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CONTENTS Morocco  Economic AnalysisLegal Information Info-Prod Country Guide  



The Moroccan taxation system consists of direct and indirect taxes. Indirect taxes provide a greater source of tax revenue than the direct taxes. The system is statutory-based and has been recently updated in part with effect from 1/1/1996 by the Investment Charter (Law No. 18/95). There is virtually no case law on taxation, and tax-issues hardly come before the courts. In general, the tax authorities do not issue advance rulings on taxation matters.

Taxation of Companies


Moroccan corporations are subject to a unitary tax system. The corporate tax (impôt sur les sociétés or IS) rate has been reduced to 35 percent in 1996. Corporations are taxed under a special tax regime, which covers limited liability companies, limited partnerships by shares, general and limited partnerships in which at least one partner is a corporate entity, civil companies, branches of foreign corporations, public sector companies having profit-oriented activity and joint ventures having business-oriented activity. General partnerships and limited partnerships in which all partners are individuals may elect to be taxed under the corporate tax regime. The same applies to joint ventures in which all parties are individuals.

Foreign corporations are subject to taxation on income arising in Morocco if they have or are deemed to have a permanent establishment in Morocco. Taxation of corporations is the same irrespective of ownership, and foreign owned corporations are essentially regarded as Moroccan corporations insofar as they are incorporated in Morocco.

The corporate tax regime is based upon territoriality. Net profits earned by foreign subsidiaries and establishments of Moroccan companies are not taxable until profits are actually repatriated and distributed to shareholders.

Taxable income is based on receipts and accruals from products delivered, services rendered and work carried out and accepted by customers. Interest, royalties, income and service fees are subject to corporate income tax at the rate of 36 percent. Dividends received by corporate shareholders from taxable entities incorporated in Morocco are not taxable. This exemption does not apply, however, to foreign investment income, which is taxed after deducting foreign withholding taxes.

Morocco exempts certain types of income from corporate taxation. The first is income derived from agriculture which is exempt until the year 2020. The second concerns income of companies set up in the Western Sahara. There are also specific tax incentives exempting some companies from corporate tax for specified periods. In addition, Moroccan corporations can distribute tax free dividend of common- stock pro rata to all common-stock shareholders.

All expenses incurred for the purpose of the business are normally deductible, including salaries and wages, depreciation, rent and representation expenses. Only 75 percent of the amount paid for purchases of raw materials and products, start-up expenses, donations and other general expenses equal to or exceeding MDh 10,000 are deductible, unless the payment is made by a non-assignable crossed check, bank transfer or bill of exchange. Except for the corporate tax (IS), taxes are deductible.

Expenses incurred outside Morocco by a foreign company having permanent activity in Morocco require adequate justification and documentation before they may be deducted. Losses may be carried forward and deducted from taxable profit for a period of four years.

A minimum amount of corporate tax is payable by companies other than foreign companies (cotisation minimale or CM), irrespective of the company's profits or losses. The CM is based on turnover, income from interest, subsidies, bonuses or donations received. The CM is levied at a rate of 0.5 percent of income, and is not payable by companies during their first thirty-six months of operation.

Registration Fees

Morocco imposes a registration fee at a fixed rate of 0.50 percent on the forming or increasing of company capital. This rate is reduced to 0.25 percent for deeds of partnership or capital increase of investment banks and companies the main purpose of which is either stocks and shares management or application for other companies on joint account.

Subsidiaries of Foreign Companies

Subsidiaries set up in Morocco by foreign companies are treated as local companies, independent of their foreign parent-company for legal and taxation purposes. Inter-company transactions must be on an arm's length basis. Expenses must be incurred in the furthering of the subsidiary's objectives and not those of its parent-company.

Dividends paid to non-resident shareholders are subject to a 15 percent withholding tax. Interest, royalties and service or management fees paid to non-residents are subject to a 10 percent withholding tax. These rates may be reduced or waived under prevention of double taxation treaties.

National Solidarity Levy

Companies subject to corporate tax must pay a levy called National Solidarity Levy (PSN). The base used to asses this levy is equal to the base chosen for the assessment of corporate tax, and it is calculated by applying a 10 percent rate to the amount of the corporate tax. If a company is fully exempt from corporate tax, PSN has to be paid in an amount of 25 percent to a theoretical corporate tax. The PSN cannot be less than MDh 1,500 for a yearly turnover of less than MDh 1,000,000 and not less than MDh 3,000 for a turnover of more than MDh 1,000,000.

Capital Gains Tax

Morocco instituted a tax on the proceeds from stocks and company's shares and comparable income (TPT), distributed by companies based in Morocco and paying taxes on corporations. The tax of 15 percent is collected at the source and applies to:

  • Dividends;
  • Capital interest;
  • Profit percentages;
  • Special allowances or the payment of fees and other compensations allotted to members of the board of directors (except for the fraction of these compensations considered as salary and subject to personal income tax -IGR);
  • Sums levied on profits to repay capital produced to stockholders or to buy over stocks;
  • Beneficiary/founder's shares;
  • Surpluses from winding up augmented by reserves built up over at least ten years ago;
  • Profits made in Morocco by establishments whose home office is located abroad, as these profits are made available to such companies abroad.

Taxation of Individuals

Individuals, regardless of nationality or activity, who have their habitual residence in Morocco are subject to a personal income tax (impôt général sur le revenue or IGR) on their worldwide income on a progressive scale between 13 and 44 percent. Individuals not having their habitual residence in Morocco are subject to tax only on Moroccan-source income. Habitual residence status is established by reference to one of the following: (1) place of permanent abode; (2) center of economic interest; and (3) duration of stay in the country exceeding 183 days within any period of 365 days. The issue of double taxation is partially addressed by tax treaties or unilateral relief in the form of tax credit.

