Corporate income tax in Morocco: scope, rates and exemptions (CGI)
If you run a company in Morocco, corporate income tax (CIT) concerns you directly. The General Tax Code (CGI) defines precisely who must pay it, who is excluded, and which entities benefit from exemptions. This guide helps you place your company and anticipate your obligations.
What the tax applies to
CIT applies to all the income, profits and revenue earned by companies and legal entities (art. 1). The taxable result for each financial year corresponds to the excess of income over the expenses incurred for the needs of the taxable activity, determined under accounting rules and then adjusted under tax rules (art. 8).
Taxable income includes in particular your turnover (receipts and claims acquired on goods delivered, services rendered and works carried out), the change in inventories, operating subsidies, financial income and income from the disposal of fixed assets (art. 9). Some income is nonetheless not taxable, such as that arising from repurchase or securities-lending transactions carried out under the conditions provided for (art. 9 bis).
Who is compulsorily taxable
You are compulsorily liable to CIT if you fall within one of the categories targeted by the law (art. 2), in particular:
- companies, whatever their form and purpose;
- public establishments and other legal entities engaging in an operation or in activities of a profit-making nature;
- associations and legally assimilated bodies;
- the establishments of non-resident companies;
- joint ventures (sociétés en participation) that include at least one legal entity, or more than five natural-person partners;
- economic interest groupings.
Certain structures (general partnership, limited partnership, joint venture with fewer than six partners) set up in Morocco and comprising only natural persons may also opt, irrevocably, for CIT (art. 2).
Who is excluded from the scope
The following are excluded from CIT, unless they opt for taxation (art. 3):
- general partnerships, limited partnerships and joint ventures with fewer than six partners, comprising only natural persons;
- de facto companies comprising only natural persons;
- so-called "transparent" real-estate companies, under the conditions defined by law.
Note: if a transparent real-estate company ceases to meet these conditions, it again becomes taxable on its taxable result (art. 8).
Territoriality
Whether or not your registered office is in Morocco, you are taxable on income relating to property, activity and profit-making operations carried out in Morocco, even on an occasional basis (art. 5). Non-resident companies are, in addition, taxable on the gross income received in consideration for works performed or services rendered in Morocco, except where those works or services are carried out by a local branch without intervention from the foreign head office (art. 5).
Exemptions
The CGI provides for two main families of exemptions.
Permanent exemptions
Fully exempt from CIT are, among others, non-profit associations for operations consistent with their purpose, as well as numerous bodies and foundations listed exhaustively (art. 6). Cooperatives and their legally constituted unions are also exempt, under the conditions provided for in article 7: either where their activity is limited to collecting and marketing members' raw materials, or where their annual turnover remains below ten million dirhams in the case of processing (art. 7).
Agricultural operations whose annual turnover is below five million dirhams are exempt in respect of their agricultural income, subject to the threshold conditions provided for (art. 6).
Temporary exemptions
Several activities benefit from a temporary total exemption (art. 6):
- the holder of a concession to exploit hydrocarbon deposits: ten years from the start of regular production;
- approved accounting management centres: four years after approval;
- industrial companies carrying out activities set by regulation and service-outsourcing companies: the first five financial years;
- hotel businesses, for the portion of their turnover earned in repatriated foreign currency: five years, subject to declaration conditions;
- companies holding "Casablanca Finance City" status and businesses in industrial acceleration zones: five consecutive financial years.
Tax reductions
Beyond exemptions, the CGI opens up targeted reductions.
A company that lists its securities on the stock exchange benefits from a CIT reduction for three years: 25% where the capital is opened up by the sale of existing shares, and 50% in the case of a capital increase of at least 20% with waiver of the preferential subscription right (art. 6). Credit institutions, insurance companies and public-service concession holders are excluded.
If you take a stake in a young company innovating in new technologies, you benefit from a tax reduction, capped at 500,000 dirhams per company and at 30% of the tax due, subject to the conditions provided for (art. 6; art. 7).
Finally, with regard to withholding tax, dividends paid between companies subject to CIT in Morocco are included in the financial income of the recipient with a 100% allowance, on presentation of a certificate of ownership of the securities (art. 6).
In summary
First check your category (art. 2 or art. 3), confirm your connection to Morocco (art. 5), then examine whether an exemption (art. 6, art. 7) or a reduction (art. 6) applies to your situation before calculating your taxable result (art. 8).