Taxation in Morocco

Presented By :
Saidi EL mehdi
Abdelaati Abdelrafour Supervised by :
Messrar Hasnae Mr EL Ghouati
Benjalloul Bahija
 Work Plan

1 Introduction and story

2 Chapter 1 :Moroccan tax System

3 Chapter 2: Tax classification

4 Conclusion
 1 Introduction and story

The Moroccan tax system has undergone a profound reform since the mid-1980s.
The main objective of this reform was the development of a modern, coherent and
efficient tax system.

The fiscal institutions of the Moroccan state, and the legal rules governing the field of
public finances are the result of a long historical evolution. This evolution can be
subdivided into four phases:
1 Introduction and story

Before After
During
the protectorat the
protectorat 
protectorat 
The Phase number 1 : Before the protectorate
The different kinds of contributions appear in this country from the Muslim religion. These
contributions are subdivided into two kinds: direct and indirect contributions.
A- the direct contribution

The
The HARKA:
HARKA: TheThe contingent
contingent
requested
requested from
from aa tribe
tribe by
by the
the THE
THE MOUNA
MOUNA and and THE
THE SOUKHRA :
SOUKHRA :
Supplies
Supplies toto live
live for
for the
the sultan's
sultan's armies
armies oror
sultan
sultan when
when he
he wanted
wanted toto commissions
commissions givengiven by by the
the tribe
tribe to
to
undertake
undertake an
an exploitation 
exploitation  officials
officials who
who stay
stay on
on its
its territory
territory for
for any
any
reason
reason whatsoever 
whatsoever 

THE
THE GHORAMA :
GHORAMA : The The financial
financial
consequence
consequence of of damage
damage caused
caused on
THE
THE DHEIRA :
DHEIRA :The The fine
fine imposed
imposed
on aa guilty
guilty party
party for
for the
the benefit
benefit ofof the
the
by
by aa member
member of of aa tribe.
tribe. It
It follows
follows kaid
kaid for
for his
his own
own use.
use.
from
from the
the principle
principle of of collective
collective
responsibility
responsibility
B- the indirect contribution
itit is
is composed
composed of
of ::
1-
1- commercial
commercial taxes
taxes

These
These are
are taxes
taxes relating
relating to
to commercial
commercial transactions
transactions such
such as
as ::
-- Market
Market duties;
duties;
-- Management
Management rights;
rights;
-- Door
Door fees.
fees.

2-
2- Customs
Customs duties:
duties:

in
in trade
trade with
with foreign
foreign countries,
countries, there
there is
is an
an import
import duty
duty of
of 10%
10% ad
ad valorem,
valorem, the
the exit
exit
duties
duties varied
varied according
according to
to the
the situation.
situation. At
At the
the time,
time, these
these duties
duties constituted
constituted the
the
main
main resource
resource of
of the
the Moroccan
Moroccan treasury.
treasury.
The Phase number 2 : During protectorate
This period was characterized by the reform of the tax system following the
 progressive deterioration of Morocco's finances and the aggravation of its debt.

This reform was manifested by the conservation of certain taxes, the

modification, creation and cancellation of others like for example :

- Taxes kept : door duties, market duties, customs duties .

- The modification: the ZAKAT and ACHOUR were replaced by "the TERTIB“ .

- The creation new taxes : France had created the transaction tax, the patente,
the urban tax, the tax on professional profit, the PTS

- The cancellation: France has cancelled sovereignty taxes

The Phase number 3 : After protectorate
This period was characterised in fiscal terms by adjustments and reforms, the main
ones being the following:

- The urban tax and the PTS underwent slight modifications .

- The patent and the IBP were the subject of adjustments to the rate and changes
in the calculation.

- The tax on goods and services has been replaced by the tax on transactions.

- The TERTIB has been replaced by the agricultural tax.

the current phase
Morocco has undergone an important structural fiscal reform which consists
in the institution of a modern, simpler and more efficient taxation system at
the economic and financial level.

