In brief: Since 1 January 2024, all pharmaceutical products are exempt from VAT with right to deduction in Morocco (article 92-I-19° of the CGI, CN 735). This major reform replaces the former fragmented regime where only certain medicines benefited from an exemption or a reduced rate. Raw materials and pharmaceutical inputs are now subject to the standard rate of 20%. Check the VAT regime applicable to your activity with our VAT qualification tool.
Before the reform: a fragmented regime
Before the entry into force of the 2024 Finance Law, the VAT regime applicable to pharmaceutical products in Morocco was complex and fragmented:
- Certain medicines were subject to the reduced rate of 7% (former rate, now abolished);
- Anti-cancer drugs, antivirals for hepatitis B and C, diabetes treatments, asthma treatments, cardiovascular disease treatments, AIDS treatments, meningitis treatments, vaccines, fertility treatments and multiple sclerosis treatments were exempt with right to deduction;
- Medicines with a public sale price exceeding 588 MAD also benefited from exemption with right to deduction.
This multi-tiered regime created inequalities of treatment between pathologies and complicated the tax management of pharmacies and laboratories.
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The 2024 Finance Law reform: full exemption
The new principle (CN 735)
The 2024 Finance Law, commented upon in Circular Note 735, established a full exemption with right to deduction for all pharmaceutical products, both domestically and at import, effective from 1 January 2024.
This exemption is set out in article 92-I-19° of the General Tax Code. It constitutes one of the most significant reforms of the VAT component of the 2024 Finance Law, as part of the convergence policy towards two main rates (20% standard and 10% reduced).
Application conditions
To benefit from the exemption, pharmaceutical products must meet the following conditions (CN 735):
- Regulatory compliance: products must comply with the legislative and regulatory standards in force in Morocco;
- Medical use: they must be used in human or veterinary medicine for curative or preventive purposes;
- Distribution channel: they must be sold exclusively in pharmacies or by duly authorised persons.
These three conditions are cumulative. A product that does not meet all of them cannot benefit from the exemption.
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Excluded products: parapharmaceuticals
Parapharmaceutical products are expressly excluded from the exemption. They remain subject to VAT in Morocco at the rate applicable according to their nature.
The distinction between a pharmaceutical product and a parapharmaceutical product rests on the regulatory qualification of the product: a pharmaceutical product is subject to a marketing authorisation (MA) and corresponds to a precise therapeutic indication, while a parapharmaceutical product (dietary supplements, care cosmetics, comfort devices) does not have a curative or preventive purpose in the medical sense.
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Inputs and raw materials: moved to the 20% rate
The FL 2024 reform had a significant collateral effect: raw materials and inputs used in the manufacture of pharmaceutical products, which previously benefited from the reduced rate of 7%, are now subject to the standard rate of 20%.
The abolition of the former 7% rate as part of the convergence towards two rates (20% and 10%) led to this reclassification. For pharmaceutical laboratories, this means that VAT on raw material purchases is higher than before, while sales of finished products are exempt.
This gap between input VAT at 20% and exempt downstream sales mechanically generates a structural VAT credit for manufacturers and distributors of pharmaceutical products.
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VAT credit and refund (article 103)
Exemption with right to deduction (article 92) means that businesses in the pharmaceutical sector:
- Do not collect VAT on their sales of pharmaceutical products;
- Retain the right to deduct the VAT borne on their purchases (raw materials at 20%, equipment, services).
The VAT credit resulting from this situation entitles the holder to a refund under the conditions set out in article 103-1° of the CGI. The VAT credit refund covers the credit arising from 1 January 2024 in respect of sales of pharmaceutical products exempt with right to deduction.
Businesses concerned must ensure proper bookkeeping and retain all supporting documents for deductible VAT to compile their refund files.
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Blood and derivatives: extension by FL 2026
The 2026 Finance Law, commented upon in Circular Note 737, extended the exemption with right to deduction to blood and its derivatives complying with standards in force, used in medicine for curative or preventive purposes (article 92-I-19° and article 123-37° of the CGI).
This extension, effective from 1 January 2026, completes the logic of the 2024 reform by covering all therapeutic products of biological origin. Application conditions are similar to those for pharmaceutical products: regulatory compliance, curative or preventive medical use.
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Reference texts
- Article 92-I-19° of the CGI — WRD exemption for pharmaceutical products: General Tax Code 2026
- Circular Note 735 (FL 2024) — Commentary on the full exemption
- Circular Note 737 (FL 2026) — Extension to blood and derivatives
- Article 103 of the CGI — VAT credit refund
- Circular Note 717, Volume 2 — Former regime (partially obsolete on this point)
VAT Qualification Morocco 2026 — Free tool: Determine in just a few clicks whether your transaction is outside scope, exempt or taxable, and at what rate.
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FAQ
Are medicines subject to VAT in Morocco in 2026?
No. Since 1 January 2024, all pharmaceutical products complying with regulatory standards, used in medicine for curative or preventive purposes and sold in pharmacies, are exempt from VAT with right to deduction (article 92-I-19° of the CGI). This exemption applies to both locally manufactured and imported medicines.
Do parapharmaceutical products benefit from the same exemption?
No. Parapharmaceutical products (dietary supplements, care cosmetics, comfort devices) are expressly excluded from the exemption provided for in article 92 of the CGI. They remain subject to VAT at the rate applicable to their category, generally the standard rate of 20%.
How do pharmaceutical laboratories recover VAT on their purchases?
Laboratories and distributors of pharmaceutical products benefit from the exemption with right to deduction: they can deduct the VAT paid upstream (raw materials at 20%, equipment, services). The resulting VAT credit is refundable under the conditions of article 103-1° of the CGI. The refund application is made via the SIMPL-TVA platform.
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