The Court of Auditors recommends that the Ministry of the Economy and Finance carry out an assessment of the impact of the measures implemented as part of the reform relating to VAT and IS and to communicate about this assessment and the expected effects of the proposed reform in terms of IR, both at the budgetary level and with regard to the objectives set by the aforementioned framework law.
Framework Framework Law No. 69.19 of July 26, 2021 specified the orientations, objectives, mechanisms and modalities for the progressive implementation of the priority measures of the tax reform, and set a deadline of five years from the month of August 2021 for their implementation. This reform mainly aims to establish an efficient, fair, equitable and balanced tax system making it possible to mobilize the full tax potential for the financing of public policies.
“During the first half of the implementation period of the aforementioned framework law, the main measures brought by the finance laws (LF) of 2023 and 2024, mainly concerned, respectively, corporate tax (IS) and value added tax (VAT)”, notes the Court of Auditors in its recently published 2023-2024 report.
Concerning the IS, the main measure introduced concerned the revision of the rates with a view to gradually reaching, by 2026, the target rates of 20% applicable to companies whose net profit is less than 100 MDH, 35% for those with a net profit equal to or greater than 100 MDH, and 40% for credit establishments and organizations assimilated et insurance companies. The minimum contribution has been revised also decreasing from 0.5% to 0.25% of turnover.
With regard to VAT, the main measure brought by the FL 2024 consisted of the reduction in the number of VAT rates (7%, 10%, 14% and 20%) and the gradual alignment towards two target rates ( 10% and 20%) by 2026. Likewise, the VAT exemption has been generalized to basic products of wide consumption, such as pharmaceutical products, school supplies and the materials used in their manufacture. This exemption also concerned the sale and delivery of water intended for domestic use and sanitation services.
In addition, the VAT self-assessment regime and a new withholding tax regime for this tax have been established.
Concerning the reform measures planned in the PLF 2025, they mainly concern income tax (IR). Thus, it is planned to reorganize the progressive IR scale from January 1, 2025, by increasing the first tranche of the scale relating to exempt net income from 30,000 DH to 40,000 DH, and widening the other brackets. and the reduction of the marginal rate from 38% to 37%. The aforementioned PLF also provides for the increase in the annual amount of the income tax reduction for family expenses, by increasing the amount of the deduction from 360 to 500 DH per dependent and the increase in the ceiling of this reduction from 2,160 DH to 3,000 DH.
Likewise, it is planned to raise the threshold for applying withholding tax on property income from 30,000 to 40,000 DH. Furthermore, it is proposed to allow the option of taxing gross property income of individuals in an amount equal to or greater than 120,000 DH, by the application of a withholding rate of 20% with the possibility of benefiting from the exemption. of the annual declaration of global income for these incomes.
In addition, as part of the fight against tax evasion, it is planned to subject to income tax all other income and gains, not included in the five categories of income provided for by article 22 of the code. General of Taxes.
“Similarly, in order to improve the readability of tax texts and ensure tax fairness, the PLF of 2025 provided for the clarification of the principle of taxation of land profits made following expropriation by de facto or subsequent action to any other transfer of property by a judicial decision having the force of res judicata. It is also proposed to establish the obligation to make a withholding tax on the compensation paid by the people involved in the payment of this compensation,” recalls the institution of Zineb El Adaoui.
In addition to the measures relating to IR, other provisions of the PLF concern VAT, in particular the increase from 30% to 32% of the minimum share of the proceeds of this tax allocated to local authorities. The other measures relate to registration rights such as the establishment of the obligation for notaries to transmit to the tax administration, by electronic means, documents bearing an electronic signature, the establishment of a fine applicable to professionals responsible for completing the registration formalities by electronic means electronically, in the event of failure to provide mandatory information, communication of incorrect information or failure to transmit the document recorded electronically.
However, as the end of the deadline set by the framework law relating to tax reform approaches, other priority measures have not yet been implemented, particularly the revision of the bases relating to territorial taxation, and this after the amendments made by law 07.20 modifying and supplementing law 47.06 relating to the taxation of local authorities.
Furthermore, except for the integration of certain parafiscal taxes into the general tax code, as proposed by the PLF of 2025 for the special tax on cement, measures aimed at rationalizing and simplifying the basis and recovery rules parafiscal measures as prescribed by the framework law have not yet been enacted.
In view of the above, while noting the continued implementation of framework law No. 69.19 on tax reform, the Court reiterates its recommendations issued in its 2022-2023 annual report, addressed to the Head of Government and relating on the activation of the implementation of the reform of taxation of local authorities and parafiscality in accordance with the objectives set by the framework law, and on the regular evaluation of the impact socio-economic of the tax advantages granted in order to guide decisions regarding their maintenance, revision or elimination as the case may be.
Finally, the Court recommended to the Ministry of the Economy and Finance to carry out an assessment of the impact of the measures implemented as part of the reform relating to VAT and IS and to communicate about this evaluation and expected effects of the proposed IR reform, both at the budgetary level and with regard to the objectives set by the aforementioned framework law.
