The Tax Administration confirms that advances on shareholders' current account should be subject to registration duties

The Moroccan Finance Act for FY2019 introduced the obligation to complete the registration formality for deeds and agreements recording monetary obligations or acknowledgements of debt of one person towards another. In this respect, the tax administration has confirmed in a tax ruling, that agreements for advances on shareholders' current accounts whether written or verbal and whatever the form of the deed recording them, authentic or private, are subject to the proportional registration fee of 1.5%. In practice, the following cases can be observed:

Advances on shareholders' current accounts	Application of Registration Duties
1.      Existence of a written agreement regarding current account advances between the partner and the company. The agreement specifies the sum advanced and the repayment date.	RD of 1.5% liquidated based on the sums expressed in the agreement.
2.      Existence of a written agreement regarding current account advances between the partner and the company. The agreement indicates the sum advanced but without specifying a due date.	RD of 1.5% liquidated based on the sums expressed in the agreement. The mention of the due date or repayment date has no impact on the treatment of registration duties.
3.      Existence of a written agreement regarding current account advances between the partner and the company. The agreement does not mention neither the amount advanced nor the due date/repayment date.	Where the current account advance agreement does not mention the sum advanced, the tax authorities shall determine the taxable basis through an assessment taxation procedure. The mention of the due date or the repayment date has no impact on the treatment of registration duties.
4.      Existence of advances on shareholders' current account that are not covered by a written agreement between the partner and the company.	The contracting parties must make a detailed declaration to the tax inspector for registering the operation.

  It should be noted that the contracting parties should complete the registration formality within 30 days as from the date of completion of the advance operation. Legal references:  Articles 127-I-A-8°; 133-I-C-5°; 136-I and 228-I-2° of the Moroccan Tax Code.   Written by Ali SALIM  Manager TAX