Worldwide VAT, GST and Sales Tax Guide
Casablanca GMT 0
EY
37, Boulevard Abdellatif Ben Kaddour 20 050 Casablanca Morocco
Indirect tax contacts
Loubna Saif-Eddine
Maria Chafii
Hosana Elinam Afla
A. At a glance
Name of the tax
+212 (522) 957 900 loubna.saif.eddine@ey.com
+212 (522) 957 900 maria.chafii@ma.ey.com
+212 (522) 957 900 hosana.elinam.afla@ma.ey.com
Value-added tax (VAT)
Local name Taxe sur la Valeur Ajoutée (TVA)
Date introduced 1 January 1986
Trading bloc membership None
Administered by Ministry of Finance (www.finances.gov.ma)
VAT rates
Standard 20%
Reduced 10% (transitional reduced rates (9%, 12%, 15%, 18%)
Other Zero-rated (0%) and exempt
VAT number format 12345678
VAT return periods
Thresholds
Monthly or quarterly
Registration None
Recovery of VAT by non-established businesses Yes, subject to certain conditions
B. Scope of the tax
VAT applies to all transactions involving the supply of goods and services performed in Morocco and to the importation of goods and services, including services provided remotely by nonresidents using dematerialized communications for the benefit of Moroccan residents (except for customers residing occasionally in Morocco), as well as one-off supply or importation of goods. The 2025 Finance Law revised the territoriality rules for VAT regarding the concept of the tax residence of clients benefiting from services provided in a dematerialized manner by nonresident suppliers. The following criteria are used to determine whether the transaction falls within the scope of Moroccan VAT:
• Traders who sell without transformation, product and foodstuffs other than those exempted without the right to deduct the input tax
• Persons who affect premises for professional use intended for rental (other than furnished premises for professional use located in commercial complexes)
The taxable person should send the application for optional VAT registration to the local tax administration office that is responsible for the taxable person and takes effect after the expiry of 30 days following the date of the notification.
Group registration. Group VAT registration is not allowed in Morocco.
Fixed establishment. In Morocco, there is no legal definition of a fixed establishment for VAT purposes. However, the guidelines issued by the tax authorities refer to the general definition provided by the model tax treaties and define a permanent establishment (PE) as a fixed place of business through which the business of an enterprise is wholly or partly carried out. The said guidelines provide a list of examples of what can be considered a PE, among which are the following:
• Branch
• Office
• Factory
• Workshop
• Construction or assembly project, exceeding a certain duration (generally six months)
Non-established businesses. Non-established taxable persons that perform taxable activities in Morocco are liable to Moroccan VAT (subject to the normal VAT registration rules, as outlined above).
However, where a non-established business supplies services in Morocco to a private individual i.e., a business-to-consumer (B2C) supply, it must appoint a tax representative in Morocco to comply with all VAT filing and payment formalities as put forward by the Moroccan tax legislation.
For supplies made to a taxable person in Morocco, i.e., a business-to-business (B2B) supply, and the non-established business that has not chosen to appoint a tax representative in Morocco, the customer becomes legally bounded, via the reverse-charge mechanism, to account and declare the VAT due, on behalf of the non-established supplier. Therefore, due to this mechanism, the VAT filing and payment obligations pertaining to the tax due by the non-established supplier becomes legally the liability of the Moroccan customer. Therefore, if the Moroccan customer does not comply with the reverse-charge obligation of accounting and declaring the VAT due, the latter becomes liable for all pertaining penalties and surcharges.
Tax representatives. Under the VAT law, non-established taxable persons must appoint a tax representative to handle their VAT obligations (VAT returns, filings and payments). If a non-established taxable person does not appoint a tax representative, the Moroccan customer becomes liable for the declaration and the payment of VAT due on behalf of the non-established supplier on its own VAT return (auto-liquidation).
Reverse charge. Non-established entities performing VAT taxable activities are required to appoint a tax representative in Morocco to comply with VAT obligations and pay due VAT to the tax authorities on their behalf. If the foreign entity does not appoint a tax representative, the mechanism of the VAT reverse charge applies. This mechanism provides that, if a tax representative is not appointed, the Moroccan client is required to report and pay VAT on behalf of its foreign provider using its own VAT ID number. In other terms, VAT registration of the non-established taxable person is not mandatory if the Moroccan client declares and pays VAT to the tax authorities on its behalf.
