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Morocco's Tax Overhaul: Navigating Property Sales with Mandatory Tax Clearance
A stringent property tax measure outlined in Morocco's 2024 Finance Act is poised to significantly impact real estate and business sales transactions within the country. Sale contracts can no longer be drafted until the seller obtains tax clearance, marking a pivotal change in the legal landscape.
The revised Article 139-IV now mandates that real estate and business sale contracts can only be prepared once the seller has secured proof from tax authorities, confirming the full payment of all taxes related to the property for both the year of sale and preceding fiscal years. This regulation, effective from July 1, 2024, also requires the inclusion of the housing and municipal services tax registration number in contracts. This inclusion is crucial for identifying the property concerning local taxes, as explained by the economic daily.
Failure to provide tax clearance and the administrative form, along with the business’ common corporate ID or the property's local tax article number, will result in the inability of notaries, court officials, accredited lawyers, and other notarial actors to draft any sale instruments. Additionally, tax inspectors hold the authority to reject the registration of such deeds, thereby renewing fiscal joint liability between notaries and taxpayers for settling outstanding levies.
While some notaries appreciate the provision for enhancing fairness and transparency, others express concerns about potential delays in property transactions. The requirement obliges parties to sign a preliminary sale agreement and await tax clearance before concluding the final sale. Securing tax discharge can take up to ten days, posing challenges, especially since banks often require a notarized instrument for loan requests.
The primary objective of this measure is to bolster tax compliance in property deals, addressing vulnerabilities to manipulation that existed previously. However, it is imperative to address the implementation complexities, particularly concerning assets in tax-exempt zones, to optimize equity and prevent potential revenue leakage.