Morocco: Business Environment
The VAT rate for transport, butter, services rendered by any direct selling agent or insurance broker in respect of contracts brought by it to an insurance business, and electricity is 14%.
A reduced rate of 7% applies to water; rental of water and electricity meters; pharmaceutical products and non-recoverable packaging of pharmaceutical products.
Zero-rated items include exported goods and services, goods placed under customs suspensive regime, fertilizers, machinery for exclusively agricultural use, investment goods recorded as fixed assets, acquired by taxable persons, for 36 months as from the start of the activity, excluding vehicles acquired by car rental agencies, pharmaceutical products, sales and deliveries of water for domestic use, sanitation services provided by sanitation organizations and water meter rental for the same use.
Per the changes of the 2024 Finance Law, the 7% and 14% rates have been phased out as follows:
- Downward adjustments – no changes for 2023, 2024, 2025, 2026
- Sale of electricity generated from renewable energy sources – 14% (2023), 12% (2024), 10% (2025), 10% (2026)
- Services provided to insurance companies by direct marketers or insurance brokers (contracts brought to the company by the direct marketer or broker) – 14% (2023), 12% (2024), 10% (2025), 10% (2026)
- Urban and road passenger and freight transport operations – 14% (2023), 13% (2024), 12% (2025), 10% (2026)
- Upward adjustments – no changes for 2023, 2024, 2025, 2026
- Refined or agglomerated sugar – 7% (2023), 8% (2024), 9% (2025), 10% (2026)
- Rental of electricity meters – 7% (2023), 11% (2024), 15% (2025), 20% (2026)
- Electric power – 14% (2023), 16% (2024), 18% (2025), 20% (2026)
- Passenger and freight transport (non-urban and non-road) – 14% (2023), 16% (2024), 18% (2025), 20% (2026).
Bad debts that are definitively non-recoverable are treated as deductible losses. Taxes are generally deductible (except for corporate income tax).
Tax losses can be carried forward for up to four years from the end of the accounting period in which the loss occurred. However, the portion of a loss attributable to depreciation can be carried forward indefinitely. The carryback of losses is not permitted. Foreign tax relief is provided for foreign-sourced income.
Morocco offers tax incentives in the form of tax exemption or taxation at more advantageous rates for local and foreign investors. For instance, incentives include an exemption from business tax for the first five years for newly incorporated companies and a corporate income tax exemption for companies operating tourist establishments for the first five years, subject to certain conditions. Several acceleration zones in cities like Fes, Kenitra, Layoune, Nador, Rabat, and Tangier offer authorized companies a business tax exemption for the first 15 years and a corporate income tax exemption for the first five years. Companies with "Casablanca Finance City" status are entitled to a corporate income tax exemption for five years from the start of the tax year in which the status was obtained. Additionally, tax-neutral treatment may be available for corporate income tax purposes for the transfer of investment goods between member companies of a restructuring group. Companies that qualify as OPCIs are exempt from tax on rental income from buildings constructed for professional use, as well as dividends and interest received.
Legal entities conducting business activities in Morocco are subject to a business tax based on the rental value of buildings, premises, and other assets used for the business. This tax is levied at rates of 10%, 20%, or 30% of the rental value, depending on the nature of the entity's business.
Additionally, a municipal tax is imposed at a rate of 10.5% on the rental value of real estate assets located within urban districts, and at a rate of 6.5% on the rental value of real estate assets in the peripheral zones of urban districts.
A Payroll tax (called professional training tax) is imposed on the gross monthly remuneration of employees that are subject to social security contributions, at a rate of 1.6%. Morocco's mandatory social security regime is managed by the CNSS (Caisse Nationale de Sécurité Sociale). Employers' contributions are as follows: family allocation 6.40%; social allocation 8.60% (with a computation base capped at MAD 6,000); professional tax 1.60%; mandatory medical care 4.11%.
Morocco | Middle East & North Africa | United States | Germany | |
Number of Payments of Taxes per Year | 6.0 | 20.8 | 10.6 | 9.0 |
Time Taken For Administrative Formalities (Hours) | 155.0 | 204.0 | 175.0 | 218.0 |
Total Share of Taxes (% of Profit) | 45.8 | 32.1 | 36.6 | 48.8 |
Source: Doing Business, Latest available data.
Progressive income tax | From 0 to 38% |
Up to MAD 30,000 | 0% |
From MAD 30,001 to 50,000 | 10% |
From MAD 50,001 to 60,000 | 20% |
From MAD 60,001 to 80,000 | 30% |
From MAD 80,001 to 180,000 | 34% |
Above MAD 180,000 | 38% |
Charitable contributions are deductible if granted to organisms and societies expressly provided by the tax law. Loan interest related to the acquisition of a main house is tax deductible, up to a limit of 10% of the taxable global revenue.
Certain indemnities such as dismissal indemnity, compensation for voluntary departure, and compensation for damages awarded in the event of dismissal are exempt from taxation up to a maximum limit of MAD 1 million. However, if an individual receives multiple indemnities, the combined total amount of such indemnities exempted from income tax cannot surpass the aforementioned limit of 1 million.
Professional expenses incurred in the operation of the business are generally deductible unless specifically excluded. The cap on professional expenses deductible from gross annual taxable income has been raised from MAD 30,000 to MAD 35,000 for individuals whose gross annual taxable income does not exceed MAD 78,000. For those with a gross annual taxable income exceeding MAD 78,000, the deduction rate is set at 25%, up to a limit of MAD 35,000. Additionally, the deduction for pensions and life annuities has been increased from 60% to 70% on the gross taxable amount not exceeding MAD 168,000.
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Latest Update: November 2024