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2023 finance law in Morocco: specific measures for corporation tax (IS)

 

The Finance Law for the 2023 budget year as adopted by the House of Representatives and the House of Councillors, was published in the Official Bulletin N°7154 bis dated December 23, 2022.

What is a Finance Law?

The finance law is thelegislative act  by which the Parliament  vote on state budget. It authorizes the executive power to collect thetax and to engage public expenses  for a specified period, and may contain other provisions relating to public finances. She is the main expression of the tax consent.

LEC.mareveals the measures specific to corporate tax (IS) of the Finance Law 2023 

 

Revision of corporate tax rates as part of the gradual convergence towards a unified rate 

Before the finance law for the 2023 budget year, article 19 of the CGI provided that corporation tax (IS) was calculated, according to the amount of profit made, the nature of activity or the economic sector. concerned, according to several different rates set at 10%, 15%, 20%, 26%, 31% and 37%.

 

As part of the continued implementation of the provisions of Framework Law No. 69.19 on tax reform, the LF 2023 instituted a comprehensive reform of CIT rates to give a clear view of the system of this tax according to a progressive methodology over four (4) years.

 

Thus, article 19 of the CGI has set the target CIT rates as follows:

 

  • 20%, as the unified common law target rate applicable to all companies;

  • 35%, as the target rate applicable to companies whose net profit amount is equal to or greater than 100 million dirhams;

  • 40%, as the target rate applicable to credit institutions and similar organizations, Bank Al Maghrib, the Caisse de depot et de gestion and insurance and reinsurance companies.

 

The provisions of article 19 of the aforementioned CGI provide that the rate of 35% does not apply:

 

  1. service companies benefiting from the “Casablanca Finance City” tax regime;

  2. companies operating in industrial acceleration zones;

  3. to companies created on or after January 1, 2023, with the exception of public establishments and companies and their subsidiaries in accordance with the laws and regulations in force, which undertake under an agreement signed with the State to invest an amount of at least one billion and five hundred million (1,500,000,000) dirhams for a period of five (5) years from the date of signature of this agreement.

 

This exclusion applies on condition that the companies concerned invest the aforementioned amount in tangible fixed assets and that they keep these fixed assets for at least ten (10) years, starting from the date of their acquisition.

The companies concerned must submit to the tax authorities a statement including, in particular, the total amount invested for each financial year and the nature of the fixed assets relating to the activity which was the subject of the investment as well as the date and the price of their acquisition, according to a model established by the administration to be attached to the declaration of the tax result provided for in article 20-I of the CGI.

 

They must also enclose a copy of this agreement with the declaration of taxable income for the first financial year during which the agreement was signed.

 

These companies will be subject to the 20% rate for financial years beginning on or after January 1, 2023.

 

Concernant  la  démarche  progressive  retenue  pour _cc781905-5cde- 3194-bb3b-136bad5cf58d_la  mise  en  œuvre  des  taux  d'IS   mentioned above,   the provisions of article 247XXXVII of the CGIIS have set the rates applicable during the period of the CGIIS from January 1, 2023 to December 31, 2026.

 

Thus, article 247XXXVII of the CGI provides that the CIT rates of 10%, 15%, 20%, 26%, 31% and 37% in force before January 1, 2023, will be increased, reduced or maintained, according to the case, for each of the fiscal years beginning during the period from January 1, 2023 to December 31, 2026 mentioned above.

 

The installments due, for each financial year beginning during this period, will be calculated according to the corporate tax rates applicable to this financial year.

Good to know :  In order to comply with the legislation in force, it is important to consult the Finance Act. The chartered accountant is the best ally to advise you on this subject. A chartered accountant is a liberal professional whose activity is governed by la law (15-89). To exercise his activity, a chartered accountant must beregistered on the board of the Order of Chartered Accountants

 

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2023 finance law in Morocco

Gradual reduction of the withholding tax rate on income from shares, shares and similar income 

Before the finance law for the 2023 budget year, article 19IV of the CGI provided that the rate of corporation tax (IS) deducted at source on the amount of income from shares, shares and similar income was calculated at the rate of 15%.

 

In order to mitigate the impact of the increase in corporate tax rates as part of the overall reform of the rates of this tax, the LF 2023 amended the provisions of article 19IV of the CGI in order to reduce the corporate tax rate (IS) withheld at source on the amount of income from shares, shares and similar income from 15% to 10%, and this, according to the same progressive approach over four (4) years.

 

Thus, the provisions of article 247-XXXVII-C of the CGI provide that the rate of tax withheld at source

15% will be gradually reduced, for proceeds from shares, shares and similar income 

distributed and from the profits made for each fiscal year beginning during the period from January 1, 2023 to December 31, 2026, as follows:

 

  • 13.75% for the fiscal year beginning on or after January 1, 2023;

  • 12.50% for the fiscal year beginning on or after January 1, 2024;

  • 11.25% for the fiscal year beginning on or after January 1, 2025;

  • 10% for the fiscal year beginning on or after January 1, 2026.

 

In this sense, proceeds from shares, shares and similar income distributed and coming from profits made in respect of financial years opened before January 1, 2023, remain subject to the rate of 15%.

 

In addition, article 247XXXVIIC of the CGI provides that the income from shares, shares and similar income distributed is considered to have been deducted from the oldest financial years.

Limitation of the five-year corporate tax exemption provided for companies with  obtain  le  obtained bb3b-136bad5cf58d_CFC  aux  first sixty months following their date of creation

Before the finance law for the 2023 budget year, all service companies with CFC status could benefit from total exemption from corporate tax for five years from the date of obtaining said status, even whether they had previously enjoyed a similar benefit.

 

In order to rationalize tax incentives, in accordance with the provisions of the framework law on tax reform and to direct said five-year exemption towards newly created target companies, the LF 2023 has instituted a measure aimed at limiting the application of the total exemption from corporate tax granted to companies with "Casablanca Finance City" status at the end of the first 60 months following the date of their incorporation.

2023 finance law in Morocco
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2023 finance law in Morocco
2023 finance law in Morocco
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2023 finance law in Morocco
2023 finance law in Morocco
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