration and payment obligations of taxes, duties and taxes provided for in the CGI.

The payment of the amount of the withholding at source is made online at the Simpl-TVA online service on the DGI Internet portal. It is possible to download the specifications relating to the withholding of VAT and the detailed statement of this withholding on the right menu of the Simpl-TVA online service on the DGI Internet portal. Thus, any taxpayer will have to accompany the declaration of turnover with a detailed statement of the withholding at source.