In a context of rising living costs, Eid Al-Adha bonuses and other social benefits are of crucial importance for Moroccan companies, both in terms of attractiveness and taxation. However, the regulations surrounding the taxation of these bonuses could well become a brake on the competitiveness of companies if they fail to find the right balance.
As the celebration of Eid Al-Adha approaches, many Moroccan companies are paying their employees the traditional bonus linked to this religious holiday. However, this practice raises questions regarding its tax and social treatment. Two professionals, Mohammed Reda Naam, tax specialist, and Mehdi Lafrouji, administrative and financial manager, provide valuable insight on this subject.
On the tax front, Mohammed Reda Naam emphasizes that the Eid Al-Adha bonus paid to employees is considered as a salary supplement by the Moroccan tax administration. However, it benefits from a partial exemption from wage income tax.
This exemption is capped at 2,500 dirhams per employee per year. It is important to note that this ceiling of 2,500 dirhams is not specific to the Eid Al-Adha bonus only. It includes all social benefits related to family events such as birth, marriage, circumcision, back to school or the Ashura festival.
Thus, the total amount exempt from tax for all of these bonuses cannot exceed 2,500 dirhams per year and per employee. Regarding the social aspect, Mohammed Reda Naam specifies that a similar treatment applies to contributions due to the National Social Security Fund (CNSS). The Eid Al-Adha bonus is exempt from deductions linked to these contributions, but only up to 2,000 dirhams per year per employee. This means that if the amount of the Eid Al-Adha bonus paid to an employee exceeds 2,000 dirhams, the surplus will be subject to the usual social security contributions. Likewise, if other social bonuses are paid in the same year, only the first 2,000 dirhams will be exempt from CNSS contributions.
Mehdi Lafrouji provides additional details concerning the conditions of application of these exemptions: “The 2,500 dirhams constitute an annual ceiling for all family bonuses, encompassing all social rewards linked to a family event, such as the purchase of a sheep for Eid Al-Adha, the back-to-school allowance, the purchase of toys to celebrate the Ashura festival, birth, marriage, circumcision or death bonuses.
On a social level, Lafrouji underlines three conditions to be respected: “The bonus must be generalized to all of the company’s staff; it must not exceed 2,000 dirhams […] ; the payment must be the same amount for all staff.”
However, Mohamed Reda Naam qualifies this last condition, recalling that “the circular note published by the CNSS does not condition the non-exceeding of the amount of 2,000 dirhams [et] no condition mentions that the payment must be the same amount for all staff, unless a collective agreement obliges them to do so. This divergence of interpretations highlights the complexity of the regulations regarding the taxation of remuneration and social benefits in Morocco.
In this context, Mohammed Reda Naam believes that “we need to think about rethinking the tax regime for social benefits, including Eid Al-Adha bonuses and others that are similar.”
Crucial issues for businesses Moroccan
It must be said that the tax and social treatment of bonuses and social benefits, such as the Eid Al-Adha bonus, represents a major challenge for Moroccan companies. These must juggle several potentially contradictory imperatives.
On the one hand, they must scrupulously respect the regulatory framework in force, under penalty of incurring heavy financial sanctions in the event of a tax or social audit. Incorrect application of the exemption or ceiling rules can quickly lead to tax adjustments or significant reminders of social security contributions. These adjustments weigh heavily on the cash flow and profitability of companies.
On the other hand, an overly rigid and restrictive approach to bonuses and social benefits can prove counterproductive in terms of human resources and the attractiveness of the company. In a tense economic environment, marked by strong competition to attract and retain talent, companies have every interest in offering competitive total compensation packages, including attractive social benefits. This is all the more crucial in the current context of generalized increase in the cost of living in Morocco.
For employees, these bonuses and benefits represent a welcome addition to preserve their purchasing power. They also help to strengthen their sense of belonging and their motivation within the company. Thus, companies find themselves caught between two imperatives: on the one hand, the need to remain competitive in the labor market, and on the other, the obligation to strictly respect the regulatory framework in order to avoid any tax adjustment or social.
A delicate balance to find
The solution lies in finding a delicate balance. This involves defining an attractive remuneration policy, including optimized bonuses and benefits, while ensuring rigorous application of the rules in force. This requires a fine understanding of the regulatory texts and their subtleties of interpretation.
This balance is all the more crucial since companies are the guarantors of employment and drivers of economic growth in Morocco. Their sustainability and competitiveness are major issues for the entire national economy. Finding the right formula for the taxation of salaries and benefits is a key challenge to be met.
Bilal Cherraji / ECO Inspirations
