In Limited Liability Companies (S.A.R.L.), the transfer of shares is free when it is carried out between partners, spouses, parents and relatives up to the second degree; however, the articles of association may require an approval procedure.

The transfer of shares for the benefit of a third party is always subject to an approval procedure by the majority of the partners representing ¾ of the shares (i.e. 75%) or according to the terms of the articles of association.

Thus, before any transfer of shares within a limited liability company, it is very important to know for whose benefit the transfer will be made and to check the applicable statutory clauses.

The approval clause

The approval clause is a clause that subordinates the sale of the shares by a partner to the approval of the general meeting of partners, which defines the terms of approval of the transfer of the shares and provides for a prior agreement by unanimity or majority of the partners to grant entry to a new partner in the company.

The associate wishing to sell his shares will also have to respect the approval clause by notifying his associates first.

Procedure

The procedure for the transfer of shares starts with the notification of the transfer project to the company and to each of the company’s partners by registered letter with acknowledgement of receipt or by bailiff’s act.

  • If the company does not respond within 30 days, consent is deemed to have been given.
  • If the company refuses to consent to the transfer, the partners are bound within 30 days, as from this refusal, either to acquire or to have the shares acquired.

The partnership may also, with the consent of the transferring partner, decide, within the same period, to reduce its capital by the amount of the face value of the partner’s shares and to repurchase those shares.

If, at the end of this period, none of the solutions referred to above is put in place, the partner may continue the transfer initially envisaged.

Formalities relating to the approval of the sale project

An Extraordinary General Meeting whose decision must be taken by the majority of the associates representing at least the ¾ shares (the articles of association may provide for a stronger majority) must be convened to rule on the proposed sale.

After having voted on and approved the proposed sale and approved the new shareholder, the formalities of advertising at the clerk’s office of the Commercial Court, in a Journal of Legal Announcements and in the Official Bulletin enabling the sale of shares to be made opposable must be completed.

 

Written by Nezha BELKHADIR Legal Manager

The initial finance law of 2020 introduced an arsenal of transitional measures allowing taxpayers to regularize their situation with regard to different legislations (tax, exchange regulations, … ) during the year 2020. The Amending Finance Act published on July 27, 2020 extended the deadlines for the application of these measures to take into account the application constraints related to the pandemic context. The following table provides a better understanding of the different types of amnesty, their scope of application and the deadlines for their implementation.

Written by Imane BENABOUD  TAX Manager

Prior to the finance act for FY2020, companies engaged in outsourcing services were granted the following tax benefits for their export turnover:

  • Total exemption from the CIT (Corporate Income Tax) for a period of 5 consecutive years starting from the fiscal year in which the first export transaction was carried out;
  • And taxation at a progressive scaled rate capped at 50% beyond this period.

The Moroccan finance act for FY2020 amended the tax regime applicable to companies engaged in “Offshoring” activities in the aim of standardizing applicable tax rates regardless of the destination of outsourcing services (local and export turnover):

This new regime applies to companies carrying out outsourcing services, whether inside or outside integrated industrial platforms, and benefit from:

  • Total exemption from CIT for the first five consecutive fiscal years starting from the date of commencement of their operation;
  • And taxation at progressive scale rates capped at 20%, beyond that period.

Effective Date:

This new tax regime applies to companies carrying out outsourcing services activities for fiscal years beginning as of January 1st, 2020.

Legal references: 

Articles 6 (II-B-4°) and 19 (I-A-9°) of the Moroccan Tax Code.

 

Written by Ali SALIM  Manager TAX

In the era of family capitalism, family-run businesses play an important role in Morocco’s economic development, and include everything from the smallest companies to the largest groups.  Their particularity lies mainly in the fact that they are entities in which the majority of the capital is held by members of the same family who occupy the most sensitive positions and sit on the governing bodies.

However, these structures, although apparently solid in appearance, are confronted with a set of problems specific to their “family business” nature. Indeed, a strong involvement of the family in strategic and organizational decision-making leads to a monotheistic vision of the mode of governance.

– Lack of diversity in governance bodies ;

– Recruitment based on family ties: in disregard of the technical skills and needs of society;

– Impact of emotions in strategic decision-making;

– Impact of family conflicts in the management of the company.

As a result, the management of family structures requires the adoption of an optimal system of governance to counter the barriers they face. Indeed, governance theories maintain that the quality of a deliberative body is judged by its composition.

From this perspective, good governance practices recommend the recruitment of independent directors within governance bodies (Board of Directors, Supervisory Board).

The independent director represents any director free from any situation that could create a conflict of interest and affect his or her independence of judgment.

The independent Director is free from any employee relationship and from any close family ties with controlling shareholders that would enable him or her to guarantee the effective exercise of independent and objective judgment.

