Reproduced with permission from Tax PlanningInternational 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

VAT Changes in 2016 Budget Law

Notional VAT on some Agricultural Products

Unprocessed legumes, fruits and vegetables arebeyond the scope of Moroccan VAT. Under such cir-cumstances, agribusiness firms are generally taxed onfinished products that they sell locally without beingable to deduct any VAT on the main component of thesold products.

The 2016 Budget Law is introducing a provisionthat would entitle agribusiness firms to a notional VATon their local purchases of unprocessed legumes,fruits and vegetables intended for food productionsold locally.

The basis of the notional tax is determined by aratio of transactions carried out during the previousyear, as follows: the purchase price of unprocessed ag-ricultural products included in the production soldcompared to both local and export sales relating to theprocessing activity.

That ratio is being applied to local sales in theperiod of the VAT return in order to estimate theamount of unprocessed local agricultural productsthat was used in the said sales.

The amount of the notional tax is then determinedby applying the VAT rate of the finished products tothe 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 higherthan 100 seats, as well as equipment and spare partsintended for the repair of these aircraft.

Furthermore, aircraft dismantling is now formingpart of the exempted services intended for interna-tional transportation.

The 2016 Budget Law has also introduced a newVAT provision, exempting importation of railwayequipment 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, exceptthose 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 extendingthe refund of VAT credit to input VAT of fixed assetspurchased by all taxpayers, except state-owned enti-ties.

Henceforth, those taxpayers are entitled to apply forrefund of VAT credit related to fixed assets other thanoffice furniture and vehicles not engaged in collectivetransport.

Penalties

The 2016 Budget Law has revisited the penalty regimein order to take into account the seriousness of the in-fringement and to encourage spontaneous action bythe 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 taxreturn, entailing additional tax payment;

- 15% if the filing is made more than 30 days afterthe due date;

- 20% in the event of a presumptive taxation forfailure of filing or reporting inaccurate taxationdata;

- 30% in the event of correcting the taxation base ofself-assessed VAT accrued on services provided bynonresident suppliers;

- for more serious omissions in liability, the 20/30%penalty is increased to 100% in the case of badfaith 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 theevent of non-compliance with electronic paymentobligations.

s Late VAT payment would give rise to a penalty of10%. This penalty would be reduced to 5% if thepayment is made within 30 days after its due date,and would be increased to 20% in the case of VATwithheld 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 theirtax returns. In this latter case, the tax administra-tion would claim the tax and penalties due for theperiod lacking tax returns within the limit of tenyears.

Hamid Errida CPA, Tax Advisor, Accounthink Maroc, MoroccoEmail: hamid.errida@accounthink.ma

2 02/16 Copyright � 2016 by The Bureau of National Affairs, Inc. IDTX