Main VAT amendments - Morocco 2016 Budget Law

1. Reproduced with permission from Tax Planning
International Indirect Taxes, 14 IDTX 24, 2/29/16. Copyright
஽ 2016 by The Bureau of National Affairs, Inc.
(800-372-1033) http://www.bna.com
VOLUME 14, NUMBER 2 >>> FEBRUARY 2016

2. VAT Changes in 2016 Budget Law
Notional VAT on some Agricultural Products
Unprocessed legumes, fruits and vegetables are
beyond the scope of Moroccan VAT. Under such cir-
cumstances, agribusiness firms are generally taxed on
finished products that they sell locally without being
able to deduct any VAT on the main component of the
sold products.
The 2016 Budget Law is introducing a provision
that would entitle agribusiness firms to a notional VAT
on their local purchases of unprocessed legumes,
fruits and vegetables intended for food production
sold locally.
The basis of the notional tax is determined by a
ratio of transactions carried out during the previous
year, as follows: the purchase price of unprocessed ag-
ricultural products included in the production sold
compared to both local and export sales relating to the
processing activity.
That ratio is being applied to local sales in the
period of the VAT return in order to estimate the
amount of unprocessed local agricultural products
that was used in the said sales.
The amount of the notional tax is then determined
by applying the VAT rate of the finished products to
the estimated amount of unprocessed local agricul-
tural products that were used for producing them.
New Exemptions on Railways and Aircraft
The 2016 Budget Law is exempting importation of air-
craft engaged in air transport with a capacity higher
than 100 seats, as well as equipment and spare parts
intended for the repair of these aircraft.
Furthermore, aircraft dismantling is now forming
part of the exempted services intended for interna-
tional transportation.
The 2016 Budget Law has also introduced a new
VAT provision, exempting importation of railway
equipment and trains engaged in transport of passen-
gers and goods.
Electronic Filing and Payment
The phased approach launched by the tax administra-
tion since 2010 is now close to reaching the general-
ization point.
Effective January 1, 2017, all companies, except
those subject to income tax under the flat rate scheme,
must file their tax return and pay VAT electronically.
VAT Refund
A new provision of the 2016 Budget Law is extending
the refund of VAT credit to input VAT of fixed assets
purchased by all taxpayers, except state-owned enti-
ties.
Henceforth, those taxpayers are entitled to apply for
refund of VAT credit related to fixed assets other than
office furniture and vehicles not engaged in collective
transport.
Penalties
The 2016 Budget Law has revisited the penalty regime
in order to take into account the seriousness of the in-
fringement and to encourage spontaneous action by
the taxpayer. The new penalty regime could be sum-
marized as set out below.
s The penalty on filing omissions would be set as fol-
lows:
- 5% if the filing is made within 30 days after the
due date of the tax return;
- 5% in the event of submitting a corrective VAT
return, after the due date of the regular tax
return, entailing additional tax payment;
- 15% if the filing is made more than 30 days after
the due date;
- 20% in the event of a presumptive taxation for
failure of filing or reporting inaccurate taxation
data;
- 30% in the event of correcting the taxation base of
self-assessed VAT accrued on services provided by
nonresident suppliers;
- for more serious omissions in liability, the 20/30%
penalty is increased to 100% in the case of bad
faith or evidenced dissimulation;
- non-compliance with the electronic filing obliga-
tions would give rise to a penalty of 1%;
- another penalty of 1% would be applicable in the
event of non-compliance with electronic payment
obligations.
s Late VAT payment would give rise to a penalty of
10%. This penalty would be reduced to 5% if the
payment is made within 30 days after its due date,
and would be increased to 20% in the case of VAT
withheld at source or self-assessed.
s The statute of limitations period would not be lim-
ited to four years for taxpayers that do not file their
tax returns. In this latter case, the tax administra-
tion would claim the tax and penalties due for the
period lacking tax returns within the limit of ten
years.
Hamid Errida CPA, Tax Advisor, Accounthink Maroc, Morocco
Email: hamid.errida@accounthink.ma
2 02/16 Copyright ஽ 2016 by The Bureau of National Affairs, Inc. IDTX