Good governance is certainly a value system at two levels, strategic and control.

At the strategic level, the contribution of the independent director would be :

The creation of value: The integration of new perspectives through a cognitive contribution by means of his technicality and skills;

Diversity: Allowing better management and innovation efficiency.

In terms of control, the contribution of the independent director would be :

Transparency: A better sincerity of the financial results, allowing the reinforcement of the confidence of the potential investors;

Symmetry: The director would act as a counterweight to the stakeholders of the governance body. (Agency Dilemma).

Therefore, the involvement of an independent director in the management of family structures will ensure good governance within the family and improve performance in the interest of the company.

Following the amendment of the Law No. 17-95 relating to public limited companies by the Law No. 20-19, the law requires the appointment of one or more independent directors as members of the board of directors of companies making public offerings. Their number may not exceed one-third of the total number of directors and they must meet certain conditions laid down by the same law.

The law has also allowed public limited companies, other than those making public offerings, to appoint one or more independent directors to their board of directors, subject to compliance with the conditions set forth in the said law.

 

Written by Nezha BELKHADIR Legal Manager

In order to face the context of the economic crisis caused by the coronavirus pandemic (Covid-19), it was more than necessary to update the hypotheses for the drafting of the 2020 budget law.

 

Baker Tilly Majer , in collaboration with the Spanish Chamber of Commerce of Tangier, presented the main fiscal measures taken in the framework of the LFR 2020 in a webinar organized on July 24, 2020.

 

The link to download the presentation of the main fiscal measures of the Amending Finance Act for the fiscal year 2020 :

https://majerconsultingmaroc.sharepoint.com/:b:/s/MJ/EWF2EfGkgppNjQgOBd1vAEgBTecKdMKHYqcMvXQdDkQRRA?e=U6sJRH

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 1st, 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 1st 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

Prior to the Moroccan Finance Act for FY2020, professional service companies operating under “Casablanca Finance City” status (CFC) were granted the following tax benefits for their export turnover:

  • Total exemption from CIT for a period of 5 consecutive years starting from the first fiscal year in which CFC status is granted;
  • and the application of the specific rate of 8.75% beyond the exemption period.

 

The Moroccan Finance Act for FY2020 amended the tax regime applicable to the taxable income of professional service companies with CFC status and to the dividends paid by such companies, as follows: 

  • The tax result resulting from both local and export turnover is subject to the following regime:
  • Total exemption from CIT for a period of 5 consecutive years starting from the first fiscal year in which CFC status is granted.
  • and taxation at the specific rate of 15% beyond this exemption period.

 

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

 

Transitional measure: 

This new tax regime applies to companies having obtained the “Casablanca Finance City” status as from January 1st, 2020.

As a transitional measure, professional service companies having obtained the “Casablanca Finance City” status before January 1st, 2020 remain subject to the tax regime in force before January 1st, 2020. However, these companies may irrevocably opt for the new tax regime by sending a specific request to the tax authorities before the expiry of the deadline for filing their tax return.

Legal references: 

Articles 6-I (B – 4° and C- 1°) and 19-II of the General Tax Code.

 

Written by Ali SALIM  Manager TAX

The Covid-19 epidemic has a negative impact on the economy as a whole across all sectors of activity, which led to a deterioration in the initial budget forecasts: the initial estimate of revenue and expenditure made in the 2020 budget law is no more applicable considering the present circumstances.

The amending Finance Bill for the year 2020 takes into account, on the basis of the evolution of economic forecasts, the initial budgetary consequences of the Covid-19 epidemic and forecasts a 5% recession and a budget deficit of 7.5%. It also provides an amending budget that aims to implement emergency measures to maintain economic activity.

This article sets out the main tax measures provided for in the amending Finance Bill for the year 2020:

  1. Measures to neutralize the impact of expenses related to the Coronavirus pandemic

On April 29, 2020, the National Accounting Council (CNC) published its Opinion No. 13 in response to the request of the Economic Intelligence Committee. The amending Finance Bill for the year 2020 proposes to incorporate the CNC’s directives, particularly with regard to the possibility of spreading the following deductible expenses at a constant rate over 5 years (as deferred charges over several years):

– Contributions, donations or legacies to the “Special Fund for the Management of the Coronavirus Pandemic ”Le Covid-19”;

– fixed structural costs incurred or borne by companies during the period of the state of health emergency declared throughout the national territory, to cope with the spread of the “Covid-19” Coronavirus pandemic, and which are related to the sub-activity in relation to the normal production or operating capacity planned for 2020.

  1. Measures allowing the relaunch of certain sectors of activity

(a) Extension of time limits for agreements on social housing construction plans

The amending Finance Bill for the year 2020 plans to extend by 6 months the deadlines for agreements concluded between the State and real estate developers who have difficulty completing their social housing construction plans within the 5-year period.

