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Tax in morocco for business

Tax in morocco for business

Learn about the tax regulations and obligations for businesses operating in Morocco. This comprehensive guide covers corporate tax rates, VAT, and other essential tax information to help businesses comply with Moroccan tax laws.

Navigating the fiscal landscape in Morocco, businesses are often curious about their tax obligations. A primary concern is the Corporate Tax (IS), calculated based on the net taxable profit after offsetting any carried-forward losses. The tax rate applied is meticulously determined from this net figure, ensuring that each company’s unique financial history is reflected in its tax obligations.

The tax rate for net taxable profits in Morocco below 100,000,000 DHS is 20%, while it increases to 35% for profits equal to or greater than 100,000,000 DHS. However, certain companies are excluded from the 35% rate:

  • Service companies with the “Casablanca Finance City” (CFC) status are taxed at 20%.
  • Companies operating in industrial acceleration zones are taxed at 20%.
  • Companies established after January 1, 2023, that commit to investing at least 1.5 billion dirhams over five years from the date of signing an agreement with the state benefit from a 20% rate, even if their net taxable profit exceeds 100,000,000 DHS.

Who Pays Income Tax in Morocco?

In Morocco, the following people need to pay income tax:

  • Residents: If you live in Morocco, you pay taxes on all your income, no matter where it comes from—inside or outside the country.
  • Non-residents: If you don’t live in Morocco but earn money from Moroccan sources, you’ll pay taxes on that income.
  • Special Cases: Regardless of where you live, if you earn money that Morocco has the right to tax due to international agreements, you’ll need to pay taxes in Morocco.

You’re considered a resident for tax purposes if:

  • Morocco is your main home or the center of your economic interests.
  • You stay in Morocco for more than 183 days in any 365-day period, either continuously or intermittently.

Dividend Tax Rates in Morocco

Dividends, distributed as payments to shareholders from the profits of a company in Morocco, are subject to varying tax rates based on international tax treaties. While the typical tax rate on dividends is 10%, certain treaties may lower this rate to 5%.

Example of Tax Treaties with Reduced Rates on Dividends in Morocco

Here’s a list of some countries and their special tax rates for dividends under treaties with Morocco:

  • Germany
    •   5% if the company receiving the dividends owns at least 25% of the distributing company.
    •   10% in other cases.
  • Switzerland
    •   7% if the company receiving the dividends owns at least 25% of the distributing company.
    •   10% in other cases.
  • Poland
    •   7% if the company receiving the dividends owns at least 25% of the distributing company.
    •   10% in other cases.
  • Russia
    •   5% if the company’s equity participation is more than USD 500,000.
    •   10% in other cases.
  • Bulgaria
    •   7% if the company receiving the dividends owns at least 25% of the distributing company.
    •   10% in other cases.
  • United Arab Emirates
    •   5% if the company receiving the dividends owns at least 10% of the distributing company.
    •   10% in other cases.
  • South Korea
    •   5% if the company’s equity participation is more than USD 500,000.
    •   10% in other cases.
  • Belgium
    •   6.5% if the company receiving the dividends owns at least 25% of the distributing company.
    •   10% in other cases.
  • France
    •   10% on dividends paid by a French company to a person in Morocco, but they are exempt from withholding tax in France.
  • Italy
    •   10% if the company receiving the dividends owns at least 25% of the distributing company.
  • Bahrain
    •   5% if the company receiving the dividends owns at least 10% of the distributing company.
    •   10% in other cases.
  • India
    •   10% on the gross amount of dividends.
  • Qatar
    •   5% if the company receiving the dividends owns at least 10% of the distributing company.
    •   10% in other cases.
  • Ukraine
    •   10% on the gross amount of dividends.
  • Austria
    •   5% if the company receiving the dividends owns at least 25% of the distributing company.
    •   10% in other cases.
  • United Kingdom
    •   10% on the gross amount of dividends if the receiving company owns at least 10% of the distributing company.
    •   10% in other cases.
  • China
    •   10% on the gross amount of dividends.
  • The Netherlands
    •   10% if the company receiving the dividends owns at least 25% of the distributing company.
    •   10% in other cases.
  • Portugal
    •   10% on the gross amount of dividends if the receiving company has held at least 25% of the share capital for two years prior to the payment.
    •   10% in other cases.
  • Spain
    •   10% if the company receiving the dividends owns at least 10% of the distributing company.
    •   10% in other cases.
  • Luxembourg
    •   10% if the company receiving the dividends owns at least 10% of the distributing company.

