Morocco

Value-added tax (VAT)

VAT is levied under the Moroccan Tax Code and is due on all industrial, commercial, and handicraft transactions taking place in Morocco, as well as on importation operations.

The 2024 Finance Act provided for gradual transition to the following rates: 0%, 10% and 20% over the period from 2024 to 2026.

The following table summarizes the rates applicable in FY24.

The sale of goods is considered as taking place in Morocco, and thus subject to VAT, if the goods sold are delivered in Morocco.

The sale of services is considered as taking place in Morocco, and thus subject to VAT, if the services sold are consumed or used in Morocco or when the service is provided remotely in digital form by a non-resident person with no place of business in Morocco to a customer whose registered office, place of business or tax domicile is in Morocco, or to a customer who occasionally resides in Morocco.

Two types of exemptions from VAT are provided. The first is an exemption with credit, equivalent to the zero tax concept. The second is an exemption without credit.

The zero-rated supplies include (but are not limited to) supplies of the following goods or services:

• Exported goods and services.
• Domestic and import sales and deliveries of pharmaceutical products.
• Certain agricultural equipment supplied under prescribed circumstances.
• Investment goods recorded as fixed assets in the company accounting and acquired during the first 24 months following the beginning of activity.
• Offshore banks for certain specific operations, such as interest and commissions.
• Goods and services rendered to companies established in free trade zones (FTZs).
• Activities related to hydrocarbon exploration, etc.

Exempt supplies without deduction right include (but are not limited to) supplies of the following goods or services:

• Milk,powdered milk,butter, sugar, bread, cereals.
• Fiscal stamps.
• School supplies, products and raw materials used in their manufacture.
• Newspapers, books, documentaries.
• Interest on government loans.

Withholding tax on VAT

Finance law 2024 introduced a VAT WHT system applicable to the following operations :

VAT-registered suppliers of equipment : This withholding tax must be levied on VAT due on taxable transactions carried out by  suppliers who fail to present a recent certificate of tax compliance (issued by tax authorities less than 6 months).

Companies carrying out transactions outside the scope of VAT or exempt from VAT without the deduction right are not required to operate the WHT.

VAT-registered service providers :75% of invoiced VAT, in respect of the supply of services listed by regulation, should be withheld by the following entities:

- State, local and regional authorities, public establishments and their subsidiaries, as well as other public bodies.

• Entities governed by private law and individuals, whose income is determined according to the system of actual net income or simplified net income, who pay the remuneration for these services to taxable individuals who have presented a recent certificate of tax compliance. In the absence of such certificate, the WHT should be operated up to 100% of the invoiced VAT.

• The following operations are excluded from the VAT WHT :

  • Sales of electricity and water delivered to public distribution networks.
  • sanitation services provided to subscribers by sanitation organizations, as well as the rental of water and electricity meters
  • Sales and services provided by telecommunications operators.
  • Services provided by canvassers and insurance brokers.
  • Services worth up to 5,000 dirhams, up to a maximum of 50,000 dirhams per month per service provider.

Customs duties

Importation of goods in Morocco gives rise to payment of importation duties, the VAT on importation, and the special tax on importation called Taxe Parafiscale à l’Importation (TPI).

Customs duties are computed on the basis of the ad valorem value of the goods at the time of their entrance into Morocco.

Customs duties can be reduced if the imported products are covered by free trade agreements signed by Morocco or other specific regulatory dispositions.

Under Moroccan tax law, the importation operations are subject to VAT at the rate of 20%. Lower rates of 10% apply to specifically designated importations.

The Moroccan tax law also offers some economical customs regimes that provide VAT exemptions with credit (equivalent to zero rate).

The TPI rate is 0.25% levied on the value of the imported goods.

Excise taxes

Excise taxes apply to specific products imported or produced in Morocco, such as tobacco, alcohol, and lubricants.

Professional tax

A professional tax is levied on individuals and enterprises that carry out a professional activity in Morocco.

The tax consists of a tax on the rental value of business premises (rented or owned) and fixed assets. The tax rates range from 10% to 30%, with exemption for the first five years of activity.

The rental value is exempted for the portion of cost exceeding MAD 50 million.

Registration duties

Registration duties are due on all written or verbal conventions, such as property transfer of real estate, shares, or rights; company set up; equity increase; and goodwill transfer.

The rates of registration duties range from 1% to 6%. A flat rate of MAD 200 is also applicable to specific operations and conventions.

The applicable rate for the transfer of goodwill is 6%.

Payroll taxes

Individual income tax on salaries is paid by way of withholdings made by resident employers.

Social security contributions

The only mandatory social security regime in Morocco is the one managed by the CNSS fund (Caisse Nationale de Sécurité Sociale).

The CNSS rates are as follows and apply to the gross salary, excluding exempted allowances and indemnities: