In brief: Morocco is progressively reducing the withholding tax rate on dividends from 15% (pre-2023) to 10% by 2026. The rate is 11.25% in 2025. Dividends between Corporate Tax-liable companies are exempt, subject to providing a share ownership certificate.
Withholding Tax Rate on Dividends: What Changed in 2024
The 2024 Finance Bill in Morocco (Finance Law 2024) did not introduce any changes to the withholding tax rates on dividends in Morocco.
The changes implemented during this fiscal year will continue to produce their effects for fiscal years 2025 and beyond. However, the 2025 Finance Law eliminated the taxation based on the year the profits were earned. Starting in 2025, dividends paid by a company are subject to the rate in effect during the year of distribution.
That said, since the 2023 Finance Law, a series of reforms to the tax system have affected the withholding tax on dividends in Morocco. Certain enacted provisions have fundamentally changed the tax landscape as it was long known.
In 2023, the Moroccan tax landscape underwent significant changes, particularly regarding the withholding tax on dividends. This tax measure is of critical importance to investors and businesses, as it directly affects the return on equity investments and the management of corporate profits. The 2023 Finance Law introduced a progressive reduction of the withholding tax on dividends.
In this article, we review in detail the implications of these changes and the current status of the rates that apply from 2023 through 2026.
Aimed at investors, business owners, and finance professionals, this guide serves as a reference tool for navigating the Moroccan tax framework.
—
Understanding the Withholding Tax on Dividends
The withholding tax on dividends is a tax mechanism for taxing profits that a company distributes to its shareholders.
The distributing company must withhold and pay this tax to the State before the shareholders even receive their share.
The purpose of this withholding is to simplify the collection of tax on investment income. As such, this mechanism ensures fair and efficient tax collection.
Progressive Reduction of the Withholding Tax Rate on Dividends — Standard Regime
The year 2023 marks an important turning point in dividend taxation in Morocco. This Finance Law introduced new withholding tax rates on dividends. This rate revision is part of an effort to adapt to current economic realities, thereby offering a more attractive tax framework for investors and businesses.
Accordingly, until 2022, the corporate tax withholding rate on dividends in Morocco was 15%.
However, dividends paid by a company subject to Corporate Tax to another company subject to Corporate Tax are exempt. To benefit from this exemption, the parent company must provide the distributing company with a certificate of share ownership. The distributing company must attach this certificate to its tax return.
This measure particularly benefits holding companies in Morocco that receive dividends from their subsidiaries.
Rate Evolution
- 2023: The withholding tax rate on dividends is set at 13.75%.
- 2024: A further reduction is planned, lowering the rate to 12.5%.
- 2025: The rate continues to decrease, reaching 11.25%.
- 2026: Finally, the rate will be reduced to 10%, marking a significant decrease from the initial rate of 15%.
The following table summarizes the evolution that will lead to a rate of 10% (instead of 15% before the reform):
| Gross income amount | Current rate in effect | 2023 Finance Bill Proposal | |||
| 2022 | 2023 | 2024 | 2025 | 2026 | |
| Applicable rate | 15% | 13.75% | 12.5% | 11.25% | 10% |
The purpose of this provision is to mitigate the impact of higher Corporate Tax rates for certain companies.
Special Regime for REITs (OPCI)
REITs (OPCI) currently benefit from:
- First, full exemption from Corporate Tax;
- Second, taxation with a 60% allowance on their dividends for investor shareholders;
- Third, deferral of Corporate Tax or Income Tax payment on net capital gains or real estate profits realized upon the transfer of properties to these entities;
- Finally, a 50% tax reduction upon the subsequent sale of shares received in exchange for said contribution.
This tax incentive was put in place to support REITs during their initial launch phase.
Starting in 2023, the 2023 Finance Bill proposes:
- First, the elimination of the 60% allowance applied to dividends distributed by REITs;
- Second, the elimination of the 50% tax reduction on capital gains realized upon the contribution of real estate to REITs.
These measures apply to profits distributed by REITs from fiscal years beginning on or after January 1, 2023.
Dividends Paid by Companies Located in the CFC and Industrial Acceleration Zones
In 2022, companies located (1) in the Casablanca Finance City zone and (2) in Industrial Acceleration Zones benefited from a permanent exemption from the withholding tax on dividends. This exemption applied to corporate shareholders and also covered Moroccan-source dividends.
Starting in 2023, the 2023 Finance Bill proposes the elimination of this permanent exemption. Accordingly, the 2023 Finance Bill proposes limiting the application of the permanent withholding tax exemption to foreign-source dividends distributed to non-residents.
These measures apply to dividends and other similar participation income distributed from fiscal years beginning on or after January 1, 2023.
Impact of Double Taxation Treaties on Dividend Withholding
Morocco has signed double taxation treaties with over 60 countries, including France, Spain, the United Kingdom, Germany, the United Arab Emirates, and the United States. These treaties also affect the withholding tax on foreign service providers in Morocco. These treaties may reduce the withholding tax rate applicable to dividends paid to non-resident shareholders. Typically, the treaty rate ranges between 10% and 15%, depending on the percentage of shareholding and the specific provisions of each agreement.
For instance, under the Morocco-France double taxation treaty, the withholding tax rate on dividends may be reduced to 15% (or 10% for substantial shareholdings). The shareholder must provide the distributing company with the appropriate form certifying their tax residence in the treaty partner country. The distributing company then applies the reduced treaty rate and files the necessary documentation with the Moroccan tax administration.
Practical Considerations for Businesses
Companies distributing dividends should carefully assess the applicable withholding tax rate based on the shareholder’s tax residence, the relevant double taxation treaty, and the year of distribution. It is advisable to consult with a chartered accounting firm to ensure compliance with the current provisions and to properly document any treaty-based rate reduction. Failure to correctly apply the withholding tax can result in penalties and surcharges imposed by the Direction Generale des Impots (DGI).
Frequently Asked Questions
What is the current withholding tax rate on dividends in Morocco?
The withholding tax rate on dividends has been progressively reduced since 2023. It was 13.75% in 2023, 12.5% in 2024, 11.25% in 2025, and will reach 10% in 2026. Starting in 2025, the applicable rate is based on the year of distribution, not the year the profits were earned.
Are dividends between Moroccan companies subject to withholding tax?
Dividends paid by a company subject to Corporate Tax to another company subject to Corporate Tax are exempt from withholding tax. To benefit from this exemption, the parent company must provide the distributing company with a certificate of share ownership, which must be attached to the tax return.
How do double taxation treaties affect dividend withholding tax?
Double taxation treaties concluded by Morocco may reduce the standard withholding tax rate on dividends paid to non-resident shareholders, typically to between 10% and 15% depending on the shareholding percentage and the specific treaty provisions. For example, under the Morocco-France treaty, the rate may be reduced to 15% or 10% for substantial shareholdings. To benefit from the reduced rate, the non-resident shareholder must provide the distributing company with a certificate of tax residence in the treaty partner country, which is then filed with the Moroccan tax administration.
READ ALSO
