Skip to content

Morocco

Country Name: Kingdom of Morocco
Currency: Moroccan Dirham (MAD)
Primary Tax Authority: Directorate General of Taxes (Direction Générale des Impôts, DGI), Ministry of Economy and Finance
Key Legislation:

  • General Tax Code (Code Général des Impôts)
  • Investment Charter
  • Value Added Tax (VAT) Law
  • Customs Code

Fiscal Authority Allocation

Centralized Fiscal System:
Morocco operates a centralized tax system. The Directorate General of Taxes (DGI), under the Ministry of Economy and Finance, administers and collects taxes, including corporate income tax (CIT), personal income tax (PIT), value-added tax (VAT), and other indirect taxes. Local taxes are also imposed at the municipal level.

Corporate Income Tax (CIT)

Standard Rates:
Morocco applies a tiered corporate income tax system based on income brackets:

  • Up to MAD 300,000: 10%
  • MAD 300,001 to MAD 1,000,000: 20%
  • Above MAD 1,000,000: 31%
  • Financial Institutions: 37%

Corporate Forms and Taxation:

  1. Resident Companies: Taxed on worldwide income.
  2. Non-Resident Companies: Taxed only on Moroccan-sourced income.

Exemptions and Incentives:

  • Investment Incentives: Companies investing in key sectors such as industry, renewable energy, agriculture, and tourism can benefit from reduced CIT rates, tax holidays, and customs duty exemptions for up to five years.
  • Free Trade Zones (FTZs): Companies in Morocco’s FTZs, such as the Tangier Med Zone, benefit from a full CIT exemption for the first five years, followed by a reduced rate of 8.75% for the next 20 years.

Goods and Services Tax (GST) / Value-Added Tax (VAT)

Standard Rate: 20%
Morocco imposes VAT at a standard rate of 20% on most goods and services. VAT is applied to both domestic production and imports.

Reduced Rates:
There are reduced VAT rates of 10% and 14% for specific sectors, including banking, transport, and basic goods like water and electricity.

Exemptions:
Certain goods and services, such as basic foodstuffs, healthcare, and education, are VAT-exempt. Exports are zero-rated, allowing businesses to reclaim VAT on inputs used in producing export goods.

Personal Income Tax (PIT)

Progressive Rates:
Morocco applies a progressive personal income tax system to residents’ worldwide income and non-residents’ Morocco-sourced income.

Resident Tax Rates for 2023 (Annual Income):

  • Up to MAD 30,000: 0%
  • MAD 30,001 to MAD 50,000: 10%
  • MAD 50,001 to MAD 60,000: 20%
  • MAD 60,001 to MAD 80,000: 30%
  • MAD 80,001 to MAD 180,000: 34%
  • Above MAD 180,000: 38%

Non-Resident Tax Rate:
Non-residents are taxed at a flat rate of 20% on Morocco-sourced income.

Deductions and Allowances:
Taxpayers can deduct expenses for social security contributions, healthcare costs, and certain other personal expenses.

Additional Mandatory Contributions

Social Security Contributions:
Employers and employees must contribute to Morocco’s social security system, which covers pensions, healthcare, and unemployment benefits.

  • Employer Contribution: 16.24% of gross salary.
  • Employee Contribution: 6.74% of gross salary.

Withholding Taxes

  • Dividends: 15%
  • Interest: 10%
  • Royalties: 10%
    Morocco imposes withholding taxes on payments to non-residents. Withholding tax rates may be reduced under Morocco’s double taxation agreements (DTAs).

Transfer Pricing Rules

Morocco follows OECD guidelines for transfer pricing. Transactions between related parties must adhere to the arm’s-length principle. Companies must maintain transfer pricing documentation for cross-border transactions.

Special Tax Regimes

  • Free Trade Zones (FTZs): Companies operating in FTZs enjoy full CIT exemptions for the first five years, followed by reduced CIT rates. These zones also offer VAT and customs duty exemptions.
  • Investment Incentives: Morocco’s Investment Charter provides tax exemptions and reductions to companies in key sectors like manufacturing, renewable energy, tourism, and agriculture. Tax incentives include reduced CIT rates, VAT deferrals, and customs duty exemptions.

Other Taxes

  • Customs Duties: Morocco levies customs duties on imported goods, with rates varying from 2.5% to 40% depending on the type of goods. Goods destined for export or re-export through FTZs are exempt.
  • Excise Taxes: Excise taxes apply to specific goods, such as alcohol, tobacco, and petroleum products, with rates varying depending on the product.
  • Urban Property Tax: A tax levied on property owners, with rates depending on the location and use of the property (residential or commercial).

Double Taxation Agreements (DTAs)

Morocco has signed over 50 double taxation agreements (DTAs) with countries including France, Spain, the United States, and China. These agreements help reduce withholding taxes on cross-border income and prevent the double taxation of income earned in Morocco and other jurisdictions.

Local Taxes

Local governments in Morocco may impose municipal taxes, including the Urban Property Tax and business license fees. However, most major taxes, such as CIT, PIT, and VAT, are centrally administered by the Directorate General of Taxes (DGI).

Compliance and Reporting

Annual Filing:
Corporate tax returns must be filed by March 31st of the following year. Personal income tax returns are due by April 30th. VAT returns are filed monthly or quarterly depending on the size of the business.

Penalties for Late Filing:
Penalties for late filing include fines and interest on unpaid taxes. The standard penalty is 5% of the unpaid amount for the first month, and 0.5% per month thereafter.

Recent Developments

Green Energy Investments:
Morocco is a leader in renewable energy in Africa and offers tax incentives for investments in green energy projects such as wind and solar power. Companies investing in these sectors benefit from CIT exemptions, VAT exemptions on equipment imports, and customs duty reductions.

Digital Economy Taxation:
As part of its broader efforts to modernize its economy, Morocco is introducing measures to tax the digital economy, including e-commerce and online services. The government has been exploring ways to tax digital service providers and cross-border online businesses.

Investment Charter Update:
In recent years, Morocco has updated its Investment Charter to attract more foreign direct investment (FDI). The updated charter provides additional tax benefits and legal protections for investors in priority sectors such as automotive, aerospace, and renewable energy.

Subscribe to my free newsletter for regular updates on law, taxation and business worldwide.

Tags: