Inactive companies: regularise your tax position before the end of 2023

Many Moroccan companies have stopped trading without being formally struck off, either legally or for tax purposes. They remain on the taxpayer register. Because they file no returns, the tax authorities assess them ex officio, and their tax debt grows year after year, often without the shareholders knowing.

The Finance Act (Loi de Finances) 2023 created two tools to deal with these situations. The second, flat-rate regularisation, is open until 31 December 2023. That leaves six weeks to use it.

First tool: the register of inactive companies

The new article 228 bis of the General Tax Code (CGI) defines an inactive company. It is a company that, over its last three financial years closed, has met no filing or payment obligation and, according to the tax authorities’ information, has carried out no transactions.

The procedure gives the company a chance to respond. The tax authorities first ask it, by formally notified letter, to file a declaration of cessation of business within 30 days. If it does not reply, it is entered in the register of inactive companies, and ex officio assessments against it are suspended.

Second tool: flat-rate regularisation

This scheme is aimed at two types of company:

• those that have generated no turnover;
• those that have paid only the floor amount of the minimum tax (cotisation minimale).

The test is applied over the last four financial years. A company that wants to cease trading permanently must:

1. file its declaration of total cessation of business during 2023;
2. voluntarily pay a flat-rate tax of MAD 5,000 for each financial year not yet time-barred.

In return, those years can no longer be subject to a tax audit. Penalties for failure to file and pay are automatically cancelled for the years not time-barred.

An example

A private limited company (SARL) set up in 2015 for a project that was later abandoned has been dormant since 2018. It filed its returns irregularly and, in some years, paid only the minimum tax floor. Its shareholders want to wind it up properly.

They can file the declaration of cessation before 31 December 2023 and pay MAD 5,000 for each year not time-barred. The company then leaves the register at a cost known in advance (excluding gains on the sale of assets and compensation payments, which remain taxable under the normal rules). The alternative is to let ex officio assessments and penalties build up and weigh on the liquidation.

Points to watch

• Tax is only part of the picture. Ceasing business for tax purposes does not replace dissolution, liquidation or removal from the trade register (RC). These legal formalities must be completed in parallel.
• Other debts are still payable. The scheme does not settle social security contributions or debts owed to third parties.
• Check eligibility year by year. A single year with significant turnover can rule the company out.
• Start early. Convening the shareholders, preparing the liquidation accounts and filing the returns all take time, and the year end comes round quickly.

Close or relaunch?

Before closing, consider what the company is worth: tax losses carried forward, contracts, brand, licences. A dormant company can sometimes be relaunched or sold. But if it no longer serves any purpose, 2023 gives you the chance to close it at a controlled cost.

Our tax & legal team can check your company’s eligibility, compare the cost of both options and handle every formality through to deregistration. To discuss your situation, contact us.