Taxation in Morocco | Upsilon Consulting

In brief: Taxation in Morocco is governed by the General Tax Code (CGI) and Law 47-06 on local taxation. The main taxes include Corporate Tax, Income Tax, VAT, and Registration Duties, complemented by local taxes and over 60 double taxation treaties.

Taxation in Morocco encompasses all the legal texts that impose a certain number of taxes on Moroccan taxpayers. The main sources of taxation in Morocco include:

First, the General Tax Code
Second, Law 47-06 on local taxation

In addition, certain tax rules may stem from administrative provisions, such as:

First, Circular 717 of the Tax Administration
Then, the various annual circulars

Moroccan taxation also relies on case law arising from court decisions.

Taxation in Morocco - The General Tax Code

The General Tax Code is a law setting out the tax provisions applicable in Morocco. This code covers the following taxes:

First, Corporate Tax (CT)
Second, Income Tax (IT)
Third, Value Added Tax (VAT)
Finally, Registration Duties (RD)

Let us analyse each of these components of Moroccan taxation below.

Corporate Tax (CT)

Corporate Tax is a tax that applies to company profits. This tax applies mandatorily to the profits of companies with the following legal forms:

LLC: Limited Liability Companies
PLC: Public Limited Companies

Furthermore, this tax may apply to other legal entities such as: for-profit associations and public establishments. Moreover, in certain cases, Corporate Tax may apply to cooperatives.

CT - Tax Base

Corporate Tax applies to the net income of the entity, meaning the excess of revenue for a fiscal year over expenses.

The taxable income of a company subject to Corporate Tax corresponds to:

Accounting profit determined according to Moroccan accounting rules;
Adjusted notably for non-taxable income and non-deductible expenses.

CT Rates

In addition, this tax is calculated according to a proportional scale: a single rate applies to the entirety of the profit depending on the bracket in which it falls. Certain business sectors may benefit from an exemption.

For more information, read: Corporate Tax in Morocco

Furthermore, the General Tax Code provides in certain cases for taxes applicable by way of withholding at source. Moroccan taxation provides, in terms of Corporate Tax:

First, a withholding tax on dividends;
Then, a withholding tax on interest paid;
Finally, a withholding tax on gross payments made abroad.

Income Tax in Morocco (IT)

Income Tax (IT) in Morocco applies to:

First, the profits of companies that are not subject to Corporate Tax. These include, notably, limited partnerships and general partnerships;
Second, the income of individuals.

In addition, Income Tax applies according to different rules depending on the income category. The following income categories are distinguished:

First, wage income, which is taxed by way of withholding at source by employers;
Second, real estate income and capital gains;
Third, income and capital gains from movable assets;
Fourth, agricultural income
Finally, professional income

Value Added Tax (VAT)

In Morocco, Value Added Tax (VAT) applies to the consumption of goods and services. Every trader, manufacturer, industrialist, or service provider must apply VAT ad valorem to their sales.

Despite its broad scope, certain transactions remain outside the scope of application. These include notably:

First, the agricultural sector
Then, civil transactions (with no commercial purpose)

The standard VAT rate is 20%. Certain reduced rates are also provided for (7%, 10%, 14%).

Furthermore, VAT is due according to a fractional payment model. Each trader settles the VAT collected, after deducting the VAT incurred on their purchases.

For more information, read: Value Added Tax in Morocco

In certain cases, the VAT credit may be refunded by the Administration. This includes, notably and non-exhaustively, the case of exporting companies.

Tax Incentives and Exemptions

Moroccan taxation offers a range of incentives designed to attract investment and promote specific sectors. Companies established in Industrial Acceleration Zones (formerly free zones) benefit from a total exemption from Corporate Tax during the first five years of operation, followed by a reduced rate of 20% thereafter. Casablanca Finance City status holders enjoy similar advantages. Service offshoring companies also benefit from a 5-year exemption followed by the standard rate. Export-oriented companies benefit from a total exemption from Corporate Tax on export turnover during the first five years, followed by a 50% reduction. Agricultural companies with turnover below 5 million dirhams remain exempt from Corporate Tax.

International Tax Treaties

Morocco has signed more than 60 double taxation treaties with countries around the world, including France, Spain, the United Kingdom, the United States, Canada, and the United Arab Emirates. These treaties aim to eliminate double taxation and prevent tax evasion. They typically provide for reduced withholding tax rates on dividends, interest, and royalties paid between the treaty countries. Understanding these treaties is essential for any company with cross-border operations in Morocco.

Taxation in Morocco - Local Taxes

In addition to the taxes provided for by the General Tax Code, Law 47-06 establishes additional duties collected by local authorities. These include notably:

Professional Tax

The professional tax (formerly the “patente”) is a local tax owed by all traders.

It applies to all forms of companies as well as branches. The professional tax base is the entire productive assets of the liable trader.

For more information, read: Professional Tax in Morocco

Communal Services Tax, a Component of Taxation in Morocco

The communal services tax in Morocco is a local tax that was established in 2018. It replaced the building tax.

The communal services tax applies on an annual basis. The public treasury handles its collection on behalf of municipalities.

The communal services tax applies to all built real estate of any nature. It also applies to other means of production falling under the professional tax.

For more information, read: Communal Services Tax

In addition, the Moroccan tax system includes other sector-specific local taxes, namely:

First, specific taxes for the hotel sector (read: Hotel Taxation in Morocco). These include in particular:

First, the beverage tax;
Second, the tourist tax;
Then, specific taxes for other business sectors:
First, the tax on undeveloped urban land;
Second, the tax on construction operations;
Third, the tax on subdivision operations;
Fourth, the tax on mineral and table waters;
Fifth, the tax on public passenger transport;
Finally, the tax on quarry product extraction.

Frequently Asked Questions

What are the main taxes in Morocco?

The main taxes in Morocco are Corporate Tax (CT) on company profits, Income Tax (IT) on individual and partnership income, Value Added Tax (VAT) on consumption of goods and services, and Registration Duties. These taxes are governed by the General Tax Code, while local taxes such as Professional Tax and Communal Services Tax fall under Law 47-06.

What is the standard VAT rate in Morocco?

The standard VAT rate in Morocco is 20%. However, reduced rates of 7%, 10%, and 14% apply to certain categories of goods and services. Some sectors, notably agriculture and civil transactions, remain outside the scope of VAT entirely.

What tax incentives are available for companies in Morocco?

Morocco offers several tax incentives, including total Corporate Tax exemption for five years for companies in Industrial Acceleration Zones, followed by a reduced 20% rate. Export-oriented companies benefit from a total CT exemption on export turnover for five years, then a 50% reduction. Agricultural companies with turnover below 5 million dirhams are also exempt from Corporate Tax.

How many double taxation treaties has Morocco signed?

Morocco has signed more than 60 double taxation treaties with countries including France, Spain, the United Kingdom, the United States, Canada, and the United Arab Emirates. These treaties aim to eliminate double taxation and typically provide for reduced withholding tax rates on dividends, interest, and royalties paid between treaty countries.

What corporate tax rate applies to your company? Try our interactive calculator to find the exact rate, minimum contribution and CSS based on your business activity and fiscal year.

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