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:
- The customer is subject to VAT: 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.
- The customer is not subject to VAT: 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.
