The deadline of Monday July 1, set out in the Finance Act 2024, concerns the date of entry into force of a package of tax measures. These include provisions targeting the withholding tax on VAT. Some practitioners have already alerted their clients.
From July 1 onwards, the new withholding tax regime will apply to invoices issued by certain economic operators. These are suppliers of capital goods and works, whether natural or legal persons, subject to VAT. Starting next month, a 100% withholding tax will be levied on suppliers who fail to present a certificate of good tax standing issued electronically by the Directorate General of Taxes (DGI) within the last 6 months. This also applies to service providers who are natural persons and obviously liable for VAT. The amount of the compulsory deduction will be 75% of the value-added tax amount, provided a certificate of good tax standing less than 6 months old is produced. Failing this, the levy will be 100% of the VAT amount. Revenues from these deductions must be paid to the tax authorities in the month following the month in which they are collected. In the event of a tax credit due to the application of these withholding taxes, the supplier concerned will be reimbursed in accordance with the procedure laid down by regulation.
« Contrary to the VAT reverse charge system, where the taxable customer is required to declare, according to his monthly or quarterly tax regime, the amount excluding tax of the transaction on his own sales declaration for the month or quarter during which the reverse charge payment was made», points out Younes El Fachtali, chartered accountant and member of the Moroccan Tax Professionals’ Circle (Cercle des Fiscalistes du Maroc). He continues by saying that « under the withholding tax system, clients are required to pay the withholding tax and file a tax return for the said withholding tax on a monthly basis, regardless of whether the system is monthly or quarterly, and to make the payment independently of their tax return». As far as suppliers are concerned, they are required to state the amount of withholding tax they have incurred on their tax return, and to file a tax return in respect of said withholding tax.
Persons carrying out only transactions that are not subject to VAT or are exempt from VAT without the right to deduct are, of course, exempt from the withholding tax.
Also exempt from this obligation are the national government, local authorities, local development corporations (SDLs), as well as public establishments and other legal entities governed by public procurement regulations.
Hassan EL ARIF
