VAT in Morocco 2026: Rates, Exemptions & Rules

In brief: VAT in Morocco has a standard rate of 20% and a reduced rate of 10% since the completion of the 2024-2026 reform. The former 7% and 14% rates have been eliminated. VAT applies to commercial, industrial, and service transactions under the General Tax Code (CGI).

Value Added Tax (VAT) is a central element of taxation in Morocco, collected on the added value of goods and services at each stage of the production and distribution chain.

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VAT in Morocco - Current Regulations

VAT in Morocco is an ad valorem tax applicable to the sale of goods and services. Under Article 87 of the General Tax Code (CGI), VAT in Morocco applies to turnover from:

First, commercial and industrial operations (including crafts);
Second, services (including liberal professions);
Third, import transactions;
Generally, VAT applies to virtually all business turnover.

VAT in Morocco - Which Transactions Are Excluded from the Scope of Application?

The law excludes the following from the scope of VAT in Morocco:

First, agricultural operations;
Second, transactions of a non-industrial and non-commercial nature;
Third, transactions of a civil nature.

When a transaction is outside the scope of VAT, this means:

First, the business carrying it out must not charge VAT on its sales;
Second, it bears the VAT charged by its suppliers (recorded as an expense).

For more information on this topic,

Which Transactions Are VAT-Exempt?

There are generally two types of VAT exemptions:

VAT - Exemption Without the Right to Deduct

As with out-of-scope transactions, for transactions exempt without the right to deduct VAT:

First, the business carrying it out must not charge VAT on its sales; Second, it bears the VAT charged by its suppliers (recorded as an expense).

Examples: Bread, milk, raw sugar, packaged dates…

For more information, consult: Article 91 of the Moroccan General Tax Code.

VAT - Exemption With the Right to Deduct

In this case, the VAT exemption with the right to deduct means that:

First, the business carrying it out must not charge VAT on its sales;
Second, it does not bear the tax charged by its suppliers. Indeed, it can:

First, apply it against VAT collected on other taxable activities;
Second, benefit from the VAT suspension regime;
Third, benefit from a VAT refund.

What Does VAT Deduction Mean in Morocco?

VAT deduction means that taxable businesses and/or those exempt with the right to deduct can recover the VAT charged by their suppliers.

Indeed, a business must prepare a VAT return in which:

It totals the amount of tax collected from its customers;
It totals the amount of tax paid to its suppliers.

The VAT due equals the difference between the VAT invoiced and the deductible VAT (also called recoverable VAT).

Non-Deductible VAT in Morocco

Certain purchases do not, however, give the right to deduct VAT. These mainly include:

First, goods, products, materials, and services not used for business purposes (including non-business premises);
Second, passenger transport vehicles (except those used for public transport or collective staff transport); The exclusion also applies to diesel used in these vehicles;
Third, travel and entertainment expenses.

VAT Returns in Morocco

Persons liable for VAT in Morocco must file a return. This return must be filed:

Quarterly, if turnover is less than 1 million dirhams
Monthly, if turnover exceeds 1 million dirhams

This return is filed electronically on the SIMPL VAT portal.

Obligation to Maintain Accounts

Businesses subject to VAT must:

Maintain proper accounts in accordance with the standards in force in Morocco;
Issue valid invoices in accordance with the applicable provisions.

Upsilon Consulting has the expertise to help you manage your accounting and taxation in Morocco. Tax advice, compliance, and tax audits. Book an appointment to discuss your projects.

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What Are the VAT Rates in Morocco?

The standard VAT rate in Morocco is 20%.

In Morocco, VAT is characterized by a varied rate structure, tailored to different types of goods and services. There are mainly two rates: the standard rate and reduced rates.

The standard rate, generally applied to the majority of goods and services, is currently set at 20%.

However, for certain categories of products and services, such as basic food products, books, or certain hotel-related services, a reduced rate is applied.

As of 2026, following the reform initiated by the 2024 Finance Law, Morocco has only two VAT rates: the standard rate of 20% and the reduced rate of 10%. The former 7% and 14% rates have been progressively eliminated between 2024 and 2026. Products previously subject to these rates have been reclassified either as exempt (under Articles 91 or 92 of the CGI) or at the 10% reduced rate.

Specific Rates

Here is a table summarizing the VAT rates in Morocco in 2026:

Category of Goods/Services	VAT Rate in 2026
Accommodation and catering	10%
Banking and credit operations	10%
Sale of food or beverages for on-premises consumption	10%
Urban and road transport of passengers/goods	10%
Edible oils (except palm oil)	10%
Refined sugar, processed rice, cooking salt	10%
Renewable electrical energy	10%
Public water distribution	10%

Former rates eliminated: Pharmaceutical products are now exempt with the right to deduction (art. 92). School supplies, powdered milk, canned sardines, and household soap are exempt without the right to deduction (art. 91). Non-urban/non-road transport has moved to 20%. VAT in Morocco - Changes Introduced by the 2025 Finance Act and Their Objectives

The 2025 Finance Act in Morocco introduced substantial changes to taxation, particularly regarding VAT. The main objective of these changes is to modernize the tax system, make it more equitable, and support strategic sectors for the country’s economic and social development.

