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Several new tax measures have come into effect in Morocco as of Wednesday, January 1, 2025, under the new Finance Law. These changes affect businesses and Economic Interest Groups (EIGs), which have now been included for the first time in the General Tax Code. These measures will significantly impact how companies are structured and the taxes levied upon them.
Economic Interest Groups: Corporate Tax Imposed for the First Time
One of the main changes in the 2025 Finance Law is the introduction of corporate tax (IS) for Economic Interest Groups (EIGs) for the first time. According to Article 2 of the updated Tax Code, individuals and companies that are part of these groups will now be taxed based on their share of the group's net results.
As per Law No. 13.97, which governs Economic Interest Groups, two or more natural or legal persons can establish an EIG for a defined or indefinite period. The goal is to pool resources to enhance the economic activities of its members and improve the outcomes of these activities.
The group’s activities must be related to the economic activities of its members, and it must operate as a cohesive entity carrying out activities related to those of its members. Importantly, the group's objective is not to generate profits for itself.
Joint Ventures: Corporate Tax Now Applicable
Another significant change is the introduction of corporate tax for joint ventures that include at least one legal entity or more than five natural persons as partners. These companies will be taxed under the name of the respective joint venture.
Legal Definition of a Joint Venture: According to Article 88 of Law No. 5.96, a joint venture is defined as a company that "does not have legal personality, exists solely within the relationships between its partners, and is not intended to be made known to third parties. It is not subject to any registration in the commercial register or any publicity measures, and its existence can be proven by any means, including by de facto establishment."
New Tax Exemptions in the 2025 Finance Law
The 2025 Finance Law introduces several new tax exemptions for certain entities. For example, FIFA representations in Morocco and its affiliated bodies are exempt from corporate tax on all activities aligned with their statutes' objectives. Additionally, profits derived from these FIFA representations are also exempt from withholding taxes.
Tax Exemption for Smaller Joint Ventures
Among the changes introduced by the 2025 Finance Law is the exemption of joint ventures with fewer than 6 partners from the scope of corporate tax, whereas the previous tax law imposed corporate tax on all joint ventures without exception.
What Do These Changes Mean for Businesses in Morocco?
These tax changes indicate a move towards greater tax transparency and the imposition of taxes on entities that were previously exempt. It will be important for businesses in Morocco to assess how these changes affect their tax strategies and ensure compliance with the new laws.
Conclusion
The tax amendments in the 2025 Finance Law mark an important step in strengthening the tax system in Morocco. These changes impact the structure of Economic Interest Groups and joint ventures. Companies must stay informed about these adjustments to ensure they are fully compliant with the new regulations.
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