The New Tax Regime for Professional Service Companies under “Casablanca Finance City” Status
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.
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.
Articles 6-I (B – 4° and C- 1°) and 19-II of the General Tax Code.
Written by Ali SALIM Manager TAX