This measure applies to agreements for social housing construction plans whose deadline expires during the period from the date of the start of the state of health emergency to 31 December 2020.

(b) Exemption of mobile payment turnover

The finance bill 2020 had introduced a 25% allowance applicable to the taxable base, corresponding to the turnover realized by mobile payment, by natural persons with professional income determined according to the simplified net income (RNS) or lump-sum profit (BF) schemes.

The amending Finance Bill for the year 2020 proposes to delete this provision and replace it by a measure that does not take into account the amount of turnover generated by mobile payment for 5 consecutive years for the determination:

– of the taxable base of the income tax due by the above-mentioned taxpayers;

– the thresholds for taxation on income tax under the above schemes and for liability to VAT.

– and the thresholds for the compulsory transition to accounting of 2 MDH of annual turnover.

  1. c) 50% reduction of registration fees applicable to the acquisition of real estate for residential use

The amending Finance Bill for the year 2020 provides for a 50% reduction in registration fees in favor of deeds drawn up for the acquisition of built premises used for housing when the amount of the tax base does not exceed MAD 1 million (directly or through a credit institution or similar organizations), during the period starting from the date of publication of the amending Finance Bill for the year 2020  in the Official Gazette to December 31, 2020.

  1. Postponement of the deadlines for the derogatory regularization measures introduced by the Finance Bill 2020.

The text of the PLFR extends and completes certain transitional measures introduced by the initial Finance bill 2020.

  1. a) Spontaneous regularization of the tax situation of taxpayers

Taxpayers who have noted non-compliant operations in their tax returns for the years 2016, 2017 and 2018 may file spontanous corrective tax return before October 2020, in respect of the following taxes and duties:

– Corporate Income tax;

– Income tax, in respect of professional income determined according to the RNR or RNS

– Value Added Tax ;

– The tax withheld at source provided for in Articles 116, 117, 156 and 158 of the CGI;

– Stamp duty paid on declaration;

– Tax on insurance contracts.

The corrective return is subscribed to allows them to benefit from an exemption from penalties for late payment as well as an exemption from tax inspection (subject to compliance with a specific formality) conditional to :

– Subscribe the said amended declaration to the tax authorities before 1 October 2020 and

–  proceed with the spontaneous payment of the supplementary rights in two equal instalments before the expiry of the months of September and November of the year 2020.

The amending Finance Bill for the year 2020 provides for the postponement of these deadlines. Thus, taxpayers may now subscribe to the said amending declaration and pay the additional duties in a single payment until 15 December 2020.

(b) Regularization of the tax situation of taxpayers with regard to property income

 

The finance bill 2020 allows taxpayers who have not filed their annual declaration of total income relating to property income for the years 2018, 2017 and 2016 to regularize their tax situation by filing a declaration before 1 July 2020 and paying a contribution equal to 10% of the gross amount of property income relating to the year 2018.

The amending Finance Bill for the year 2020 provides for an extension of the deadline until 31 December 2020.

  1. c) Regularization of liquid assets from professional or agricultural activity

Exceptionally, the Finance bill 2020 has introduced a contribution for natural persons who are resident and hold assets from profits or income relating to the exercise of a professional or agricultural activity that have not been declared before 2020.

These persons had a period from 1 January to 30 June 2020 to pay a contribution of 5% in respect of liquid assets deposited in bank accounts or held, in cash in the form of banknotes, movable or immovable property not intended for professional use and in respect of advances in partners’ current accounts and in the account of the farmer and loans granted to third parties.

The amending Finance Bill for the year 2020 proposes to extend the above deadline until 15 December 2020.

 

  1. d) Spontaneous regularization for assets and cash held abroad

Individuals and legal entities resident in Morocco who have committed foreign exchange and tax offences in respect of assets and liquid assets held abroad may regularize their situation by depositing before October 31, 2020 a declaration highlighting the nature of the assets held abroad, repatriating the foreign currency liquid assets as well as the income and proceeds generated by such liquid assets and by disposing of at least 25% of such liquid assets on the foreign exchange market in Morocco. The declaration shall be accompanied by the payment of a contribution at the following rates:

– 10% of the acquisition value of real estate held abroad and the subscription or acquisition value of financial assets and securities and other equity or debt securities held abroad.

– 5% of the amount of liquid foreign currency assets repatriated to Morocco and deposited in foreign currency accounts or convertible dirhams.

– 2% of liquid assets in foreign currencies repatriated to Morocco and sold on the foreign exchange market against the Moroccan dirham.

The PLFR 2020 proposes to extend the deadline for the declaration and payment of the contribution in full discharge of liabilities to December 31, 2020 instead of October 31, 2020.

