Voluntary disclosure 2024: how the 5% discharging contribution works

The Finance Act (Loi de Finances) 2024 brings back, as a one-off measure for 2024, voluntary tax regularisation for individuals. The scheme follows the one introduced by the Finance Act 2020. Circular No. 735 (note circulaire) from the Directorate General of Taxes (DGI), published in February, sets out the details.

Who is covered?

Individuals with income or gains taxable in Morocco that they had not declared before 1 January 2024. The scheme is also open to taxpayers already undergoing a review of their overall tax position or another tax audit, for years on which no final court judgment has set the tax.

What can be regularised

1. Liquid assets held in bank accounts.
2. Cash (banknotes) held outside the banking system, provided it is paid into a bank.
3. Purchases of movable or immovable property not used for business purposes.
4. Advances to shareholders’ current accounts or to the proprietor’s account, and loans made to third parties.

The rate and the procedure

The contribution is 5% of the amount regularised.

• For bank balances and cash, the process goes through a bank. You file a declaration using the tax authorities’ template. The bank deducts the contribution and pays it to the DGI within the following month. It passes on only the declaration number, not your name, so your anonymity is protected. If you have several banks, you can file a declaration with each of them.
• For purchases and advances, the declaration is filed with the tax authorities. The contribution, calculated on the purchase price or on the amount of the advances and loans, is paid when the declaration is filed.

The window is fixed: 1 January to 31 December 2024.

The effects

Once the declaration has been filed and the contribution paid:

• the regularised assets, and any spending financed up to their amount, are no longer taken into account to assess income in a review of overall tax position;
• you can no longer be required to regularise these assets in any other audit, including audits of the accounts of professionals taxed on actual or simplified net profit.

If an audit is already under way, the tax authorities’ assessment bases are reduced by the amounts regularised.

An example

A trader holds MAD 900,000 in a bank account and MAD 300,000 in cash, from past income that was never declared. He pays the cash into his account and files the declaration with his bank. The bank deducts (900,000 + 300,000) × 5% = MAD 60,000. The MAD 1,200,000 is then covered: he can use it, for example to buy a home, without the purchase being held against him in a later review of his tax position.

Questions to ask before regularising

• Do the funds really come from income taxable in Morocco? The scheme does not cover other offences, in particular breaches of foreign exchange regulations for assets held abroad.
• Should you regularise assets rather than cash? The base is not the same. The purchase price of an asset bought several years ago may be more relevant than its cash equivalent.
• What about your business? If you are a shareholder, the current-account advance must be consistent with the company’s accounts.
• When should you act? The law does not provide for an extension, and banks are likely to be very busy at the end of the year.

How we can help

A regularisation needs preparation: tracing the origin of the funds, choosing the base, and making sure everything is consistent with your past returns and the accounts of the companies you own. Our tax & legal team helps directors and professionals through this process in complete confidence. To discuss your situation, contact us.