In brief: Morocco taxes corporate profits based on territoriality. Companies with a registered office in Morocco pay IS on all profits. Foreign companies pay IS only on income from Moroccan assets, activities, or occasional transactions conducted in Morocco.
What are the rules governing the territoriality of corporate tax (IS)?
The territoriality of IS refers to the rules that apply to determine whether a company is liable for Corporate Tax based on its geographical situation.
The [General Tax Code (CGI)](/code-general-des-impots-cgi-2026-maroc/) stipulates that companies carrying out an activity in Morocco are subject to Corporate Tax. This taxation applies regardless of whether these companies have a registered office in Morocco or not.
Furthermore, this provision states that the tax applies to all:
- Income, profits, and revenues relating to assets they own in Morocco;
- Revenues and profits relating to the activity they carry out;
- Profit-making transactions they conduct in Morocco, even on an occasional basis;
Additionally, Corporate Tax may be due when a tax treaty grants the right to tax to Morocco.
Territoriality of IS - Companies with a Registered Office in Morocco
Having a registered office is the primary criterion for IS territoriality. A company with its registered office in Morocco is considered a “company incorporated under Moroccan law.”
IS therefore quite naturally applies to companies incorporated under Moroccan law. The tax applies to the entirety of the profits they earn. “Profits” means the difference between taxable revenue and deductible expenses.
Moreover, these companies must also pay IS on transactions carried out abroad. However, the territoriality rules for IS may depend on:
- The nature of the transactions;
- The status of the operator abroad;
They also depend on the presence or absence of a foreign establishment that qualifies as a permanent establishment.
Let us analyze the following two situations one by one:
- Transactions carried out in Morocco;
- Transactions carried out abroad.
First, Transactions Carried Out in Morocco
The IS territoriality rules stipulate that Corporate Tax for companies incorporated under Moroccan law applies to transactions carried out in Morocco.
This tax applies to the entire profit, including:
- Sales made by a company in Morocco;
- Services performed in Morocco;
- Sales made from Morocco to foreign countries (export of goods and services)
Example: A company with its registered office in Morocco that carries out exports must subject the profit from those exports to IS.
Any income originating from abroad that is not linked to a permanent establishment must be taxed in Morocco. The following examples (non-exhaustive) illustrate this:
- First, technical studies carried out by a Moroccan company for a foreign client;
- Second, technical assistance and labor services;
- Third, equipment rental abroad;
On the other hand, construction and assembly work carried out abroad is exempt from tax in Morocco. However, it may be subject to taxation in Morocco if a treaty so provides.
Next, Establishments Operated Abroad
Companies that have their registered office in Morocco and have a foreign permanent establishment are not subject to tax on the profits of that establishment. This rule applies subject to the provisions of tax treaties.
In this case, the following conditions must be verified:
- The permanent establishment must carry out the transaction using its own resources. If the Moroccan head office participates in the execution, transfer pricing rules must be applied;
- The sale or service must involve a complete commercial cycle of transactions carried out abroad.
It should be specified, however, that the following remain taxable in Morocco:
- Compensation for occasional services provided by the Moroccan company to its establishments abroad;
- The participation of these establishments in the head office expenses of the Moroccan company.
If the transactions do not constitute a complete cycle abroad, they remain subject to IS in Morocco.
Territoriality of IS - Companies without a Registered Office in Morocco
The IS territoriality rules consider these companies as foreign companies. However, in certain cases, the IS territoriality rules allow all or part of their income to be captured.
These companies will therefore be subject to taxation for:
- First, the ownership of assets in Morocco;
- Second, the conduct of a business activity in Morocco;
- Finally, the execution of occasional profit-making transactions in Morocco;
Furthermore, it should be recalled that certain gross income may be subject to tax in the form of withholding tax.
Frequently Asked Questions
What is the territoriality principle for corporate tax in Morocco?
The territoriality principle means that Morocco taxes only profits generated within its territory, regardless of the company’s nationality. Both resident and non-resident companies are subject to IS on income derived from activities carried out in Morocco, including through permanent establishments.
What constitutes a permanent establishment for tax purposes in Morocco?
Under Moroccan tax law, a permanent establishment includes a fixed place of business such as an office, branch, factory, warehouse, construction site, sales outlet, or purchasing counter. When a tax treaty exists, the treaty definition of permanent establishment takes precedence over domestic law.
Can an occasional transaction be taxed under IS in Morocco?
Yes, the territoriality rules specify that even occasional or one-off profit-making transactions carried out in Morocco are subject to corporate income tax. The transaction does not need to be habitual; a single profitable operation conducted within Moroccan territory can trigger IS liability.
IS Territoriality Rules Regarding Asset Ownership in Morocco
IS applies in this case on the basis of income and capital gains derived from the management or disposal of said assets.
It should be recalled that the application of this tax may occur either:
- Through a tax return filing
- In the form of withholding tax
It bears repeating that where different treaty provisions exist, they take precedence.
IS Territoriality Rules Regarding Business Activity in Morocco
A foreign company that has a permanent establishment in Morocco is subject to IS on the profits of that establishment.
A permanent establishment includes:
- A management or operational headquarters;
- A branch;
- An agency, a sales outlet;
- A construction or assembly site;
- A purchasing office or counter operated in Morocco. In this case, the resale must be made in the same condition in Morocco.
When a tax treaty exists, the provisions defining a permanent establishment take precedence.
Furthermore, it should be recalled that a foreign company is also subject to tax in Morocco if it:
- Carries out a transaction in Morocco
- As part of a complete commercial cycle
In this case, the absence of a permanent establishment is not sufficient to escape taxation.
Example: An online platform conducting dropshipping transactions from a Moroccan supplier to a Moroccan customer.
IS Territoriality Rules Regarding Occasional Profit-Making Transactions in Morocco
The IS territoriality rules specify that for a transaction to be subject to this tax, it does not need to be habitual. Even an occasional transaction remains subject to IS as long as it is profit-making in nature.
Is your company taxable in Morocco? Find out the applicable rate. Our Corporate Tax Rate Calculator tells you in seconds the rate, minimum contribution and SSC based on your net taxable profit.
READ ALSO
Territoriality Rules for IS in Morocco
Withholding Tax on Foreign Service Providers in Morocco
For expert guidance on IS territoriality, Salaheddine Yatim, Chartered Accountant at Upsilon Consulting, member of the OEC, can advise you.
