Your company lost money for three financial years, it turns profitable again, and your accountant tells you the oldest loss is about to be lost for good. That is true of one part of the loss only: article 12 of the CGI splits the carried-forward loss into two components, and the one matching regularly accounted depreciation carries forward with no time limit at all. The whole question is how much of your loss falls into each of the two.
The essentials in five points
- Loss carry-forward is governed by article 12 of the CGI. A loss from one financial year is set against the profits of the following years.
- The ordinary share carries forward for four financial years. It can be used up to the fourth year following the loss-making one, then it is lost.
- The share matching regularly accounted depreciation carries forward with no time limit. No deadline ever extinguishes it.
- A heavily depreciated company therefore keeps far more usable loss than a naive reading of the four-year rule would suggest.
- Skipping depreciation in a loss year destroys the unlimited portion of the carry-forward: that share of the loss becomes nothing at all.
1. What article 12 actually does
Most owners remember a single sentence: “a loss carries forward four years”. That sentence is incomplete, and the missing half always works against the company, because the forgotten part is precisely the one that never expires.
| Loss component | What it consists of | Carry-forward period |
|---|---|---|
| The ordinary share | The loss excluding the year’s depreciation | Up to the fourth following financial year |
| The depreciation share | The loss matching regularly accounted depreciation | No time limit |
A financial year’s loss is therefore not a single amount that ages in one movement. It is an amount that splits from the moment it arises, and that split has to be tracked year by year in a dedicated schedule, otherwise you will later be unable to justify which fraction is still available.
This mechanism applies to the determination of the tax result from the accounting result. Worth noting in passing: the simplified net regime leaves loss carry-forward out of its determination, so what follows concerns only companies determining an actual net result.
2. The ordinary share: four financial years, then nothing
The fraction of the loss that does not match depreciation runs on a strict clock. It is set against the profits of the following financial years, and at the latest against the fourth year following the one in which it arose.
- Year N is loss-making: the ordinary share of the loss is identified and carried forward.
- If year N+1 is profitable, that share is set against the profit, wholly or partly.
- Any unused balance keeps carrying forward into N+2, then N+3.
- N+4 is the last chance: the remaining balance is set against that year’s profit.
- Beyond that, the unused ordinary fraction is definitively and permanently lost.
The practical consequence is that a long run of loss-making years costs more than one bad year alone. Every extra year of losses pushes the return to profit further away, and so brings forward the deadline on the ordinary share of the oldest losses, which expire before ever meeting a profit to absorb them.
3. The depreciation share: unlimited, but under conditions
This is the heart of the matter, and the only good news in the mechanism. The fraction of the loss matching regularly accounted depreciation escapes the four-year limit: it stays available with no deadline. Two words carry the whole rule.
- Regularly: The depreciation must have been applied by the rules: a correct base, a rate consistent with the asset’s useful life, and consistent application from one year to the next. Irregular depreciation does not open the unlimited carry-forward.
- Accounted: The depreciation must actually have been recorded in the books for the year concerned. This is not a deduction you claim afterwards: it exists if the entry exists, and it does not exist otherwise.
- Every financial year: The charge is booked every single year, including through loss years. This is exactly where most companies penalise themselves, believing they are protecting how their accounts look.
- Traceable: You must be able to show, for each loss-making year, how much depreciation was booked. That amount is what marks out the fraction of the loss that will never expire.
For a company that has invested heavily — a fitted-out shop, a cold chain, a fleet of vehicles, production equipment — the depreciation charge makes up a considerable share of the early years’ losses. In that situation the four-year rule bites on only a small part of the carry-forward, and the bulk of the loss stays available for as long as it takes to absorb it.
Put differently, the discipline of booking your depreciation every year is not only an accounting requirement about faithful accounts. It is a tax decision whose effect is measured in corporate tax saved several years later.
Failing to book depreciation in a year of losses
This is the most expensive mistake on the subject, and it is almost always made in good faith. The year is loss-making, booking the charge makes the reported loss worse, so it gets skipped “just for this year”. The result: the charge is not recorded, so it does not enter the share of the loss that carries forward with no time limit, and you have not created any durable extra ordinary share either, since that one dies at the fourth financial year. You have turned an unlimited carry-forward into nothing at all, in order to improve a presentation your banker will read with the notes in front of them anyway.
4. The set-off order, and why it matters
When a profitable year arrives and you hold several carried-forward losses, the order in which you consume them is not neutral. The common-sense principle is simple: spend first whatever is going to expire.
| What you set off first | Why | What you preserve |
|---|---|---|
| The oldest ordinary share | It is the closest to its fourth financial year | A fraction that was about to disappear |
| Then the more recent ordinary shares | They still have financial years ahead of them | Time for the ones behind them |
| The depreciation share last | It never expires at all | A carry-forward usable with no deadline |
The reasoning fits in one sentence: spend first what has an expiry date, keep for last what has none. Setting the depreciation share against a modest profit first means letting an ordinary share expire the following year, when that same profit could have absorbed it.
The concrete tracking arrangements, the content of the carry-forward schedule and the way the set-off is presented in the return are your accountant’s or your firm’s territory. Check with them, before the accounts are closed, that the split between the two components is properly kept for each of your loss-making years.
Mistakes to avoid
- Believing every loss carries forward four years, without separating the depreciation share.
- Skipping the depreciation charge during a loss-making financial year.
- Keeping no tracking schedule separating the two components, year by year.
- Setting off the depreciation share before the ordinary one and letting the latter expire.
- Applying irregular depreciation and still expecting the unlimited carry-forward.
Frequently asked questions
How long does a loss carry forward in Morocco?
It depends on the component. The ordinary share is set against the profits of the following financial years, up to the fourth year after the loss-making one, and after that it is lost. The share matching regularly accounted depreciation carries forward with no time limit.
How do I know which part of my loss is unlimited?
By taking, for each loss-making financial year, the amount of depreciation regularly accounted for that year. That amount marks out the fraction not subject to the four-year deadline. Have your accountant draw up that schedule and keep it with the file.
Can I catch up depreciation I did not book?
The unlimited carry-forward assumes depreciation regularly accounted for the year concerned. A charge that was omitted did not produce that effect at the time, and whether any catch-up is possible is a technical question: settle it with your accountant, file in hand, not on general principle.
In what order should I use my carried-forward losses?
The logic is to use up whatever expires first. You consume the oldest ordinary share, then the more recent ones, and you keep the depreciation share for last, since it has no deadline. Confirm the practical mechanics with your accountant before filing.
What to take away
Open a loss carry-forward schedule and keep it financial year by financial year, with two columns: ordinary share and depreciation share. Book your depreciation charge every year without exception, including and especially when the year is bad. Then, in the year you turn profitable again, set off first whatever is going to expire. For a company that has invested heavily, those three habits are worth several years of usable loss preserved.
Sources
The figures and rules quoted above come from these pages, read on the date given in the article.
- Moroccan Tax Administration, 2026 General Tax Code
- Ministry of Economy and Finance, General Code of Accounting Standardisation, read 1 September 2026
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