The DGI circular concerning the 2024 tax measures is here. Indeed, the purpose of the document is to present the tax measures provided for by the FL 2024 by type of tax. The key new developments for this year obviously concern VAT. As part of the continued implementation of framework law No. 69-19 on tax reform, the Finance Law (LF) for the 2024 budget year introduced the reform of the value added tax (VAT), according to a progressive approach over a period of three years (2024, 2025 and 2026), in order to ensure the visibility and stability of our tax system. “With a social aim aimed at reducing the cost of VAT to better control inflation and support the purchasing power of consumers, article 6 of the FL 2024 generalized the exemption from VAT to certain basic products of wide consumption, namely: – pharmaceutical products; – school supplies and the products and materials used in their composition; – water intended for domestic use; – butter derived from milk of animal origin; – canned sardines; – powdered milk; – and household soap,” we read in the DGI document. “Before the entry into force of the FL 2024, certain medicines were exempt from domestic VAT with right of deduction and importation, namely: – anticancer medicines, antiviral medicines for hepatitis B and C, medicines intended for the treatment of diabetes, asthma, cardiovascular diseases, acquired immunodeficiency syndrome disease (AIDS) and meningitis disease; – vaccines; – medicines intended for the treatment of fertility and multiple sclerosis; – medicines whose manufacturer price excluding tax set by regulation exceeds 588 dirhams,” adds the same source. As part of the implementation of the social objective targeted by the framework law on tax reform having recommended the exemption of basic products, article 6 of the FL 2024 extended the total exemption from VAT with right of deduction, domestically and on importation, to all pharmaceutical products. Thus, from January 1, 2024, all pharmaceutical products are exempt from VAT with right of deduction, domestically and on importation, in accordance with the provisions of articles 92-I-19° and 123-37° of the CGI (General Tax Code). The DGI specifies, to this end, that the tax credit born from January 1, 2024, relating to sales operations for pharmaceutical products exempt with the right to deduction from this date, gives entitlement to the reimbursement provided for in article 103-1° of the CGI. To benefit from the VAT exemption, the products in question must meet the following three conditions: comply with the legislative and regulatory standards in force; be used in medicine for curative or preventive purposes with regard to human or animal diseases; be sold exclusively in pharmacies or by persons authorized for this purpose in accordance with the legislation and regulations in force. Any product that does not meet the three criteria above cannot be considered a pharmaceutical product, such is the case for parapharmaceutical products. School supplies Before the entry into force of the FL 2024, school supplies as well as the products and materials used in their composition were subject to VAT at the reduced rate of 7%, with the obligation to complete the regulatory formalities. As part of the same social objective aimed at the exemption of basic products of wide consumption, article 6 of the FL 2024 introduced the exemption from VAT internally without right of deduction and on the importation of school supplies as well as the products and materials used in their composition. This exemption was provided for by the provisions of articles 91-I-E-4° and 12327° of the CGI and takes effect from January 1, 2024. Benefit from this exemption is conditional on the completion of the formalities provided for by regulation. Concerning imported school supplies and in order to benefit from the VAT exemption on the importation of school supplies provided for in article 123-27° of the CGI, the importer must provide the Customs and Indirect Tax Administration with a commitment to use the imported school supplies for exclusively school use. Furthermore, it should be remembered that office supplies intended for use other than school remain subject to the VAT rate of 20%. Informal and tax fairness In order to encourage tax transparency and effectively combat false invoices, article 6 of the Finance Law 2024 supplemented the provisions of article 117 of the CGI with two new paragraphs (IV and V), in order to establish two new withholding mechanisms for VAT. There is also talk of the reinstatement of the obligation to conserve investment property recorded in a fixed asset account. “Before the 2013 Finance Act, any company having acquired investment goods (furniture and buildings), exempt from VAT or giving right to deduction, was required to keep said goods for a period of five (5) years. Failing this conservation, this company was required to carry out a regularization by remitting to the Treasury the amount corresponding to the exemption or deduction initially made in respect of said goods, reduced by one fifth per year or fraction of a year elapsed since the date of acquisition of these goods,” specifies the circular from the DGI. And to continue: “As part of the rationalization of tax incentives and the fight against fraudulent practices, article 6 of the Finance Law 2024 modified and supplemented the provisions of the aforementioned articles 102 and 104-II-2° to reinstate the obligation to conserve movable property having benefited from the purchase exempt from VAT or the right to deduct said tax, in an immobilization account for a period of 60 months. In the event of non-compliance with the obligation to conserve said goods during the aforementioned period and their assignment to the carrying out of operations subject to VAT or exempt under Articles 92 and 94 of the CGI, provided for in Article 102 of the said code, the beneficiary of the deduction or the purchase under exemption is required to repay to the Treasury a sum equal to the amount of the exemption or deduction initially made, reduced by a sixtieth per month or fraction of a month elapsed since the date of acquisition of these goods.”
source: dhui.ma