Value Added Tax (VAT) in Morocco

How often you need to file VAT depends on your annual taxable turnover:

  • Quarterly Filing: If your yearly turnover is less than one million dirhams.
  • Monthly Filing: If your yearly turnover is one million dirhams or more.

VAT Rates in Morocco

Here are the different rates for VAT in Morocco:

  • Normal Rate: 20%
  • Reduced Rates: 20%, 10%, and 0%

Income Tax at Source in Morocco

2021 Income Tax Schedule:

  • 0 – 30,000 MAD: No tax (0%)
  • 30,001 – 50,000 MAD: 10% tax with a 3,000 MAD deduction
  • 50,001 – 60,000 MAD: 20% tax with an 8,000 MAD deduction
  • 60,001 – 80,000 MAD: 30% tax with a 14,000 MAD deduction
  • 80,001 – 180,000 MAD: 34% tax with a 17,200 MAD deduction
  • 180,001 MAD and above: 38% tax with a 24,400 MAD deduction

Social Solidarity Contribution in Morocco

For Companies:

The social solidarity contribution is based on the company’s net profit and is calculated as follows:

  • 1.50% for companies with a net profit between 1,000,000 and 5,000,000 dirhams.
  • 2.50% for companies with a net profit between 5,000,001 and 10,000,000 dirhams.
  • 3.50% for companies with a net profit between 10,000,001 and 40,000,000 dirhams.
  • 5% for companies with a net profit exceeding 40,000,000 dirhams.

Local Taxes in Morocco

Below is a rundown of the local taxes you may encounter in Morocco:

  • Local authority tax
  • Professional tax (exemption applies for the first five years)
  • Housing tax
  • Municipal services tax
  • Tax on undeveloped urban land
  • Tax on construction operations
  • Tax on subdivision operations
  • Tax on drinking establishments
  • Tourist tax
  • Tax on mineral and table water
  • Tax on public passenger transport
  • Tax on the extraction of quarry products
  • Tax on driving licenses
  • Tax on motor vehicles required to undergo technical inspections
  • Tax on the sale of forest products
  • Tax on hunting permits
  • Tax on mining operations
  • Tax on port services

Accounting Obligations in Morocco

If you’re doing business in Morocco, here are some key accounting obligations you need to follow:

  • Keep Regular Accounts: You must maintain regular accounts to determine your turnover and identify the tax amount for deductions or refunds.
  • Separate Accounts for Different Activities: If you engage in activities taxed differently for VAT, you need to keep separate accounts to determine the taxable turnover for each activity.
  • Issue Proper Invoices: If you’re dealing with VAT, you must issue proper invoices to your buyers or customers who are liable for the tax (as per Article 145).

Payment of Social Security Contributions in Morocco

Here’s a breakdown of social security contributions by category:

  • Family Benefits:
    •   Calculation Basis: Pre-written ready emails
    •   Employer Contribution Rate: 6.40%
    •   Wage Charge Rate: —
    •   Overall Rate: 6.40%
  • Short-term Social Benefits:
    •   Calculation Basis: Total capped salaries (each capped at 6000 MAD)
    •   Employer Contribution Rate: 1.05%
    •   Wage Charge Rate: 0.52%
    •   Overall Rate: 1.57%
  • Long-term Social Benefits:
    •   Calculation Basis: Total capped salaries (each capped at 6000 MAD)
    •   Employer Contribution Rate: 7.93%
    •   Wage Charge Rate: 3.96%
    •   Overall Rate: 11.89%
  • Compulsory Health Insurance:
    •   Calculation Basis: Total actual wages for the period (month/quarter)
    •   Employer Contribution Rate: 4.11%
    •   Wage Charge Rate: 2.26%
    •   Overall Rate: 6.37%
  • Professional Training Tax:
    •   Calculation Basis: Total actual wages for the period (month/quarter)
    •   Employer Contribution Rate: 1.6%
    •   Wage Charge Rate: —
    •   Overall Rate: 1.6%
  • Additionally, there’s a Compensation for Loss of Employment contribution:
    • Employer’s Charge: 0.38%
    • Wage Charge: 0.19%
    • Overall Rate: 0.57%

Conclusion

Understanding and complying with Morocco’s tax and social security contribution requirements is crucial for businesses and individuals alike. Keeping accurate accounts, issuing proper.

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Looking to establish a company in Morocco but unsure where to start? We are here to help! Our team offers expert guidance on every step of the process, from registration to compliance.

Tax in Morocco for Business 2024: Ultimate Guide
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