Morocco

Rates and scope

Rates

The standard rate of VAT is 20%.

Lower rates of 7%, 10% and 14% apply to specifically designated operations.

Starting from FY23, operations carried out by lawyers, interpreters, notaries, bailiffs and veterinarians are subject to VAT at the standard rate of 20%, instead of 10% according to the Finance Act 2023.

Some operations are expressly exempt from VAT, either with a deduction right or without a deduction right.

Scope

Unless expressly exempted, transactions that take place in Morocco relating to commercial operations, industrial and handicraft operations, and independent professional services are subject to VAT. This is regardless of the targets, the results and the legal status of the persons conducting the relevant operations and regardless of their liability for other taxes.

Regarding services, transactions are considered to take place in Morocco when the service or the right provided is used or consumed in Morocco.

VAT registration

Compulsory registration

Individuals and companies carrying out transactions that are subject to VAT are liable for compulsory registration.

Persons liable for VAT can either be totally or partially subject to VAT.

Voluntary registration

Voluntary registration is allowed where persons:

• export goods and services, or

• undertake specific operations mentioned in the law.

Group or branch registration

The branch or the subsidiary must register for VAT with the tax department, regardless of its liability for VAT, in order to obtain a tax identification number that shows the status of the registrant regarding VAT.

The registration must be done within 30 days from starting the activity or incorporating the entity.

Non-residents

Non-resident companies that are performing taxable activities in Morocco should appoint a tax representative therein in order to handle their VAT obligations (VAT return filing and payments).

As from 1 January 2014, a Moroccan taxpayer can report their foreign suppliers’ VAT on their own VAT returns (reverse-charge mechanism).

Application for registration

Deregistration

Deregistration is not possible where there is compulsory liability for VAT.

For non-resident entities that cease to perform taxable operations in Morocco, the tax representative should file a request for deregistration with the relevant tax authorities.

Output tax

Output VAT is calculated on the basis of the amount of the invoice, excluding VAT.

The VAT rate to be applied depends on the nature of the goods or services provided.

Calculation of output tax

Exempt supplies (without deduction right)

Exempt supplies include supplies of the following goods or services:

• milk, sugar, bread, cereals

• fiscal stamps

• newspapers, books, movies, documentaries

• interest on government loans

• recovered metals

The Finance Act 2023 extended the exemption without the right to deduct sales and services provided by manufacturers and service providers, within the limit of 500,000 MAD to regulated  professions: Lawyer, interpreter, notary, adel, bailiff, architect, quantity surveyor, geometer, topographer, surveyor, engineer, consultant, expert in any matter, chartered accountant and veterinary

Zero-rated supplies (exemption with deduction right)

Zero-rated supplies include supplies of the following goods or services:

• goods and services exportation

• certain agricultural equipment supplied under prescribed circumstances

• As from 2023, the benefit of this exemption is subject to the completion of the formalities provided for by regulation in the decree issued for the application of the VAT.

• investment goods recorded as fixed assets in the company’s books and acquired during the first 36 months of company activity

• goods and services rendered to industrial acceleration zones

• activities related to hydrocarbon operations

• military devices, equipment, weapons, ammunition, as well as their parts and accessories, acquired by the authorities in charge of national defence and the agencies in charge of homeland security.

• the products and materials used in the manufacture of photovoltaic panels acquired by the manufacturers of said panels, listed below:
  • Photovoltaic cells
  • Solar glass
  • Corners of plastic panels
  • Polyolefin encapsulating films
  • Ribbon used to connect photovoltaic cells
  • Junction boxes with cables
  • Silicone for junction boxes
  • Flux for soldering photovoltaic cells
  • Hook and support structure of the panel
  • Panel frame.

Input tax

Input tax allowed

Input tax expressly denied

VAT is not deductible on the purchase of the following goods and services:

• purchases of goods and services not used for business needs

• tour cars and related expenses (repair, leasing expenses, etc.)

• reception charges

• purchases that relate to promotions, such as gifts to clients, etc.

• VAT levied on purchases, services and benefits paid in cash if the amount exceeds MAD5,000 per day and per supplier, limited to MAD50,000 per month and per supplier.

Partial exemption

Where goods or services are acquired for making both taxable and exempt supplies without credit or out of the scope of VAT, the input tax incurred must be apportioned.

The standard method for calculating the apportionment is the turnover-based method.

Adjustments for variation of the deduction proportion on equipment

When the new proportion exceeds 5% of the current proportion, a complementary deduction may apply.

The complementary deduction equals 20% of the difference between the two deductions, calculated on the current and the new proportions basis.

When the new proportion is inferior by more than 5% of the current proportion, 20% of the difference between the two deductions calculated on the current and the new proportions basis should be transferred.

Non-conservation of immovable assets

In case immovable assets are not retained for a ten-year period, the beneficiary of VAT deductions must repay the VAT to the Moroccan tax administration at the rate of one tenth per year remaining until the end of the five-year period.

