MoroccoTax Obligations Detailed

In Morocco, employers face various tax obligations, including corporate income tax, social security contributions, payroll tax, and individual income tax withholding.

Corporate Income Tax (CIT)

• Rates: CIT rates are progressive and vary based on taxable income. For 2025, the rates are:
  • 17.5% for income up to MAD 300,000
  • 20% for income between MAD 300,001 and MAD 1,000,000
  • 22.75% for income between MAD 1,000,001 and MAD 100,000,000
  • 34% for income exceeding MAD 100,000,001.
• Tax Year: The tax year is the calendar year (January 1st to December 31st).
• Filing and Payment: CIT returns must be filed and paid within three months of the fiscal year's end. Payments are typically made in 12 equal monthly installments.

Social Security Contributions

• Both employers and employees contribute to social security. The employer withholds the employee's portion and remits it along with the employer's share.
• The combined rate for employer and employee contributions generally falls between 28.76% and 33.76% of the employee's salary. It comprises contributions toward short-term benefits (1.05%), long-term benefits (7.93%), and health insurance (4.11%).
• The Employer contributions include short-term social benefits (1.05%), long-term social benefits (7.93%), and health insurance (4.11%), and a professional training tax (1.6%). The percentage for the professional training tax (1.6%) is calculated using the monthly salary of employees subject to social security. In addition, for companies that have annual profits ranging from MAD 5 million to MAD 40 million, a social solidarity contribution tax is 2.5%. The amount is 3.5% for profits over MAD 40 million.

Payroll Tax (Vocational Training Tax)

• Employers pay a payroll tax at a rate of 1.6% of the gross monthly remuneration of employees subject to social security contributions.

Individual Income Tax (IIT) Withholding

• Employers withhold IIT from employees' salaries monthly and remit it to the tax authorities.

• Deadline: Payment is due by the 30th of the following month (e.g., October payroll's IIT is due by November 30th).

• Rates: As of 2025 (pending approval), IIT rates are progressive and range from 0% to 37%.

• Exemption Threshold: The annual exemption threshold increased from MAD 30,000 to MAD 40,000,

• Brackets:

  • 0% for annual income up to MAD 40,000
  • 10% for annual income between MAD 40,001 and MAD 60,000
  • 20% for annual income between MAD 60,001 and MAD 80,000
  • 30% for annual income between MAD 80,001 and MAD 100,000
  • 34% for annual income between MAD 100,001 and MAD 180,000
  • 37% for annual income above MAD 180,001

Other Considerations

• A social solidarity contribution tax of 1.5% to 5% applies to companies with taxable income above MAD 1 million for the years 2024 and 2025. The rate increases based on income brackets.
• There's a minimum CIT payable, ensuring companies pay at least 0.25% of their turnover and other income.

Please note that this information is current as of February 5th, 2025, and may be subject to change. Consulting with a tax professional is recommended for the most up-to-date and specific advice.

In Morocco, employee tax deductions are calculated based on a progressive income tax system with various deductions and allowances applicable.

Income Tax

• Tax Rates (Effective January 1, 2025): Morocco's income tax system is progressive, meaning higher earners pay higher percentages. The updated brackets and rates are as follows:

  • MAD 0 to MAD 40,000: 0%
  • MAD 40,001 to MAD 60,000: 10%
  • MAD 60,001 to MAD 80,000: 20%
  • MAD 80,001 to MAD 100,000: 30%
  • MAD 100,001 to MAD 180,000: 34%
  • MAD 180,001 and above: 37%

• Example: An employee earning MAD 90,000 annually would fall into several tax brackets. The first MAD 40,000 would be tax-free. The next MAD 20,000 (up to MAD 60,000) would be taxed at 10%, totaling MAD 2,000. The next MAD 20,000 (up to MAD 80,000) would be taxed at 20%, adding another MAD 4,000. The remaining MAD 10,000 would be taxed at 30%, resulting in MAD 3,000 tax. Their total annual income tax would be MAD 9,000.

Social Security Contributions

• Employees in Morocco contribute to the Caisse Nationale de Sécurité Sociale (CNSS), the national social security fund. The contribution amounts are based on the employee's salary and cover various benefits, including healthcare, retirement, and family allowances.

Other Deductions

• Professional Expenses Allowance: Employees can deduct professional expenses. If annual taxable income is MAD 78,000 or less, the maximum deduction is MAD 35,000. If annual taxable income is over MAD 78,000, the deduction is 25% of income, also capped at MAD 35,000.
• Pension Contributions: Contributions to a qualifying pension plan are often deductible.
• Family Allowance: An annual deduction of MAD 500 per dependent is available, up to a maximum annual deduction of MAD 3,000 (Effective January 1, 2025).

Exemptions

• New Hires: Salaries paid to newly recruited employees hired between January 1, 2021, and December 31, 2026, are exempt from income tax for the first 36 months of employment. This applies to employees under 35 hired under an open-ended contract.
• Internship Allowance: Private sector interns are exempt from tax on their allowance for 12 months (Effective January 1, 2025).

Important Considerations

• Tax Year: The tax year in Morocco aligns with the calendar year.
• Filing: Employers typically withhold income tax and social security contributions from employee salaries. Employees must file an annual tax return if required.

This information is current as of February 5, 2025, and might be subject to change. It's important to consult official government sources or a qualified tax advisor for the most up-to-date information and personalized advice.

In Morocco, the Value Added Tax (VAT), known locally as Taxe sur la Valeur Ajoutée (TVA), is levied on most commercial transactions.

VAT Rates

• Standard Rate: 20% (as of January 1, 2025). This applies to goods and services not subject to reduced rates or exemptions.
• Reduced Rates: 7%, 10%, and 14%. These rates apply to specific goods and services as outlined below.
  • 7%: Water, sugar, medicines, and pharmaceuticals.
  • 10%: Financial services, petroleum products, hotel and restaurant sales (excluding alcohol).
  • 14%: Domestic transportation services (excluding train), and electricity.
• Zero Rate (0%): Exports of goods and services; Agricultural supplies. Certain investment goods may also qualify for the zero rate under specific conditions.
• Exemptions: Some basic food items (bread, flour, milk, fish, meat), books and newspapers, and insurance business transactions are exempt.

VAT Registration

• Threshold: There is no registration threshold. Any business making taxable supplies in Morocco, regardless of turnover, must register for VAT. This includes non-resident businesses.
• Non-Resident Businesses: Those engaging in taxable transactions usually must appoint a fiscal representative. However, the reverse-charge mechanism allows Moroccan customers to self-account for VAT if the foreign supplier hasn't appointed a fiscal representative.

VAT Filing and Payment

• Returns: VAT returns are typically filed monthly. Businesses with annual turnover below MAD 1 million, and non-resident businesses may be eligible to file quarterly.
• Deadline: Returns and payments are due by the 20th of the month following the reporting period. Filing is done electronically.
• Penalties: Late payment penalties are 5% after 30 days and an additional 15% after 60 days.

VAT Invoices

Invoices must include:

• Supplier's name, address, and VAT number
• Invoice date and unique number
• Customer's name, address, and VAT number (if applicable)
• Description of goods/services, quantities, and unit prices
• VAT amount and rate for each item
• Net amount, gross amount (including VAT) and the currency used.
• For foreign currency transactions, both the original currency and the equivalent amount in Moroccan Dirham (MAD) must be shown along with the applied exchange rate.

Recent Developments and Future Changes

The information below is valid as of today, February 5, 2025 and might change in the future

It is important to be aware of potential upcoming changes to VAT regulations. The Moroccan government periodically adjusts VAT rates and regulations, impacting businesses operating in the country. Consult official sources and tax advisors for the latest information. For example, some sources indicate potential VAT rate adjustments occurring in stages between 2024 and 2026, so verification is recommended.

Morocco offers a range of tax incentives for businesses and individuals. As of February 5, 2025, these incentives aim to stimulate investment, boost specific sectors, and promote economic growth. Please note that the information below is current as of today's date and may be subject to change.

Corporate Tax Incentives

• Newly Incorporated Companies: A five-year exemption from business tax is available for newly established companies.
• Tourism Sector: Companies operating in the tourism sector can benefit from a corporate income tax exemption for the first five years of operation, subject to fulfilling specific conditions. A temporary exemption on profits linked to export turnover is also available for five years, starting from the first export operation.
• Industrial Sector: Industrial companies engaged in specified activities or outsourcing operations, whether inside or outside industrial zones, benefit from a full corporate income tax exemption for the first five years of operation.
• Sports Companies: Sports companies established under Law n° 30-09 (promulgated by Dahir n° 1-10-150 of 24 August 2010) are exempt from corporate income tax for five years, commencing from their first operating year.
• Capital Risk Companies: These companies are exempt from corporate income tax on profits earned within their defined scope of activities, relating to investments in and divestments from other companies' shares.
• Casablanca Finance City (CFC): CFC-registered entities receive a five-year corporate income tax exemption on their export turnover, effective from the date of CFC status acquisition.
• Free Trade Zones: Businesses operating within designated Free Trade Zones are eligible for specific tax benefits.
• Industrial Acceleration Zones: Several cities host industrial acceleration zones offering exemptions from business tax for the first 15 years and corporate income tax for the first five years.
• Investment Incentives (2023-2026): Companies established from January 1, 2023, investing a minimum of MAD 1.5 million over five years under an agreement with the Moroccan government can benefit from a capped tax rate of 20% for fiscal years beginning on or after January 1, 2023.

Individual Tax Incentives

• Pension Exemptions: Pensions arising from contracts lasting at least eight years, where contributions haven't been deducted from taxable income, are exempt from income tax. This eight-year requirement is waived in cases of death or disability.
• Internship Allowance Exemption: Private sector interns can receive tax-exempt internship allowances for 12 months. Trainees in indefinite positions with gross monthly salaries up to MAD 10,000.00 are also eligible for a 12-month exemption, subject to certain conditions.
• Foreign Pension Income: Residents can benefit from an 80% income tax reduction on repatriated foreign pensions.
• Family Allowance Deduction: An annual deduction of MAD 500.00 per dependent, up to a maximum of MAD 3,000.00, is available.
• Home Loan Interest Deduction: Loan interest on primary residence purchases is deductible, capped at 10% of taxable income.

Other Tax Incentives

• VAT on Renewable Energy: A reduced VAT rate applies to renewable energy sales. As of January 1, 2025, the rate is 10%.

General Tax Information

• Corporate Income Tax: The standard corporate income tax rate is generally 20% for the period 2023-2026 (for eligible companies). A social solidarity contribution is applicable for 2024 and 2025 on taxable income exceeding MAD 1 million, with rates ranging from 1.5% to 5% depending on the income bracket. A minimum tax rate of 0.25% applies to companies, based on turnover, financial, and non-current income. Capital gains are taxed at the standard corporate income tax rate, with exceptions and deductions. Tax losses can be carried forward for four years (indefinite carry-forward for depreciation-related losses). Foreign tax credits are available. Dividends received from Moroccan companies are generally 100% deductible.
• Individual Income Tax: The progressive income tax rates range from 0% to 37% (as of 2025). Residents are taxed on worldwide income, non-residents on Moroccan-sourced income. Capital gains on real estate are generally taxed at 20%, and capital gains on shares are taxed at 20%, with exemptions for principal residences held for six years or more.

This information is for general guidance only and does not constitute professional tax advice. It's crucial to consult with a qualified tax advisor for personalized advice based on your specific circumstances.