Generally speaking, there are no concessions for foreign nationals working in Morocco, but the cost of home travel is exempt from tax every two years, and a substantial reduction in tax on pensions received from other countries is granted. In addition to employment income, tax is levied on professional and business activities, investments and rent.

All compensation paid employees is taxable, including salaries and wages, allowances, pensions, annuities, reimbursement of taxes and all benefits derived from employment. Taxable benefits include the furnishing of an automobile for the employee's private use, housing benefits and profit sharing or retirement plans paid by foreign companies.

An individual taxpayer can deduct from taxable income any necessary traveling and entertainment expenses, provided they are incurred in the performance of that individual's duties, and are justified by the nature of the profession.

Other Taxes

Value Added Tax

The Value Added Tax (VAT) is a non-cumulative tax levied at each stage of the production and distribution cycle. Thus, suppliers of goods and services must add VAT to their net prices. Where the purchaser is also liable for VAT, input VAT may be offset against output VAT. The standard VAT rate is 19 percent and applies to all suppliers of goods and services, except those taxed at other rates or those who are exempt. A reduced rate of 7 percent applies to specific items such as banking and credit services, leasing, gas, water and electricity. A reduced rate of 14 percent applies to building and construction activities and to the transport and the hotel industries.

Two types of exemptions from VAT are provided. The first is an exemption with credit, equivalent to the zero tax concept, which applies to exports, agricultural material and equipment and fishing equipment. The second is an exemption without credit, i.e., the seller receives no credit for input VAT paid. This exemption applies to basic foodstuffs, newspapers and international transport services.

Business Tax

A business tax, or patente, is levied on individuals and enterprises that habitually carry out business in Morocco. The tax consists of a tax on the rental value of business premises (rented or owned) and a fixed amount depending on the size and nature of the business. The tax rates range from 5 percent to 30 percent and pro rata reimbursements are granted for businesses which commence or cease activities during the tax year.

Patent Tax

The Patent Tax is to be paid by individuals involved in commercial activities who are not exempted by special decree (dahir). The tax includes a proportional tax which averages 10 percent of the rental value of industrial establishments and a variable tax which depends on the number and kind of pieces of equipment owned by the business entity.

Stamp Duty/Notarial Tax

Corporate stocks, founder's shares and bonds issued by companies are free from both stamp duty and formalities. A notarial tax is imposed based on the capital stock, in the amount of 1 percent for stock up to MDh 5.000, 0.5 percent from MDh 5,000 to 10,000 and 0.2 percent for over MDh 10.000.

Urban Property Tax and Municipal Tax

Owners of real estate are subject to urban property tax on the rental value of the property. The same applies to owners of machines and appliances that are integral parts of the establishment producing goods or services. The general urban property tax rate is 13.5 percent of the rental value. It is 3 percent for lots and 4 percent for structures and fittings as well as for machines and appliances.

The tenants of rented property are subject to a municipal tax on the value of the property. The rate is 10 percent of the normal rental value of the buildings located within the urban areas and 6 percent of the normal value on peripheral zones of urban communes.

Tax on Interest

Tax is imposed on individual or corporate residents in respect of interest earned on bonds and other loan securities, fixed and current account deposits, loans and advances, and various loans conducted through banks or financial institutions.

Customs Duties

All goods and services may be imported; Goods deemed to have a negative impact on national production, however, may require an import license. Most products imported are subject to import duties, the rates of which vary between 2.5 percent and 10 percent for equipment, materials, spare parts and accessories. Some materials and products, however, are exempted, especially those imported under the investment charter, imported under customs economic systems and those using renewable energies. Value added tax is also payable on goods imported into Morocco.

Import Tax Levy

The Import Tax Levy (PFI) is imposed on imported commodities at a fixed rate of 15 percent. It is reduced or eliminated, however, as follows:

  • A rate of 12.5 percent for pharmaceuticals or raw materials used in the manufacturing of pharmaceuticals;
  • Exemption for the import of material subject to customs duties;
  • Exemption for enterprises which engage in research activities involving mineral substances;
  • Exemption for materials using renewable energies;
  • Exemption for fertilizer products;
  • Exemption for certain antibiotic medical products.

There is also a parafiscal tax of 0.25 percent which applies to imported commodities.

Treaties for the Prevention of Double Taxation

Since a Moroccan resident is taxed on worldwide income, the Moroccan tax system provides relief from foreign taxes paid on such worldwide income by means of a foreign tax credit. This foreign tax credit cannot exceed the Moroccan tax otherwise payable in respect of the foreign-source income.

The Moroccan government is eager to encourage foreign investment. This is reflected by the territoriality principle for taxation applicable to corporations mentioned above. In addition, Morocco has concluded about seventeen treaties for the prevention of double taxation, mainly with developed countries. Morocco's list of treaty-partners include Belgium, Canada, France, Germany, Italy, Luxembourg, the Netherlands, Norway, Romania, Spain, Sweden, Tunisia, the United Kingdom and the United States.

Most of the tax treaties are based on the OECD model and do not contain specific anti-abuse provisions. Reduced withholding tax rates vary from one treaty to another, and in the case of the treaty with Sweden, the rate is zero. Of special interest is the treaty with France which offers advantages involving self-employed foreigners and payments for technical assistance and contracts (e.g., imported supplies).


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