The main achievement of this reform is the convergence toward two VAT rates: a standard rate of 20% and a reduced rate of 10%, fully implemented by 2026. The former 7% and 14% rates have been progressively eliminated. This reform has simplified the VAT system while making it fairer and more transparent.

At the same time, the reform introduced VAT exemptions on essential goods such as pharmaceutical products (exempt with right to deduction under art. 92 since 01/01/2024) and school supplies (exempt without right to deduction under art. 91). These measures help reduce the cost of living, particularly for the most modest citizens.

Frequently Asked Questions

What is the standard VAT rate in Morocco?

The standard VAT rate in Morocco is 20%, applicable to most goods and services. The reform initiated by the 2024 Finance Law has been completed in 2026, converging toward two main rates: 20% (standard) and 10% (reduced). The former 7% and 14% rates have been eliminated.

How does VAT work for newly created companies in Morocco?

Newly created companies must register for VAT before commencing their activities. They can choose between the monthly and quarterly filing regime, depending on their projected turnover. Input VAT on investment and start-up costs is deductible from the first return.

Can a business recover VAT on all its purchases in Morocco?

Not all purchases give rise to VAT recovery. Certain expenses are excluded from the right to deduct, including passenger vehicles not used exclusively for professional purposes, entertainment expenses, and purchases made from suppliers who are not VAT-registered. Proper documentation is essential for all deductions claimed.

What are the penalties for late VAT filing in Morocco?

Late filing incurs a surcharge of 5% if the return is submitted within 30 days of the deadline, 15% if beyond 30 days, and 20% in case of non-filing. Late payment interest of 0.50% per month also applies from the due date.

In order to tax services consumed in Morocco, services provided remotely by non-resident companies must now be subject to VAT in Morocco.

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General Operation of VAT in Morocco

The VAT system in Morocco is a central element of Moroccan taxation, affecting a wide range of commercial and service transactions. Understanding how it works is crucial for businesses, consumers, and tax professionals.

Operating Principle: VAT is an indirect consumption tax. It is levied at each stage of the production and distribution chain, but it is the end consumer who bears the tax burden. Businesses act as tax collectors on behalf of the State.
Collection and Filing: Businesses record the VAT collected on their sales and the VAT paid on their purchases. They must periodically declare the difference between these two amounts to the tax administration. If the VAT collected exceeds the deductible VAT, the difference is paid to the State. In the opposite case, the business may have a VAT credit.
Deduction Rules: Businesses can deduct the VAT paid on their professional purchases from the VAT collected on their sales. This deduction is however subject to certain conditions and restrictions, particularly regarding goods and services excluded from the right to deduct.
Exemptions and Reduced Rates: Certain transactions are exempt from VAT or subject to reduced rates. These exemptions and reduced rates generally aim to lighten the tax burden on essential goods or to encourage specific economic activities.
Updates and Reforms: As previously noted, the 2025 Finance Act maintained significant changes to the VAT system in Morocco, including the harmonization of rates and the exemption of certain products and services, reflecting the government’s efforts toward a more equitable and efficient tax system.

The VAT system in Morocco is therefore a sophisticated mechanism, involving various rules and procedures. A thorough understanding of it is essential to ensure tax compliance and optimize business operations.

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Calculating VAT for Businesses in Morocco

Calculating VAT is an essential task for businesses operating in Morocco. It involves determining the amount of tax applicable to commercial transactions, based on the different VAT rates. For businesses, the calculation involves two main steps: calculating the VAT collected on sales and calculating the deductible VAT on purchases.

Calculating VAT Collected on Sales: For each sale of goods or services, the business must apply the appropriate VAT rate. For example, if a business sells a product for 1,000 dirhams with a 20% VAT rate, the VAT collected will be 200 dirhams. The total price invoiced to the customer will therefore be 1,200 dirhams.
Calculating Deductible VAT on Purchases: Businesses can deduct the VAT paid on their purchases (raw materials, supplies, etc.) from the VAT collected on their sales. If the business paid 150 dirhams of VAT on its purchases, it can deduct this amount from the VAT collected on its sales.
Filing and Payment: The difference between the VAT collected and the deductible VAT is the amount owed to the tax administration. If the VAT collected exceeds the deductible VAT, the business must pay the difference. In the opposite case, it may benefit from a VAT credit.

Businesses must maintain accurate records of their transactions and understand the applicable rates and deduction rules to ensure compliance and avoid penalties.

Contact Upsilon Consulting

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Tools

Morocco VAT Qualification 2026 — Free Tool: Determine in a few clicks whether your transaction is out of scope, exempt, or taxable, and at which rate.