Morocco

Publication
January 20, 2023

Overview

Article 88 of the Moroccan Tax Code sets out the VAT territoriality rules and specifies that a transaction is deemed to have been carried out in Morocco:

When the sale is made under the conditions of delivery of goods in Morocco.
In case of any other transaction, when the service is provided, the right assigned or the object leased is exploited or used in Morocco, or when the online service is provided remotely by a non-resident person with no establishment in Morocco to a customer whose registered office, establishment or tax domicile is in Morocco, or to a customer who occasionally resides in Morocco.

Non-resident service providers that do not have a place of business in Morocco and carry out taxable transactions for a customer established in Morocco must appoint a tax representative who commits to complying with the reporting and payment obligations of taxpayers in Morocco.

Otherwise, the liability to pay VAT lies with the Moroccan customer. The payment obligations differ depending on the VAT status of the customer as follows:

VAT should be paid under the reverse charge mechanism, i.e. the Moroccan customer is required to report the VAT due on the taxable operations carried out by the nonresident service provider on its own VAT return and is entitled to deduct the VAT so declared in the same VAT return.
Therefore, VAT should be neutral, except for some specific cases:
- VAT credit reported by the Moroccan customer, where the latter is not allowed to offset the VAT due by the non-resident company with its VAT credit.
- VAT on the operations of the Moroccan company is below the VAT threshold on the transactions carried out by the non-resident company.

In such cases, VAT due by non-resident service providers should be reversed to the tax administration.

VAT should be withheld at source and paid by the customer to the tax administration in the name and on behalf of the non-resident service provider.
It is worth mentioning that end customers, being individuals, are included in this category and are, therefore, required by law to withhold VAT upon payment of the services. However, in practice, individuals do not necessarily comply with such rules.
In this context, Finance Law 2024 introduced new reporting and payment measures for non-resident companies rendering online remote services to non-taxable customers (B2C). The provisions introduced by Finance Law 2024 will be clarified by the Decree, which is yet to be published.
Henceforth, in the absence of a tax representative in Morocco, non-resident service providers rendering online remote services to non-taxable customers are required to comply with the following obligations:
- Register on a dedicated electronic platform and obtain a Tax ID
- Submit an electronic VAT return via this platform before the end of each month. VAT withheld at source by non-taxable customers should not be reported by the non-resident service provider
- Pay VAT, without the deduction right, on services provided to non-taxable customers during the previous month
- Maintain a register of services provided in Morocco, to be presented to the tax administration electronically upon request. This register must be kept for a period of ten years

The Decree will lay down procedures for applying these provisions.

Navigation

Key provisions applicable to VAT on ESS
Services in scope
Registration and compliance
Invoicing
VAT on costs

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Release date: April 2024

Key provisions applicable to VAT on ESS

Table 1

Services in scope

The Moroccan Tax Code defines “online remote service” as any service delivered through a remote communication tool, including intangible goods and other immaterial assets.

For guidance, a circular note regarding the 2024 Finance Law includes the following services in its definition of “online remote services”:

Supply and hosting of websites, remote maintenance of programs and hardware
Supply of software and applications and their update
Supply of digital content (music, films, online games, gambling, images, videos, texts, information, etc.)
Subscription to film and TV platforms dedicated to video-on-demand (VOD) services
Subscription or provision of databases
Remote provision of training, consulting or assistance services, etc.

Registration and compliance

The non-resident supplier can use a tax representative in both transactions (B2B and B2C). When a tax representative is not appointed:

B2B - the non-resident supplier has no registration obligations. Its Moroccan customer must report the VAT due as explained in the overview.
B2C - the non-resident supplier must register on a dedicated platform, submit monthly VAT returns and pay the tax due by the end of the month following the end of the tax period.

Invoicing

The invoice should include standard commercial information. When a non-resident service provider appoints a tax representative in Morocco, the invoice must also mention the VAT number. There are no currency restrictions.

VAT on costs

Non-resident suppliers of ESS cannot recover VAT on costs incurred in Morocco.

Particulars	Description
Scope	B2C and B2B
Liability to remit VAT	If a tax representative is appointed, they are responsible for paying VAT on both B2B and B2C transactions. If the non-resident supplier does not have a tax representative in Morocco: The B2B customer bears responsibility for VAT remittance If the customer is B2C, it is the non-resident supplier’s responsibility to report and remit the applicable VAT via the new mechanism.
VAT rate	20%
Taxable value	Invoiced remuneration of services
Effective date	1 January 2024, but awaiting publication of the Decree
VAT registration threshold	None
Tax invoice	No specific measures were introduced for the specific case of digital services. Subject to the publication of implementation regulations, invoices issued by non-resident service providers performing online remote services should include general commercial information, particularly for B2B transactions for tax deductibility purposes.

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This report is a special edition of our annual VAT Guide in Africa, focusing on new rules and measures that have been introduced to tax the digital economy unilaterally by countries in Africa.

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