The new tax regime for regional or international headquarters operating under “Casablanca Finance City” status

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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The 2020 Moroccan Finance Act repealed the tax regime applicable to regional or international headquarters and representative offices of non-resident companies with CFC status, in order to harmonize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