  1. e) Contribution in full discharge in respect of fines relating to payment incidents on cheques

The finance bill 2020 had provided for a levy in discharge of fines for unpaid cheques presented for payment on or before December 31, 2019. This involves the application of a flat rate of 1.5% of the amount, together with the payment of the cheque, instead of a heavier scale: 5% for the first payment incident, 10% for the second and 20% for the third and subsequent incidents.

The amount of the contribution in full discharge is capped at MAD 10,000 for individuals and MAD 50,000 for companies, regardless of the amount of the check.

The amending Finance Bill for the year 2020 proposes to extend this contribution in full discharge under the fines relating to payment incidents regardless of their rank, not yet regularized, for checks presented for payment between 20 March 2020 and 30 June 2020.

 

Written by Imane BENABOUD  TAX Manager

The Decree No. 2-19-424 of June 26, 2019 setting the amount of the legal minimum wage in Morocco was published in the Official Gazette No. 6790 of June 27, 2019. This decree provided for the following:

  • The legal minimum wage were from July 1, 2019, about 14.13 dirhams per hour, about 2698.83 dirhams per month in the sectors of industry, commerce and liberal professions;
  • in the agricultural sector, excluding benefits, it is (73.22 dirhams per day).

 

From July 1, 2020, it will reach : To be taken into consideration for the next pay of this month

 

  • 2,828.71 dirhams per month (14.81 per hour) in the sectors of industry, trade and liberal professions ;
  • and 1,994.20 dirhams (76.70 dirhams per day) in the agricultural sector, excluding benefits.

 

Written by Nezha BELKHADIR Legal Manager

In an increasingly competitive global context characterized by the implementation of binding universal tax standards, Morocco, like other emerging economies, is seeking to adapt its tax system to the new international environment in order to consolidate the attractiveness of its territory and the competitiveness of its companies.

In order to achieve this goal, tax authorities enabled industrial companies to benefit from a multitude of derogatory measures adopted during the last finance laws to correct the dissuasive effect produced by the common law: exemption or reduction of income tax, accelerated depreciation…

This article aims to summarize national tax measures that have a favorable impact on the industrial sector.

 

Industrial companies with a net profit of less than 100 MDH

In 2020, the marginal tax rate of 31% was reduced to 28% for companies carrying out an industrial activity with a net profit of less than 100 MDH.

Industrial activity is any activity that consists in manufacturing or directly transforming tangible movable goods through technical facilities, equipment and tools, whose role is preponderant.

For industrial companies carrying out an industrial activity and another activity, the rate of 28% and the above-mentioned MAD 100,000,000 threshold apply only to the portion of the profit corresponding to the industrial activity.

Non accumulation of benefits: The application of the above reduced rate cannot be cumulated with the application of degressive depreciation allowances or any other reduction.  However, the company retains the right to choose the most advantageous incentive scheme.

 

Industrial companies located in industrial acceleration zones

The industrial acceleration zones (previously called Export Free Zone) benefit from a preferential tax regime through :

Measures concerning corporate tax:

– The five-year exemption from corporate tax from the start of operation, an advantage which is also granted to all industrial companies regardless of their geographical location at the national level;

– The application of the specific rate of 15% tax uniformly to the overall profit in terms of local turnover and export turnover from the sixth year following the five-year exemption period mentioned above;

It should be noted that prior to 2020, the reduced rate of 8.75% (raised to 15% by the LF 2020) applied only to export turnover realised by companies operating in this zone for a period of 20 years following the five-year exemption.

Exemption from withholding tax on dividends distributed by companies established in the industrial acceleration zones and originating from activities carried out in the said zones, when they are paid to non-residents.

Measures concerning VAT

Firms located in the industrial acceleration zones are exempt from VAT on products supplied to them and services rendered to them and on transactions carried out within or between the said zones.

Measures concerning Registration fees:

Firms located in Industrial Acceleration Zones are exempt from registration fees for :

– Acts of incorporation and capital increase.

– acquisition of land necessary for the implementation of their investment project

Non accumulation of benefits: The advantages granted to companies located in the industrial acceleration zones are exclusive of any other advantage provided for by other legislative provisions on investment promotion.

Industrial companies carrying out specific industrial activities

Industrial companies carrying out activities as detailed by a special decree  benefit from total exemption from corporate income tax for the first five consecutive fiscal years from the date on which they begin operations.

It should be noted that in principle, this measure is applicable to industrial companies created from the date of publication of the 2017 Finance Act for investments made after that date;

However, decree no. 2-17-743 establishing the list of activities carried out by industrial companies benefiting from the above-mentioned temporary exemption from corporate income tax was not published until June 2018, which raises doubts as to the effective date of this measure.

 

Written by Imane BENABOUD  TAX Manager