This reform covered the main categories of taxes and duties and led to the
implementation of :

1- Value Added Tax (VAT) in 1986 to replace the tax on goods and services

2- the introduction of corporate income tax (CIT) in 1988

3- the General Income Tax (IGR) in 1990, replacing the various schedular
taxes and the complementary contribution.
Chapter 1 : Moroccan tax System
I - Tax law in Morocco
The Moroccan tax system is managed by the following laws :

1- The general tax code

 1- The general tax code
The present General Tax Code : is composed of 3 parts:
- part one: containing the rules of basis of assessment,
recovery and sanctions in the field of corporate tax , income
tax ,Value added tax and registration fee .

- part two: relating to tax procedures and containing the

rules of control and litigation
- part three: containing the other duties and taxes: stamp
duty, special annual vehicle tax, social solidarity contribution
on profits, social solidarity contribution on deliveries to
oneself and tax on insurance contracts.
2 - The law 47.06 relating to the taxation of
local authorities
Law 47.06 relating to local taxation, which is
managed by the Directorate General of Taxes for
the benefit of local authorities. Among the taxes
stipulated by this law are the following :

-the business tax

- the housing tax and the service tax

II - The role of taxation

the tax law is an instrument par excellence of the State's economic policy, it is
a means of public finance management, the taxation has three roles :

A. The financial role

The tax serves to cover the public expenditure of the community or society,
this is the original role of the tax .
 II - The role of taxation
B. The economic role

The tax serves as an economic regulator, the tax plays a role in

enabling the government through parliament to overtax areas that do
not need to be taxed and in zero-rating those that do need to be
promoted.
II - The role of taxation
C. The social role

Depending on the taxpayers' ability to pay, tax is levied, and tax

fairness is achieved through progressive taxation, as opposed to
proportionality of taxation.
 Chapter 2 : Tax Classification
I. Corporate tax
The corporation tax is a direct tax which must be applied to all products, profits
and income from capital companies and other legal persons, and by option to
partnerships

The corporation tax mainly targets the profits of companies constituted in the form
of capital companies which carry out lucrative activities on Moroccan territory,
whatever their nationality.
1-Taxable Persons

The General Tax Code (CGI) stipulates that corporation tax is compulsorily
applicable to the products, profits and income of:

 The societies whatever their forms and objects.

 The public establishments and other legal persons carrying out profit-making
operations.
 The associations and bodies legally assimilated by virtue of their lucrative
activities.
 The Funds created by law or by convention.

 The establishments of non-resident companies or groups of such companies.

 2. The tax base

 - Corporate tax is based on the tax result of the company which must be
determined according to the accounting rules in force in Morocco.
 - Under the provisions of Article 8-I of the C.G.I., the tax result for each
accounting year is the excess of income over expenses for the year.
 - Are considered deductible expenses, the expenses incurred or supported for the

needs of the taxable activity.

 3. The minimum contribution

 the minimum corporation tax contribution is due even in the event of a loss. On
the other hand, in the event of a profitable financial year, it is charged against
corporation tax. However, the portion of the minimum contribution exceeding the
corporation tax may be charged against the amount of corporation tax over the
following 3 financial years.
 an exemption from the minimum contribution is applicable during the three years
following the creation of a company. However, this exemption is not applicable in
the case of a public service concessionary entity.
5. The corporate tax rate
The Corporate tax is applied at progressive rates as
follows:
6. Exempt Persons
The persons exempt from corporate tax are:
 Newly created companies: Newly created companies are not required to pay down
payments for their first financial year, they are exempt from the minimum
contribution for 36 months from the start of their activity/
 Industrial companies carrying out activities set by regulation: Total exemption from
corporation tax for the first five (5) consecutive years from the date of the start of
their operation.
 Exporting Companies: Exemption for exporting companies, and companies involved
in the manufacturing and valuation process of exported products, during the first 5
years and the application of the reduced rate of 17.5% from the 6th year.
 Companies operating in the hotel and tourist animation sector: Total exemption
from IS for the first 5 years and the application of the reduced rate of 17.5% from
the 6th year.
 Companies established in a free zone: Exemption for the first 5 years, from the date
of the start of the activity, then increase to 8.75% for the following 20 years,
beyond that, taxation according to the common law regime.
 II. Income Tax
The income tax is an annual and declarative direct tax which relates to all the
income of natural persons (having their fiscal domicile in Morocco), whatever their
nature and whatever the activities which provide them. It is also a progressive tax
since its scale is established so that the tax rate is all the more important as the
incomes are high. In addition, it should be noted that the income tax also concerns the
income of legal persons who have not opted for corporate tax.
The categorical income concerned by this tax is as follows:
 The professional income;
 The salary income and similar income;
 The income and land profits;
 The income and profits from movable capital
 The agricultural income
 1. Who pays income tax in Morocco?
In Morocco , The people considered to be taxpayers are:
The natural persons who have their fiscal domicile in Morocco, on the
basis of all their income and profits, from Moroccan and foreign sources.
The natural persons who do not have their tax domicile in Morocco, on
account of all their income and profits from Moroccan sources.
people, whether or not they have their tax domicile in Morocco, who
make profits or receive income for which the right to tax is attributed to
Morocco by virtue of conventions tending to avoid double taxation in
matters of income tax.
 2. Income tax exemption in Morocco
The Moroccan tax system provides for tax exemptions, in particular for certain
income of a social nature or allowances. In short, the list below details everything in
Morocco that is not taxed on income tax:

