Multiple employers and salaries of foreign source

Definition

What this covers

Salary income means salaries, allowances and emoluments, wages, special allowances and flat-rate expense reimbursements granted to company directors, pensions, life annuities and benefits in cash or in kind granted in addition art. 56 CGI.

The tax is in principle withheld at source by the employer or annuity payer domiciled or established in Morocco, on behalf of the Treasury, on each payment made art. 156-I CGI : each payer withholds on what it pays, and the code provides at that stage for no consolidation between payers. Two combined sources of pay, or income on which no Moroccan payer has withheld, therefore create a gap that only the annual global income return settles art. 82 CGI.

Scope

Who is affected

• Employees employed simultaneously, or successively during the same year, by several employers established in Morocco.
• Employees who also receive a pension or life annuity from a separate annuity payer.
• Persons receiving pay or allowances, occasional or otherwise, from a body of whose permanent staff they are not part.
• Persons with their tax domicile in Morocco who receive a salary paid from abroad, with no Moroccan employer.

The relief is open only to taxpayers whose income consists solely of salary income paid by a single employer or annuity payer domiciled or established in Morocco and required to withhold art. 86-2° CGI. Each of those elements is a condition : a second payer, a payer not established in Morocco, or income of another category brings it down. It also ceases where the taxpayer considers themselves overtaxed or claims the deductions under articles 28 and 74.

Applicable rules

One basis of assessment, several payers

Net taxable income is obtained by deducting from the gross sums the exempt items in article 57 and the deductions in article 59 art. 58-I CGI. Expenses inherent in the post are taken on a flat-rate basis at 35 % where annual gross taxable income does not exceed 78,000 dirhams, and at 25 % above that, the deduction being capped at 35,000 dirhams art. 59-I-A. For the purposes of that paragraph A, the gross income to which the percentage applies is taken excluding benefits in cash or in kind art. 59-I, penultimate paragraph. Rates specific to certain occupational categories replace them : under the same cap of 35,000 dirhams for those in paragraph B art. 59-I-B, with no cap for seagoing staff in the merchant navy and sea fishing, taxed at 40 % art. 59-I-C.

Also deductible are amounts withheld to build up pensions or retirement benefits under the basic schemes and the statutory schemes of Moroccan retirement bodies — a deduction conditional on the employer withholding the contributions and paying their amount monthly to those bodies art. 59-II-A —, contributions of foreign nationals contributing exclusively to foreign retirement bodies, up to the rate borne by the staff of the Moroccan business or administration to which they belong art. 59-II-B, contributions to Moroccan social welfare bodies and the employee's share of group insurance premiums covering sickness, maternity, invalidity and death art. 59-III and IV. The scale is then applied to the reconstituted global income art. 73-I.

Pay made to persons who are not part of the permanent staff bears a withholding of 30 % art. 73-II-G-1°, other than doctors not subject to the professional tax practising in a clinic and teachers not part of the permanent staff of an education or training establishment, who fall under 73-II-G-2°, at the same rate but in full discharge art. 73-II. Only the withholding under G-1° is not in full discharge and does not relieve its recipient from filing the global income return art. 58-II-C and 156-I.

Salary paid from abroad

A person with their tax domicile in Morocco is taxable there on all their income, of Moroccan and foreign source art. 23-I-1°. Subject to tax treaties, foreign-source income is included in taxable global income at its gross amount art. 25 ; tax borne in a source country linked to Morocco by a treaty, payment of which is evidenced, is credited against Moroccan tax up to the corresponding fraction art. 77.

Beyond those three rules, the code says nothing about a salary paid from abroad to a resident with no Moroccan employer. The withholding obligation in article 156-I falls only on a payer established in Morocco : it has no application here, and no provision substitutes a mechanism of its own. The characterisation of the income, its interaction with the applicable treaty and the calculation of the tax credit therefore call for a review of the individual position.

Deadlines and limitation periods

The timeline

1. Each month

   Amounts withheld by employers and annuity payers are paid over to the Treasury in the following month art. 174-I.

2. Before 1 March

   Filing of the global income return for the previous year, for those with income other than professional income art. 82-I. The tax due is paid spontaneously within the same period art. 173-I.

3. Until 31 December of the 4^th year

   The administration's power to make good, following the year in which the income arose art. 232-I ; for tax withheld at source, the same power is exercised against the person required to make the withholding, following the year in which the sums should have been paid to the Treasury art. 232-II.

For years in respect of which no return was filed, the tax and surcharges remain payable even if the limitation period has expired, up to a limit of ten years art. 232-VIII-15°.

Documents and supporting evidence

What the file contains

The file rests on the following elements :

• Identification details : address of the tax domicile, national identity card or foreign national's card, tax identification number and the municipal services tax article number for the usual residence art. 82-I.
• Evidence of pay, payer by payer : gross sums paid and benefits in cash or in kind art. 56.
• Evidence of the withholdings made : for each payer, the amount taxed, the amount of the levy, the period concerned and the payer's tax identification number art. 82-I.
• Deduction and foreign-source items : documents relating to retirement, social welfare and group insurance contributions art. 59, and evidence of the foreign tax for which a credit is claimed art. 77. Article 59-II-A further requires the employer to keep a certified copy of the membership contract.

This list is indicative ; the exact composition of the file depends on the circumstances.

Points to watch

What can derail a file