Extension of Tax Amnesty for Inactive Companies in Morocco

The "tax amnesty" initiative, introduced by Morocco's 2023 Finance Law for inactive companies, has recently been extended until December 31, 2024.

Initially met with subdued interest, attributed to unfamiliarity with the legal framework, apprehensions about tax implications, and a tendency towards procrastination, this extension offers inactive companies an opportunity to address their tax obligations, according to a report by Al Ahdath Al Maghribia.

Beneficiaries of this measure are granted exemption from tax audits and are automatically absolved of fines, penalties, and back-taxes related to unfiled returns and unpaid taxes from non-expired years, effectively constituting a form of amnesty for overdue payments. The amnesty primarily targets two categories of corporations: inactive firms and those either devoid of sales or subject only to the minimum fixed tax, particularly those experiencing financial hardship.

Approximately 250,000 inactive businesses, non-compliant with tax regulations over the past three years and devoid of any transactions during that period, are urged to officially declare the cessation of their activities. Failure to comply within 30 days of receiving notification from the tax authority results in automatic enrollment, thereby suspending arbitrary taxation procedures.

For taxpayers without sales or those subject to the minimum fixed tax over the past four years, the extension entails the automatic annulment of penalties associated with unfiled returns and unpaid taxes. In return, they are required to submit a comprehensive activity cessation statement and make a spontaneous payment of 5,000 Moroccan dirhams for each non-expired year to be exempt from audits.

It is important to note that assessment periods undergoing adjustment procedures are not covered by this transitional regime. Specific operations, such as the transfer of clientele or capital gains from sales, remain taxable. The tax administration retains the authority to initiate an audit in cases of fraud, falsification, or the use of fake invoices, in accordance with standard regulations.

A circular released in September by the General Tax Authority outlines the eligibility conditions for an audit waiver and can be accessed on www.tax.gov.ma. Companies without sales or those paying the minimum fixed tax for the past four years can qualify by electronically declaring a total cessation of activity, making a spontaneous payment of 5,000 dirhams in corporate or income tax per non-expired year, providing supporting documentation for deregistration from the commercial register, and submitting an application for the cancellation of the professional tax.