 The family allowances and family assistance.

 The allowances intended to cover official costs.
 the employer's share of pension and social security contributions;
 The daily sickness, accident and maternity benefits and death benefits
 The compensation for dismissal, voluntary departure and all other compensation
for damages awarded by the courts or resulting from a conciliation procedure.
 The Gross monthly internship allowances capped at MAD 6,000, paid by private
companies to successful interns in higher education or vocational training.
 The supplementary pensions and alimony.
3. Income tax rates and scales in Morocco

The income tax scale is used to calculate the amount of tax payable
from the gross tax.
B. Expense taxes: Value added tax
 

1- The Value Added Tax (VAT)

 
VAT is levied under the Moroccan Tax Code and is due on all industrial, commercial, and handicraft
transactions taking place in Morocco, as well as on importation operations.  

Scope VAT applies to all transactions involving the supply of goods and services performed in
of
Morocco and to the importation of goods and services, including the one-off supply or
the tax
importation of goods. 
 
A taxable person is a person or legal entity that carries out a tax­able transaction. A taxable
Who
is liable ? transaction is a transaction involving the sale or importation of goods or services that is
subject to VAT even if such transaction occurs only once.

Non-
established Nonresident companies that perform a taxable activity in Morocco are liable to Moroccan
businesses.  VAT.
 2- VAT rates
 

20%
20% Transport services (truck
The standard rate of VAT
transport), electricity…
  

14%

7% 10%

Supply of water, and   Petroleum products, banking

pharmaceutical transactions, and hotel and
products… restaurant operations
 3- Time of supply

The Moroccan Tax Code provides that the tax point is the date of cash
receipt. After a company receives cash, VAT becomes due, even if the cash
Common
received represents only part of the total out­standing amount for the
law regime
goods or services provided.

The Moroccan Tax Code provides an optional regime under which VAT is
Optional due when the transaction is booked in the accounts of the seller or service
regime
provider. However, if the payment pre­cedes the invoicing, the time of
payment constitutes the tax point.

 
 4- VAT returns and payment

 Taxpayers that had taxable turnover during the preceding year of MAD1
monthly VAT
million or more
returns
 Nonresident persons that carry out taxable activities in Morocco  

 Taxpayers that had taxable turnover during the preceding year of less
than MAD1 million
quarterly VAT
 Taxpayers operating through seasonal establishments, practic­ing periodic
returns
activities or carrying out occasional activities
 New taxpayers in their first calendar year of activity 

If the amount of input VAT recoverable in a period exceeds the amount of output VAT payable in the
same period, a refund is not generally granted. In most cases, the taxable person must carry the excess
forward to a future VAT period.
 B. Capital taxes: Registration and stamp duties

1- Definition

 Registration is a formality to which are subject deeds and other agreements.

It gives rise to the levy of a tax called "registration fee". Registration is meant
Registration to give a definite date to private deeds and ensure recordkeeping.
fees  The registration fees are made up of fixed and proportional fees. The deadline
for completing the registration formalities is generally one month from the
date on which the document is drawn up.  

