New tax on profits from online games of chance: 30% source withholding begins

Economy of the East

Playing time is over for online game of chance enthusiasts who have been secretly reaping big winnings. As of July 1, they will have to pay tax. Online winnings, whatever their nature or form, that come from abroad will be subject from this date to a mandatory withholding at source for the Treasury at a liberalized rate of 30% (Article 73-II-G-9 of the General Tax Code).

Morocco is finally trying to tax an activity that has been shrouded in mystery, such as the concentration of operators in tax havens and the clandestine nature of some activities at the international level...

This deduction will be made by credit institutions, similar bodies or any other entity involved in the payment of foreign-sourced dividends.

The amount of deductions at source (Article 160 bis) must be transferred to the DGT on a monthly basis, i.e. before the end of the month following the month in which the deduction was made (Article 174-VII of the General Tax Code). This transfer must be done electronically on a form prescribed by the administration.

Declaring and paying at the same time

In addition, the structures responsible for paying dividends to beneficiaries are obliged to submit an electronic declaration to the administration before March 1 of each year, which includes the online foreign-source dividends paid to resident beneficiaries, their identity, the total amount of dividends paid, as well as the amount of withholding applied at source (Article 154).

This will allow the tax administration to track the financial flows generated by games of chance. In the case of a declaration that does not contain the required information, the penalties provided for in Article 230 bis will be applied, depending on the extent of the lack of data.

Additional sanctions go into effect on July 1

These penalties relate to the procedures provided for in Articles 186 and 208 of the General Tax Code in the event of correction of the taxable base or late payment. Article 186-A of the same code provides for an increase from 20% to 30% in the event of correcting the taxable base for entities charged with withholding at source on this category of profits. The “automatic assessment” procedure is also triggered if the organization paying the dividend fails to file the mandatory annual declaration.

With regard to tax obligations, these organizations are subject to increases in penalties according to the amount of tax withheld or should have been withheld, if the declaration is not filed or is filed outside the legal deadline. Increases are also imposed if the declaration is incomplete or contains discrepancies.

Moroccan-sourced earnings

Convinced by the arguments of local operators about the impact of the 30% withholding at source on Moroccan-origin games of chance winnings on their business and the tourism sector, the government reversed the decision to impose a social contribution of 2% (Article 300 of the General Tax Code). However, it has decided to impose a social contribution of 2% (Article 300 of the General Tax Code) on the profits realized by local companies that pay gaming winnings to beneficiaries (Article 298 of the same code). This contribution applies from the fiscal year open since January 1, 2025, and must be paid to the tax administration no later than 3 months after the closing date of the fiscal year, in conjunction with the filing of the tax declaration (Articles 301 and 302 of the Code).

This social contribution is a permanent measure and is calculated on the basis of the net profit used to calculate corporate tax or income tax under the real or simplified net result system. If the organization is engaged in another activity besides games of chance, the social contribution applies only to the part of the profit related to games of chance.