Morocco

Inventory valuation

Cost of inventory must be determined in accordance with the first in first out (FIFO) or the average cost method. The last in first out (LIFO) method is prohibited.

Capital gains

Capital gains are taxable as a part of ordinary business income.

Dividend income

Dividends received by corporate shareholders from Moroccan-resident entities subject to CIT must be included in business profits of the recipient company, but the dividends are 100% deductible in the computation of taxable income.

The participation exemption in Morocco is also applicable to dividends derived from foreign subsidiaries.

Interest income

Interest income received from tax resident entities (other than financial institutions) is subject to a withholding tax (WHT) at the rate of 20%. The WHT is deductible from CIT.

Rents/royalties income

Rents and royalties income are taxable as a part of ordinary business income.

Foreign income

The income derived from activities carried out in a foreign country is not subject to taxation in Morocco unless the taxation is granted by treaty dispositions.

Note that the participation exemption in Morocco is also applicable to dividends derived from foreign subsidiaries.