Corporate tax calculation is an important step for all businesses in Morocco. Indeed, with constant changes in regulations, it is important to ensure that the calculation of corporate tax and IS installments is up to date.
Corporate tax (IS) is one of the main items in the income and expense account.
Understanding and correctly calculating this tax is essential to optimize the taxation of your business and ensure its legal compliance. In this article, we guide you through the steps of corporate tax calculation in Morocco, providing you with precise information, practical examples and advice for effective tax management.
This article is up to date with the provisions of the 2024 finance law in Morocco.
Understanding Corporate Tax in Morocco
This article does not aim to give a detailed analysis of the basic principle on IS. For more information on IS in Morocco, read this article .
Corporate tax in Morocco is a direct tax levied on profits made by companies. It applies to resident and non-resident companies which carry out a lucrative activity in the country.
Who is subject to IS?
Before explaining the rules for corporate tax calculation in Morocco, it is important to recall a few principles.
In Morocco, all companies, whether individuals or capital, are subject to IS. This includes SARL, SA, SNC, and other legal forms.
Calculation of corporate tax
Determination of the Taxable Base
The tax base is equal to the net profit made during the fiscal year. To calculate it, you must subtract the eligible charges and expenses from the business’s income.
Subject companies have the right to deduct carry-forward losses under certain conditions for the calculation of corporate tax.
The tax rate varies depending on the amount of profit made. It is important to refer to the scale in force to determine the rate applicable to your business.
Corporate tax calculation – Determination of tax result
The first step in calculating corporate tax is to determine the tax income of the company.
This result corresponds to the difference between income and expenses for the financial year. Furthermore, this result is determined after taking into account depreciation and provisions.
The tax result is determined on the basis of:
- First, taxable products;
- Second, deductible expenses .
Certain expenses may not benefit from deductibility in Morocco, particularly when they are not linked to operations. Certain charges are explicitly excluded or limited.
Moroccan companies have the right to deduct deficits carried forward from previous years, under certain conditions.
Application of the tax rate for corporate tax calculation
Once the tax result has been determined, the tax rate in force for the financial year in question should be applied.
The tax rate varies depending on the profit the company makes.
Indeed, the new rates applicable to the 2023 finance law are as follows:
|Net profit level
|Rate currently in effect
|PLF 2023 proposal
|Less than or equal to 300,000
|From 300,001 to 1,000,000
|From 1,000,000 to 99,999,999
|Greater than or equal to 100,000,000
Since 2023, Morocco has introduced a measure aimed at converging all rates towards a single rate of 20%.
The corporate tax rates applicable in 2024 are as follows (depending on the level of net income):
- Less than or equal to 300,000: 15%
- From 300,001 to 1,000,000: 20%
- From 1,000,000 to 99,999,999: 25.5%
- Greater than or equal to 100,000,000: 33%
Specific regime for the corporate tax calculation
(*) Industrial activity means any activity which consists of directly manufacturing or transforming tangible movable goods using technical installations, materials and tools whose role is preponderant.
It should also be noted that certain specific rates are provided for in certain cases:
However, the rate applied to the tranche for which the amount of net profit is greater than 1,000,000 dirhams is set at 20%, for certain activities (in particular):
- companies exporting goods and services
- hotels and tourist entertainment establishments
- craft businesses
- private educational or professional training establishments
- agricultural exploitations
The general code also provides specific regimes for certain types of companies:
- Companies based in Casablanca Finance City :
These companies benefit from a 5-year exemption then a rate of 15% beyond that.
- Companies carrying out service outsourcing activities :
These companies benefit from the exemption for a period of 5 years then a rate of 20% beyond.
Finally, in accordance with the provisions of Article 6-II-B-4, certain industrial activities established by decree benefit from a total exemption from IS during the first five (5) consecutive financial years from the date of the start of their exploitation.
Corporate tax calculation – Proportional rates
The calculation of corporate tax in Morocco is a process that relies on the application of proportional rather than progressive rates. This is an important distinction in the tax field.
To understand this difference, it is essential to understand that:
- On the one hand, in a progressive system, the tax rate increases as the tax base (income or profit) increases. In other words, the more profit a company makes, the higher the percentage of tax levied on the additional profit.
- On the other hand, in a proportional rate system, such as that used to calculate corporate tax in Morocco, the tax rate remains constant, regardless of the level of profit made by the company.
This means that the entire profit is taxed at the rate of the bracket, even if you only exceed this bracket by one dirham.
All companies are subject to the same tax rate for a given amount of profit, thus ensuring a certain predictability and uniformity in the calculation of tax.
This proportional system is often considered simpler, because it eliminates the variable rate tiers that characterize progressive systems. However, it remains questionable as to its fairness, two companies close to the level could be taxed at different rates. It is in particular this argument which pushed towards a standardization of rates by 2026.
Taking into account installment payments
Businesses must make installment payments throughout the tax year.
These advance payments correspond to an estimate of the corporate tax that the company will have to pay at the end of the financial year.
When calculating the final corporation tax, installment payments must therefore be taken into account.
Each installment corresponds to 25% of the tax amount for the reference year.
If the amount of the deposits is greater than the amount of tax due, the company may request a refund.
Conversely, if the amount of the deposits is less than the amount of tax due, the company will have to pay the difference.
It should be noted that installment payments must be calculated on the basis of the IS rate in force during the current year. It is therefore appropriate to adjust the amount of tax to take into account the change in rate.
Calculating corporate tax is an important step for all businesses in Morocco.
It is necessary to determine the tax result, apply the tax rate in force, take into account installment payments and deduct any tax credits.
If you have any questions about calculating corporate tax in Morocco, do not hesitate to contact an accountant who can assist you in this process.
Read also: Payment deadlines in Morocco