PLF 2024: The CGEM unveils its tax proposals

PLF 2024: The CGEM unveils its tax proposals

The CGEM’s proposals for the PLF 2024 are divided into cross-cutting measures and targeted measures. In total, 10 measures are recommended by employers, and are the subject of a presentation this Friday at a press conference. “Our proposals for this finance law are pragmatic and realistic. They come from sectoral federations, CGEM Regions and a set of Commissions and therefore reflect the concerns of companies of all sizes,” said Chakib Alj, President of the CGEM.

Here are the proposals in detail.

Reforming value added tax

  • Redefinition of the scope of application, VAT exemptions and generalization of the right to deduction and reimbursement.
  • Reduction of the number of VAT rates to reach 2 rates, while maintaining the 0% rate.
  • Review of the taxable VAT base, in particular to exclude specific taxes from the calculation of the base.
  • Development of the temporary admissions system.

Accelerate the overhaul of local taxes, and more particularly business tax

  • Reduction of the number of taxes by grouping them into two major taxes: a property tax and a tax on economic activity.
  • Simplification of the calculation of the professional tax, generating an inequity between owner-operators and tenants, by modifying in particular the base of this tax to base it on the common indicator which seems the most relevant: the gross operating surplus and by harmonizing the mode of payment of this tax.

Reform income tax over 3 years

  • Consider reducing the income tax scale over a period of 3 years with a marginal target rate of 30% in 2026.
  • Extend the ceiling for exemption from severance pay to 3 million dirhams from the age of 50.
  • Increase the face value of the meal voucher to 60 dirhams.
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Make adjustments to certain corporate tax provisions

  • Exclude non-current products from the calculation of the tax base for corporation tax (IS), currently discouraging for any company wishing to sell a fixed asset at the risk of exceeding the threshold of 100 million dirhams of taxable profit.
  • Extend the CIT capping system to 20% to all companies committing to make an investment equal to or greater than 1.5 billion dirhams over 5 years and not only those newly created.
  • Improve the neutrality mechanisms for group restructuring operations.
  • Review the conditions for the deductibility of provisions for bad debts and in particular the requirement of legal recourse.

Customs measures

  • Continue to reduce the minimum contribution with a view to its abolition.
  • Review the taxation of demurrage, expressly excluding them from the application of the 10% withholding tax.
  • Review the public debt collection policy: notice to third party holder.
  • Review the tax penalty system.
  • Rationalize the taxation of import inputs.
  • Review the calculation mechanism of the TIC on polluting products.
  • Revise the terms of application of customs duties on “royalties and license fees”.

Encourage the development of start-ups

  • Act a definition of the start-up.
  • Give non-resident companies the possibility of benefiting from the tax deferment regime.
  • Allow the recovery of VAT on management fees for investment funds.
  • Set up incentive schemes via stock options for employees.

Encourage circular economy and waste recovery

  • Apply VAT only on the margin of products from the green sector in the plastics and metallurgy sectors.

Encourage the energy transition

  • Lower customs duties for electricity storage batteries to 2.5%.
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Rehabilitate our architectural heritage and improve the urban housing stock

  • Define the activity of property dealers and establish an appropriate tax regime.
  • Apply VAT on margin only.
  • Consecrate the uniqueness of the purchase-sale operation following the transformation within 5 years in terms of registration fees.

Supporting the recovery and growth of the tourism sector

  • Generalize the 10% VAT rate to the tourist industry, including ancillary revenue from tourist accommodation establishments.
  • Eliminate VAT on the Tourist Promotion Tax (TPT) and the Tourist Tax (TS).
  • Create an appropriate tax framework for furnished rentals by individuals.

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