Tax Framework for Temporary Cessation of Business Activity

The Moroccan Finance Act 2018 established a simplified tax framework for cases of temporary cessation of business activities applicable to companies (corporations or individual professional) subject to corporation tax or income tax in respect of professional income determined according to the regime of actual net income or the regime of simplified net income. Tax incentives: This framework allows eligible companies to lodge a declaration of temporary cessation of activity for a period of 2 years, renewable for a single year, with:

• The exemption from payment of the minimum amount of the minimum contribution relating to the years concerned by this declaration (i.e. 3,000 MAD for companies and 1,500 MAD for professionals) ;
• A reduction in the VAT declaration obligations through the filing of only one declaration per year concerning the turnover relating to the previous year, possibly accompanied by the payment of the corresponding VAT and this, before the end of the month January of each year.

Tax obligations: Eligible companies can subscribe to the declaration of temporary cessation of activity, in the month following the closing date of the last financial year of their business activity. However, these companies must continue to file their tax returns for corporation tax and income tax in respect of professional income. In the event of resumption of activity during the period covered by the aforementioned declaration, the concerned taxpayer must notify the administration through an information letter within a period not exceeding one month following the resumption of activity. The tax payer should also proceed to the regularization of his tax situation for the financial year concerned under the conditions of common tax law. Legal references:  Articles 144-I-C-3°; 150 bis ; 221-I et 232-VIII-17° of the Moroccan Tax Code