Where immovable assets are acquired more than ten years before the transfer, no VAT is due by the seller to the Moroccan tax administration.

Preregistration or post-deregistration VAT

International trade

Imports

Goods

VAT is payable on the importation of goods, except where a specific exemption applies.

The Finance Act 2021 exempts from import VAT frozen beef and camel meat imported by the Royal Armed Forces or on their behalf.

The Finance Act 2023 exempts from VAT on importations, simple food intended for the feeding of livestock and farmyard animals from January 1, 2023 until December 31, 2023

Exports

Goods and services

The exportation of goods and services is not subject to VAT. 

VAT exemption applies when goods are sold to consumers outside of Morocco, and to services that will be used or exploited abroad.

Refunds to foreigners

VAT charged on goods bought by non-resident individuals (tourists) may be refunded (value exceeding MAD 2000 including VAT).

Place, time and value of supplies

Place of supply

The sale of goods is deemed to have taken place in Morocco if the delivery takes place in Morocco.

The sale of a service is deemed to have taken place in Morocco if such service is used in Morocco.

Time of supply

In general, deductible VAT can be declared once the related payable amount has been paid to the debtor (VAT must be recovered within one year). However, the collected VAT can be declared according to the two following regimes:

Receivable collection regime

• The VAT invoiced on sales is declared after payment of the receivable account, i.e. upon money collection from the client.

Invoicing regime

• Collected VAT is declared when the invoice is issued, or on the delivery date if that occurs first, regardless of when payment is received by the client.

Value of supply

VAT is levied on the invoiced amounts.

VAT compliance

Accounting basis and tax period

VAT is normally accounted on an accrual basis. Tax periods consist of one month or three months:

• monthly for taxpayers whose annual taxable turnover equals or exceeds MAD 1m, as well as for persons not established in Morocco and performing taxable operations

• quarterly for taxpayers with an annual taxable turnover under MAD 1m, or who perform seasonal or occasional activities. New taxpayers are also subject to this provision for their first year of activity.

Returns and payment of VAT

VAT declarations are prepared for each calendar quarter. The VAT return of each quarter must be filed within the month following the relevant quarter (on the digital platform SIMPL no later than the end of the concerned month).

However, if the taxable turnover of the previous calendar year equals or exceeds MAD1 million, VAT returns must be prepared on a monthly basis, and the VAT return for each month must be e-filed with the tax authorities no later than the end of the following month. The same rule applies to non-resident taxpayers.

The filing of the return and the payment of the tax that is due should be done simultaneously. However, in case of a nil return or VAT credit, no payment is due.

Interest and penalties

In case of a late tax return the following penalties apply:

• 5% penalty where the tax return is submitted within 30 days following the legal deadline, or in case of a corrective return

• 15% penalty where the tax return is submitted after the above-mentioned 30 days

• 20% penalty in case of automatic taxation due to non-filing of a tax return.

In case of late tax payment, the following penalties apply:

• 20% penalty in case of non-payment or late payment

• 5% interest for the first month of late tax payment

• 0.5% interest for the following months.

Refunds

Input tax may be carried forward to offset output VAT for a limited period of one year.

However, a VAT refund is limited to some operations provided by law only, such as exports.

To obtain a reimbursement for input tax in qualifying cases, a request must be submitted before the expiration of the one-year debarment deadline.

The Moroccan tax code also provides for refund of VAT on equipment (excluding cars and office furniture).

Time limits

The limitation period for rectifying errors and omissions in the tax base is four years from the year for which the tax is due.

In case of VAT credit imputed on VAT of the first year not time barred, the corrections may go back to four additional years. However, the correction cannot exceed the amount of VAT credit.

VAT records

Tax invoices

A regular invoice should mainly include the following elements:

• invoice number

• vendor identity

• tax IDs

• ICE (unified tax ID)

• date of the operation

• name and address of the client

• price, quantity and nature of the purchased goods and services

• value-added tax (if applicable)

• references and means of payment

• social security ID.

Credit notes and debit notes

Record-keeping

Specific VAT rules

Bad debts

Land and buildings

Leasing

Promotional gifts

Secondhand goods

Tourism industry

Currency conversion

Transfer of a business

Warranty repairs

Other indirect taxes

Import duties

The importation of goods into Morocco gives rise to the payment of importation duties, import VAT and a special tax on importation called Taxe Parafiscale à l’Importation (TPI) (para-fiscal import tax).

Customs duties are calculated on the basis of the ad valorem value of the goods at the time of their entrance into Morocco.

Customs duties can be reduced if the imported products fall under free-trade agreements signed by Morocco or other specific regulatory provisions.

Under Moroccan tax law, importation operations are subject to VAT at the rate of 20%. Lower rates of 7%, 10% and 14% apply to specifically designated importations.

The Moroccan tax law also offers some customs regimes that provide VAT exemptions with credit (equivalent to the zero rate).

In addition to importation duties and VAT on importation, the TPI applies. A TPI rate of 0.25% is levied on the value of the imported goods.

Excise duties