[World Tax News] Morocco increases corporate tax rate, reduces personal tax & withholding rates

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. Morocco publishes an overview of ‘2023 Finance Law’ restructuring income tax rates

The Moroccan General Directorate of Taxation (DGI) has released a document providing an overview of the tax measures introduced in the “2023 Finance Law”. A few key measures announced in the 2023 Finance Law are mentioned below:

(a) New corporate income tax structure

The ‘2023 Finance Law’ provides a comprehensive reform of Corporate Income Tax (CIT) rates.

All companies are subject to a standard corporate income tax rate of 20%. For companies with annual net profits of MAD 100 million or more, the corporate income tax rate is increased to 35%. Financial institutions, similar bodies, insurance and reinsurance companies are subject to a higher corporate income tax rate of 40%.

(b) Gradual reduction of withholding tax rates

The government has announced a reduction in the rate of corporation tax withheld at source on income from shares, and similar income, from 15% to 10% over a period of four years. The reduction will be implemented gradually, with the rate decreasing as follows:

• 13.75% for the fiscal year starting on January 1, 2023;
• 12.50% for the fiscal year starting on January 1, 2024;
• 11.25% for the fiscal year starting on January 1, 2025;
• 10% for the fiscal year starting on January 1, 2026.

(c) Exemption to agriculturists from the annual filing

Taxpayers whose only source of income is from exempt agricultural activities are not required to file an annual declaration of overall income for that income. Instead, they must submit their annual declaration using a simplified model established by the tax administration.

(d) Reduction of the tax burden on employees and pensioners

The 2023 Finance Law in Morocco has made changes to the tax system for individuals with wage and similar income and retirees. These changes include:

• An increase in the flat rate for deducting job-related expenses from 20% to 35% for individuals whose gross annual taxable income is 78,000 dirhams or less. For those with a higher income, the flat rate is 25%, and the deduction ceiling has been raised from 30,000 to 35,000 dirhams.
• An increase in the flat-rate reduction on the gross taxable amount of pension and life annuities income from 60% to 70% for those whose income does not exceed 168,000 dirhams.

(e) Tax regime applicable to self-entrepreneur

Self-employed individuals whose annual revenue exceeds MAD 80,000 from a single client will be subject to a 15% withholding tax.

Sources:

• Finance Law for 2023
• Table of Tax Measures For FL 2023

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