 Stamp duties apply to acts, documents, books or registers irrespective of their

form, which are established for the title or justification of a right, of an
Stamp duty
obligation or a discharge and, in general, to record a legal fact or legal
relationship.
 2- Rates of Registration fees

 Registration is a formality to which acts and agreements are subject. It gives rise to the collection of a tax
known as “registration fees”.
Registration fees are split into fixed fees and proportional fees

FIXED RIGHTS

Fixed at Example
The incorporation and capital increases of companies or economic interest groups carried
1000 DH out by contribution, purely and simply, when the share capital subscribed for said
contribution does not exceed 500,000 DH
 Sales or transfers for valuable consideration of ownership or usufruct of aircraft,
ships or boats;
200 DH  Real estate leasing contracts relating to premises for professional or residential use, as
well as their termination during the lease by mutual consent of the parties;
ROPORTIONAL RIGHTS

Rates Are subject to the rate for example

6%  Acts and agreements, involving inter vivos transfer (sale, donation or exchange);
 Transfers of shares or company shares in real estate companies as well as predominantly real estate
companies;
5%  Deeds and agreements relating to the acquisition, against payment or free of charge, of bare land or
containing buildings intended to be demolished,
4%  The acquisition by natural or legal persons of built premises, whether these premises are intended for
residential, commercial, professional or administrative use, as well as the acquisition of said premises
by credit institutions or similar organizations, the object of commercial operations or financial, under
a "Mourabaha", "Ijara Mountahia Bitamlik" or "Moucharaka Moutanakissa" contract
3%  Transfers of shares in EIGs, shares or shares in companies other than real estate companies with a
predominance of real estate;
 Auctions, sales, resales, transfers, retrocessions contracts and all other civil or legal acts transferring
ownership of movable property;
 Auctions, sales, sales, transfers, retrocessions, contracts and all other civil or legal acts transferring
ownership, free of charge or against payment, of movable property

1,5%  The partitions of movable or immovable property between co-owners, co-heirs and co-partners of
sharing;
1%  Pure and simple extensions of the deadline for payment of a debt;
 Inventories established after death;
Local tax
A – Business tax
The business tax (taxe professionnelle) consists of a tax on the
rental value of business premises (rented or owned) and fixed
assets. The tax rates range from 10% to 30%, with exemption for
the five first years of activity. The rental value is exempted for
the portion of cost exceeding MAD 50 million.
B- Property tax
Property tax is assessed on the rental value of the property. The
general tax rate is 10% of the assessed rental value, as determined
by the local property ax authorities.
If the property is used as a primal residence, only 25% of the assessed rental
property value is subject to tax. Properties occupied as a main or second
residence are taxed at progressive rates.
PROPERTY TAX

TAX BASE, MAD (US$) TAX RATE

Up to 5,000 (US$508) nil

5,000 - 20,000 (US$2,030) 10%

20,000 - 40,000 (US$4,061) 20%

Over 40,000 (US$4,061) 30%

Source: Global Property Guide

C- Municipal tax
A municipal tax is levied at a rate of 10.5% of the rental value of
properties located in urban areas and 6.5% for properties located on
the outskirts of cities.
Tax level in morocco compared to other
African countries

Morocco is on the third step of the tax pressure podium in Africa.

According to the OECD (Organization for Economic Co-operation and
Development), tax revenues including taxes and social contributions
accounted for 26.4% of GDP in Morocco in 2016, which was the
third highest ratio after Tunisia (29.4%) and South Africa (28.6%).
Moreover, the tax pressure is still high in Morocco.
 A figure up just under half a point from 2015 (26.1% of GDP), when Morocco
was already second in the ranking after Tunisia (30.3%). However, according to
this 2018 edition of the OECD's Revenue Statistics in Africa, Morocco's tax-to-GDP
ratio remains lower than the Organization for Economic Co-operation and
Development Organization average (OECD-34.3%-).
For Morocco, its tax-to-GDP ratio in 2016 (26.4%) was 8.2 percentage points higher
than the average of the 21 African countries in the publication (18.2%) and above
average Latin America and the Caribbean (LAC) (22.7%). According to the report, the
main source of tax revenue in Morocco comes from value added taxes (28%).
The second largest source of tax revenue comes from social security contributions
(17%).
Taxes have a lot of roles Bay paying taxes you can help
other people in your society also you can improve
services in it , so be a good citizen and pay taxes at time
to see our country as we wont to see it.