The new tax regime for regional or international headquarters operating under "Casablanca Finance City" status

Prior to the 2020 Moroccan Finance Act, the regional or international headquarters and representative offices of non-resident companies operating under CFC status were subject to the specific rate of 10% as from the first year in which such status is granted: The taxable basis of these entities was determined as follows:

• In case of profit, the highest amount resulting from the comparison of the fiscal result with the amount of 5% of the operating expenses of the aforementioned entities;
• In the event of a deficit, the taxable basis would be equal to 5% of the operating expenses of the aforementioned entities.

The 2020 Moroccan Finance Act repealed the tax regime applicable to regional or international headquarters and representative offices of non-resident companies with CFC status, in order to harmonize the tax status of the Casablanca financial center for all companies operating under CFC status:  All service companies with CFC status, including regional or international headquarters and representative offices of non-resident companies with CFC status as of January 1^st, 2020, benefit from the same unified and single tax regime:  

• For the tax result determined according to the general rules of common law referred to in Article 8-I of the CGI:
• Total exemption from the corporate income tax, for a period of 5 consecutive years starting from the first fiscal year in which the CFC status is granted;
• Taxation at the specific rate of 15% after this period;

 

• and permanent exemption from withholding tax on dividends and other similar income paid by companies operating under CFC status.

  Transitional measure:  Regional or international headquarters and representative offices of non-resident companies that have obtained CFC status before January 1^st 2020 are subject to the following tax regime:

• Taxation at the specific rate of 15%;
• and permanent exemption from withholding tax on dividends and other similar income from equity interests paid, made available or entered into account by companies with CFC status.

Legal references:  Articles 6-I (B - 4° and C- 1°) and 19-II of the General Tax Code.   Written by Ali SALIM  Manager TAX