Morocco

Depreciation

Fixed assets are normally depreciated according to their economic life duration according to the provision of the accounting regulation.

Depreciation is computed according to two methods: the straight-line method and the declining-balance method.

The tax regulation (through administrative guidelines) has provided indicative depreciation rates applicable when the company activity or the asset to be depreciated is specific or particular.

Indicative depreciation rates are as follows:

Goodwill

Under Moroccan tax law, goodwill cannot be subject to amortisation. However, a decrease of the value of goodwill is allowed to be recorded through provisions.

Start-up expenses

The development as well as incorporation expenses shall be capitalised and depreciated for tax purposes over a period of five years.

The carryforward of any loss due to the above expenses is limited to a period of four years.

Interest expenses

Interest on loans granted by direct shareholders is deductible if the capital is fully paid in. Also, the deductible interest is limited to (i) the portion of the loan that does not exceed the share capital equity and (ii) the interest rate provided, annually, by the Ministry of Finance (2.22% in 2018).

Bad debt

Bad debts that are definitively non-recoverable (after all recovery procedures have been undertaken) are treated, from a tax point of view, as deductible losses.

Charitable contributions

Charitable contributions made by companies are deductible only if they are granted to foundations and societies explicitly provided by law.

The contributions made to the community enterprise are deductible at up to 0.2% of the company turnover.

Fines and penalties

Fines and penalties are not tax deductible expenses if they relate to infringements to legal and regulatory dispositions.

However, expenses relating to late payment penalties (calculated in accordance with the provisions of the law) should be tax deductible.

Taxes

Taxes constitute deductible expenses, except CIT itself and recoverable taxes.

Net operating losses

Tax losses may be carried forward for a period of four years from the end of the loss-making accounting period. However, the portion of a loss that relates to depreciation may be carried forward indefinitely.

A carryback mechanism is not allowed under Moroccan law.

Payments to foreign affiliates

Payments to foreign affiliates are allowed under Moroccan law. However, such payments should respect the arm’s-length principle and foreign exchange regulations.