A reform of the IR to the taste of the unions

The Minister Delegate to the Head of Government in charge of Relations with Parliament, and Government Spokesman, Mustapha Baïtas, a month ago (mid-September) at the end of a meeting of the Government Council, the claimed, “the income tax (IR) scale will indeed be reviewed“.

He was referring, then, to the statements of the Minister of Economy and Finance Nadia Fettah, who answered a written question from the parliamentary group of the Popular Movement (MP). She had announced that the government is committed to the reform of the IR and that this would be programmed in the Finance Act 2023.

Well its done. The draft finance law 2023 (PLF 2023) read, seen, and approved by the Executive and therefore adopted Tuesday, October 18 in the Council of Ministers, aims to be ambitious, through its orientations. Also, for the income tax reform component, note the revision of the income tax scale with a reduction in tax on low incomes and middle incomes, and an increase in tax on high incomes . Some will say that it is to the taste of the unions, but rest assured, the government has not touched the current scale and the few “small measures” granted should not have any real impact on income. employees and civil servants.

However, one will also note the government’s interaction with the union and management proposals concerning new recruits. Thus, it is proposed in the PLF2023 the revision of the tax system and the extension of the period of exemption from income tax for this category of employees until December 31, 2026. It should also be noted with this extension of the period of exemption from income tax for newly recruited employees, these other “flagship” measures proposed in the PLF 2023.

The alleviation of the tax burden of employees and assimilated, retirement pensions, the revision of the mode of taxation and control of the IR… Note that the product of the IR amounts to 48 billion DH against 43 7 billion in 2022, an increase of 11.32%, while the income from corporate tax (IS) amounts to 61.5 billion DH against 52 billion in 2022, an increase of 18 .18%.

That said, the Executive remained straight in “its shoes” by refusing any revision of the income tax scale during the negotiations on purchasing power that Fouzi Lekjaa is currently conducting with the unions, within the framework of social dialogue. Earthenware eyes have, it seems, dominated the debates with regard to the PLF 2023 menu. In detail, this PLF proposes, for example, raising the flat rate of abatement for professional expenses from 20% to 35% for people whose gross annual taxable income is less than or equal to 78,000 DH.

However, this flat rate is set at 25% for persons whose gross annual taxable income is greater than seventy-eight thousand (78,000) dirhams, while raising the deduction ceiling from 30,000 to 35,000 dirhams. Raising the flat-rate abatement rate applicable to pensions and life annuities from 60% to 70% on the gross taxable amount of said income not exceeding 168,000 dirhams.

Among the PLF measures affecting income tax, there is the progressive application of the principle of taxation of the overall income of natural persons, under the framework law for tax reform. It is thus proposed to reinstate the taxation of the annual global income of these people according to the rates of the progressive scale of IR, with application of the deduction at source (RAS) for certain categories of income from land, agriculture, etc. Remuneration and allowances paid by educational or vocational training establishments to teachers have not escaped this. As for doctors subject to the professional tax, the imposition of the IR is, by way of RAS, at the non-discharging rate of 20%.

The tax levied is chargeable to the overall income tax with the right to refund. With regard to white coats not subject to business tax, income tax is taxed by withholding at source, at the non-discharging rate of 30% instead of the discharging rate currently applied. The tax levied is the same thing, it is attributable to the global IR with the right to refund. Finally, with regard to redemptions of contributions and premiums relating to individual or collective pension insurance contracts, taxation in terms of income tax, by way of RAS, at the non-dischargeable rate is 30%, instead of the rates of the current scale. It’s the same song, “the tax deducted is attributable to the global IR with the right to refund”… Other corporations, please refer to the PLF 2023.

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