Key takeaway: Tax depreciation is one of the most significant deductible expenses for computing IS in Morocco. Art. 10-I-F-1° of the CGI provides for two methods — straight-line and declining balance — with specific rates by asset category. The passenger vehicle cap is set at MAD 400,000 tax-inclusive (2025 Finance Act). Depreciation not recorded in the accounts is permanently lost.
Tax Depreciation Principle (Art. 10-I-F-1°)
Depreciation is the accounting recognition of the irreversible decline in value of a fixed asset resulting from use, time, or technological obsolescence. For tax purposes, the depreciation charge is a deductible expense from IS taxable income, subject to compliance with the conditions set by Art. 10-I-F-1° of the CGI.
Deductibility Conditions
To be tax-deductible, depreciation must:
- Relate to an asset recorded on the balance sheet
- Correspond to an actual decline in value
- Be calculated using rates accepted by the tax authorities
- Be actually recorded in the accounts for the relevant fiscal year
- Not exceed the statutory caps (vehicles in particular)
Depreciable Base
The depreciable base is the cost of acquisition excluding recoverable VAT for purchased assets, or the cost of production for self-constructed assets. It includes the purchase price, ancillary costs (transport, installation, commissioning) and customs duties, but excludes recoverable VAT.
Straight-Line Depreciation (Default Method)
Straight-line (or constant) depreciation is the default method in Morocco. The annual charge is calculated by applying a fixed rate to the depreciable base. The rate is determined based on the expected useful life of the asset.
Standard Depreciation Rates
| Asset Category | Straight-Line Rate | Useful Life |
|---|---|---|
| Buildings | 4%–5% | 20–25 years |
| Fixtures and fittings | 5%–10% | 10–20 years |
| Industrial machinery and tools | 10% | 10 years |
| Transport equipment | 20%–25% | 4–5 years |
| Office furniture and equipment | 10%–15% | 6–10 years |
| Computer equipment | 20%–25% | 4–5 years |
| Software | 20%–33% | 3–5 years |
| Patents and licences | Based on title duration | Variable |
Note: these are standard rates accepted by the administration. Companies may apply different rates provided they can justify the useful life adopted.
Pro Rata Temporis Calculation
Depreciation is calculated pro rata temporis from the date the asset is put into service (not the acquisition date). For an asset commissioned on 1 July, the first-year charge corresponds to 6/12 of the annual charge.
Declining Balance Depreciation (Art. 10-III-A)
Declining balance depreciation allows for accelerated depreciation of new assets in the early years of use. It is reserved for new capital equipment, excluding buildings, passenger vehicles, and furniture.
Declining Balance Coefficients
The declining balance rate is obtained by multiplying the straight-line rate by a coefficient depending on the depreciation period:
| Depreciation Period | Coefficient |
|---|---|
| 3–4 years | 1.5 |
| 5–6 years | 2 |
| More than 6 years | 3 |
Calculation Method
- First year: declining balance rate applied to the depreciable base (pro rata temporis if commissioned during the year)
- Subsequent years: declining balance rate applied to the net book value (NBV) at the start of the fiscal year
- Switch to straight-line: when the declining balance charge becomes less than the straight-line charge calculated on the residual NBV and remaining period, switch to straight-line
Example: new industrial equipment acquired for MAD 500,000 (excl. VAT), 10-year life, straight-line rate 10%, coefficient 3, declining balance rate 30%.
| Year | NBV Start | Declining Balance Charge | NBV End |
|---|---|---|---|
| 1 | 500,000 | 150,000 | 350,000 |
| 2 | 350,000 | 105,000 | 245,000 |
| 3 | 245,000 | 73,500 | 171,500 |
| … | … | … | … |
Special Cases
Passenger Vehicle Cap: MAD 400,000 (Tax-Inclusive)
The depreciable base for passenger vehicles is capped at MAD 400,000 tax-inclusive (Art. 10-I-F-1°, as amended by the 2025 Finance Act). This cap also applies to leased vehicles.
For a vehicle acquired at MAD 600,000 (TI) and depreciated over 5 years:
- Deductible charge = 400,000 / 5 = MAD 80,000/year
- Non-deductible charge (add-back) = 200,000 / 5 = MAD 40,000/year
Start-Up Costs and Non-Values
Preliminary expenses (incorporation costs, capital increases, prospecting, pre-opening advertising) are amortisable over a maximum period of 5 years (Art. 10-I-F-1°). They are recorded as non-values on the balance sheet.
Unrecorded Depreciation: Permanent Loss
This is one of the strictest rules in Moroccan tax law: depreciation not recorded in the accounts for the fiscal year to which it relates is permanently lost (Art. 10-I-F-1°). It cannot be carried forward or recovered in a subsequent year.
Practical consequence: even if the company does not have a profitable result, it must record its depreciation to preserve future tax deduction rights. Deliberate omission of depreciation to “inflate” the result is a strategy to be avoided.
For a comprehensive review of your depreciation policy and identification of possible optimisations, our tax advisory team accompanies you in this strategic process.
Frequently Asked Questions
Can a second-hand asset be depreciated using the declining balance method?
No. Declining balance depreciation is reserved for new capital equipment (Art. 10-III-A of the CGI). Second-hand assets can only be depreciated on a straight-line basis, over their estimated remaining useful life.
How should a fully depreciated asset still in use be treated?
A fully depreciated asset remains on the balance sheet at its residual value (often a symbolic MAD 1) as long as it is in use. No additional depreciation charge is recorded. Upon disposal, the capital gain is calculated on the basis of the net book value (zero or near-zero).
Does the MAD 400,000 cap apply to commercial vehicles?
No. The cap applies only to passenger vehicles (touring cars). Commercial vehicles (trucks, vans, specialised vehicles) are not subject to this cap and are depreciated on their full acquisition cost.
Legal references:
- General Tax Code 2026 (PDF) — Art. 10-I-F-1° (depreciation), Art. 10-III-A (declining balance)
- Circular Note No. 735 — Commentary on 2026 Finance Act
- CGNC — Accounting depreciation standards
READ ALSO:
- Corporate Tax Rates Morocco 2026
- Taxable Income: From Accounting Profit to Tax Base
- Non-Deductible Expenses for Corporate Tax
- Deductible Provisions: Conditions and Risks
- Deductible Expenses for IS in Morocco
- Reportable Tax Deficit IS in Morocco
Need help optimising your depreciation policy? Contact Upsilon Consulting, a chartered accountancy firm in Casablanca, for a comprehensive review of your fixed assets.
