Morocco

Revision of Value Added Tax rates

The 2024 Finance Act introduced a gradual convergence towards two rates: 10% and 20% over the period 2024-2026, as follows : 

LF 2024 extended VAT exemption to certain basic consumer products as follows : 

• Exemption with right of deduction, of sales and deliveries of internal and imported pharmaceutical products.
• Exemption with right of deduction of sales of water for domestic use, sanitation services provided by sanitation organizations and water meter rental for the same purpose.
• Exemption, without right of deduction, for school supplies, products and raw materials used in their manufacture.
• Import and domestic exemption without right of deduction for butter derived from animal milk, canned sardines, milk powder and household soap.

VAT Withholding Tax

The 2024 Finance Act introduced a VAT RAS system applicable to 2 categories as follows :

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.

VAT on digital operations

LF 2024 expanded the scope of VAT to cover digital operations.Services supplied remotely by a non-resident person with no establishment in Morocco to :

• A customer whose registered office, place of business or tax domicile is in Morocco;
• An occasional resident customer;

are now subject to VAT.

A service provided remotely in a dematerialized manner is every service rendered via a remote communication tool, including intangible and other immaterial goods.

Revision of the corporate income tax rates

The 2023 finance bill fixed the applicable CIT rates as follows:

• 20% for companies with a net tax income lower than MAD 100 million.
• 35% for companies with a net tax income equal to or higher than MAD 100 million (subject to some exceptions)

Still, the target rates of 20% and 35% rates would not be applicable until January 2026. As such, CIT rates will progressively evolve, from 2023 to 2026, as follows:*

As for companies carrying out industrial activities, CIT rates will progressively evolve, from 2023 to 2026, as follows:

Social solidarity contribution (SSC)

The 2023 Finance Act extended the application of the Social Solidarity Contribution for corporate profits and professional income for the years 2023, 2024 and 2025.

The contribution is calculated:

• For companies: Based on the same amount of net profit used for the calculation of the CIT and which is equal or superior to 1 million dirhams, for the last closed fiscal year.
• For individuals: Based on the net income made and which is equal or superior to 1 million dirhams, as of the last closed fiscal year. 

SSC calculation method and applicable rates for companies

For companies, the SSC is calculated on the net taxable profit of the previous fiscal year according to the following proportional rates:

Companies subject to SSC must submit a declaration, by electronic means, according to a model established by the administration within three months following the closing date of the last accounting period. They must pay the amount of the contribution at the same time as the declaration referred to above.

Other measures

The 2023 Finance Law introduced a reform on the WHT rate applicable to income from shares, units and similar income that extends to 2026. Thus, the target rate of 10% would not be applicable until January 2026. As such, WHT rate on dividends will progressively evolve, from 2023 to 2026.

 The WHT rate applicable to dividends is the one corresponding to the year in which these products were distributed as follows: