Morocco Tax Compliance

Tax rates in Morocco

Tax Rates

Consumption Taxes

Nature of the Tax

VAT - Value-Added Tax (Taxe sur la Valeur Ajoutée - TVA)

Tax Rate

20%

Reduced Tax Rate

A reduced rate of 10% applies to petroleum products; banking transactions; hotel operations; restaurant operations; sales and delivery operations relating to art objects; edible fluid oils; solar water heaters and photovoltaic panels, sales and deliveries of water intended for public distribution networks, sanitation services provided by sanitation organizations and water meter rental operations not intended for domestic use, fishing gear and nets intended for maritime fishing professionals, economy cars and all products and materials used in their manufacture, as well as related assembly services.

The VAT rate for transport, butter, services rendered by any direct selling agent or insurance broker in respect of contracts brought by it to an insurance business, and electricity is 14%.

A reduced rate of 7% applies to water; rental of water and electricity meters; pharmaceutical products and non-recoverable packaging of pharmaceutical products.

Zero-rated items include exported goods and services, goods placed under customs suspensive regime, fertilizers, machinery for exclusively agricultural use, investment goods recorded as fixed assets, acquired by taxable persons, for 36 months as from the start of the activity, excluding vehicles acquired by car rental agencies, pharmaceutical products, sales and deliveries of water for domestic use, sanitation services provided by sanitation organizations and water meter rental for the same use.

Per the changes of the 2024 Finance Law, the 7% and 14% rates have been phased out as follows:
  - Downward adjustments – no changes for 2023, 2024, 2025, 2026
  - Sale of electricity generated from renewable energy sources – 14% (2023), 12% (2024), 10% (2025), 10% (2026)
  - Services provided to insurance companies by direct marketers or insurance brokers (contracts brought to the company by the direct marketer or broker) – 14% (2023), 12% (2024), 10% (2025), 10% (2026)
  - Urban and road passenger and freight transport operations – 14% (2023), 13% (2024), 12% (2025), 10% (2026)
  - Upward adjustments – no changes for 2023, 2024, 2025, 2026
  - Refined or agglomerated sugar – 7% (2023), 8% (2024), 9% (2025), 10% (2026)
  - Rental of electricity meters – 7% (2023), 11% (2024), 15% (2025), 20% (2026)
  - Electric power – 14% (2023), 16% (2024), 18% (2025), 20% (2026)
  - Passenger and freight transport (non-urban and non-road) – 14% (2023), 16% (2024), 18% (2025), 20% (2026).

Other Consumption Taxes

Excise duties are levied on several products, including alcoholic beverages, energy drinks, tobacco, sugar, oil products, lubricants, etc.
Plane tickets for international flights departing from Moroccan airports are taxed at MAD 100 for Economy class and MAD 400 for Business and First class.

Corporate Taxes

Company Tax

For fiscal years 2024 to 2026, the evolution of the CIT rates for companies in Morocco is as follows:

Tax Rate For Foreign Companies

Moroccan tax applies territorially. Companies, whether established in Morocco or not, are subject to corporate income tax on all profits or income derived from property they own, activities they conduct, and profit-making transactions they carry out in Morocco, even if these activities are occasional. Foreign companies are liable on Moroccan-sourced income at the same rates as local companies (unless preferential treatment is granted under foreign investment schemes).
A branch tax of 15% applies to the net income transferred by the Moroccan branch to foreign entities.

Capital Gains Taxation

Capital gains are treated as non-current income and taxed at the normal corporate tax rate.
Non-resident companies are exempt from capital gains derived from the sale of stocks listed on the Casablanca stock exchange, excluding the shares of real estate entities.
For the years 2023, 2024 and 2025, companies will benefit from a 70% deduction on the net capital gain resulting from the sale of fixed assets, excluding land and buildings.

Main Allowable Deductions and Tax Credits

Expenses incurred in connection with business activities are generally deductible unless specifically excluded. Start-up expenses shall be capitalised and depreciated for tax purposes over a five-year period. Interest on loans granted by direct shareholders is deductible if the capital is fully paid in, limited to the share capital equity and the interest rate provided annually by the Ministry of Finance.

Charitable contributions made by companies are deductible only if they are granted to foundations and societies explicitly provided by law. In the case of contributions made to the community enterprise, the deduction is capped at 0.2% of the turnover.

Bad debts that are definitively non-recoverable are treated as deductible losses. Taxes are generally deductible (except for corporate income tax).

Tax losses can be carried forward for up to four years from the end of the accounting period in which the loss occurred. However, the portion of a loss attributable to depreciation can be carried forward indefinitely. The carryback of losses is not permitted. Foreign tax relief is provided for foreign-sourced income.

Morocco offers tax incentives in the form of tax exemption or taxation at more advantageous rates for local and foreign investors. For instance, incentives include an exemption from business tax for the first five years for newly incorporated companies and a corporate income tax exemption for companies operating tourist establishments for the first five years, subject to certain conditions. Several acceleration zones in cities like Fes, Kenitra, Layoune, Nador, Rabat, and Tangier offer authorized companies a business tax exemption for the first 15 years and a corporate income tax exemption for the first five years. Companies with "Casablanca Finance City" status are entitled to a corporate income tax exemption for five years from the start of the tax year in which the status was obtained. Additionally, tax-neutral treatment may be available for corporate income tax purposes for the transfer of investment goods between member companies of a restructuring group. Companies that qualify as OPCIs are exempt from tax on rental income from buildings constructed for professional use, as well as dividends and interest received.

Other Corporate Taxes

Registration duties between 1% to 6% 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 (6%). A flat rate of MAD 200 is also applicable to specific operations and conventions. The acquisition of real property is subject to a 1% real estate tax.

Legal entities conducting business activities in Morocco are subject to a business tax based on the rental value of buildings, premises, and other assets used for the business. This tax is levied at rates of 10%, 20%, or 30% of the rental value, depending on the nature of the entity's business.

Additionally, a municipal tax is imposed at a rate of 10.5% on the rental value of real estate assets located within urban districts, and at a rate of 6.5% on the rental value of real estate assets in the peripheral zones of urban districts.

A Payroll tax (called professional training tax) is imposed on the gross monthly remuneration of employees that are subject to social security contributions, at a rate of 1.6%. Morocco's mandatory social security regime is managed by the CNSS (Caisse Nationale de Sécurité Sociale). Employers' contributions are as follows: family allocation 6.40%; social allocation 8.60% (with a computation base capped at MAD 6,000); professional tax 1.60%; mandatory medical care 4.11%.

Other Domestic Resources

General Tax Administration

Country Comparison For Corporate Taxation

	Morocco	Middle East & North Africa	United States	Germany
Number of Payments of Taxes per Year	6.0	20.8	10.6	9.0
Time Taken For Administrative Formalities (Hours)	155.0	204.0	175.0	218.0
Total Share of Taxes (% of Profit)	45.8	32.1	36.6	48.8

Source: Doing Business, Latest available data.

Individual Taxes

Tax Rate

Progressive income tax	From 0 to 38%
Up to MAD 30,000	0%
From MAD 30,001 to 50,000	10%
From MAD 50,001 to 60,000	20%
From MAD 60,001 to 80,000	30%
From MAD 80,001 to 180,000	34%
Above MAD 180,000	38%

Allowable Deductions and Tax Credits

The deductions from gross salary concern mainly social security contributions, retirement contributions, and a lump-sum deduction equal to 25% of the gross salary for incomes not exceeding MAD 78,000 (with a ceiling of MAD 35,000 per year).
The deduction applicable to pensions and life annuities is set at 70% of the gross taxable amount not exceeding MAD 168,000.

Charitable contributions are deductible if granted to organisms and societies expressly provided by the tax law. Loan interest related to the acquisition of a main house is tax deductible, up to a limit of 10% of the taxable global revenue.

Certain indemnities such as dismissal indemnity, compensation for voluntary departure, and compensation for damages awarded in the event of dismissal are exempt from taxation up to a maximum limit of MAD 1 million. However, if an individual receives multiple indemnities, the combined total amount of such indemnities exempted from income tax cannot surpass the aforementioned limit of 1 million.

Professional expenses incurred in the operation of the business are generally deductible unless specifically excluded. The cap on professional expenses deductible from gross annual taxable income has been raised from MAD 30,000 to MAD 35,000 for individuals whose gross annual taxable income does not exceed MAD 78,000. For those with a gross annual taxable income exceeding MAD 78,000, the deduction rate is set at 25%, up to a limit of MAD 35,000. Additionally, the deduction for pensions and life annuities has been increased from 60% to 70% on the gross taxable amount not exceeding MAD 168,000.

Special Expatriate Tax Regime

Individuals with their main homes in Morocco are taxed on the totality of their incomes. Non-resident individuals are taxed only on Moroccan-sourced income.
There are no special regimes for expatriates (unless a double taxation treaty applies).

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed

List of double taxation treaties signed by Morocco

Withholding Taxes

Dividends paid to a resident company are not subject to withholding tax. A 12.5% withholding tax rate applies to dividends paid to a resident individual, while the rate for a nonresident company or individual is 10%.
Interest paid to a resident company is subject to a 20% withholding tax. A 30% withholding tax applies to interest paid to a resident individual. Interest paid on a loan from a nonresident is subject to a 10% withholding tax, unless reduced by an applicable tax treaty. Interest on loans granted by a nonresident for 10 years or more is exempt from withholding tax.
Royalties paid to a resident are exempt from withholding tax, while royalties paid to a nonresident are subject to a 10% withholding tax.
The rates may vary according to specific tax treaties.