Domestic reverse charge. The 2024 Finance Law introduced an optional VAT reverse-charge mechanism allowing persons liable for VAT to declare and pay the VAT on their purchases (except purchases of land and agricultural products) from suppliers who are not liable to VAT or who are exempt from VAT, without the possibility of deduction. The taxable customer is therefore required to report the amount excluding tax of the transaction on its own turnover return for the month or quarter during which payment for the transaction was made, calculate the tax due and simultaneously deduct the amount of tax due as reported.
Withholding tax on transactions carried out by service providers subject to VAT. The 2024 Finance Law introduced a provision concerning withholding tax on transactions carried out by suppliers of capital goods and works, as well as by service providers subject to VAT. Details are as follows:
• For suppliers of capital goods and works who do not present their VAT-registered customers with a tax clearance certificate issued less than six months previously by the tax authorities, the VAT due in respect of taxable transactions is withheld by the customers. This withholding obligation does not apply to the state, local authorities, public establishments and other legal entities governed by public law.
• For VAT-registered service providers who have presented their customers with a tax clearance certificate issued less than six months previously, a withholding tax of 75% of the VAT amount is levied by:
– The state, local authorities, and public establishments and companies and their subsidiaries, as well as other public bodies that pay the remuneration for the said services to taxable persons (individuals or legal entities).
– Legal entities governed by private law that are taxable persons and individuals whose income is determined according to the real or standard taxable income (RNR) or simplified taxable income (RNS) systems (as per the two regimes of corporate income tax company taxable income calculations in Morocco), who pay the remuneration for the said services to taxable individuals.
– In the absence of the certificate, withholding tax is applied at 100% of the VAT amount.
Among the operations covered by this obligation:
• Installation, fitting, repair or refurbishment operations
• Furnished or equipped premises leases and premises fitted out for business use, as well as premises in shopping malls, including intangible elements of the business, and premises not fitted out for business use acquired or built with the right to deduct or exempt from VAT
• Transport, warehousing, brokerage, leasing of goods or services, transfers and concessions to exploit patents, rights or trademarks and, in general, any provision of services
• Transactions carried out by natural persons or legal entities during their profession in the capacity of lawyer, interpreter, notary, adel, bailiff, architect, quantity surveyor, geometrician, topographer, surveyor, engineer, consultant, expert in any field, chartered accountant and veterinary surgeon
Digital economy. The Moroccan tax code states that any service used or rendered within the Moroccan territory is subject to Moroccan VAT. For digital services, the VAT rate applicable is 20%. As the services rendered by the provider will be used in Morocco, the operation will be subject to VAT in Morocco.
Nonresident providers of electronically supplied services for B2B supplies are required to appoint a tax representative to handle their VAT obligations (VAT returns filings and payments). If no tax representative is appointed, the customer (i.e., the Moroccan business) is required to self-account for the VAT due by way of the reverse-charge mechanism (see the Reverse charge subsection above).
Changes to VAT registration details. In the event of the head office transfer, the taxable person must notify the tax inspector of its new head office address, tax domicile or principal place of business by registered letter with acknowledgment of receipt or by delivery of the said letter against a receipt or by subscribing to a declaration established on, or according to, a model form of the MTA.
This declaration must be filed within 30 days of the date of the transfer or change. Failing this, the taxable person is notified and taxed at the last address known to the tax authorities.
In the event of a change in the VAT regime, taxable persons who wish to opt for the debit regime must make a written declaration before 1 January of the following year or, in the case of newly VAT-registered taxable persons, within 30 days of the date on which they started its activity. Aside from the changes outlined above, there is no requirement to notify the tax authorities for any other changes to a taxable person’s VAT registration details in Morocco.
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero-rate.
The VAT rates are:
• Standard rate: 20%
• Reduced rates: 10% (transitional reduced rates 9%, 12%, 15%, 18%)
• Zero-rate: 0%
The standard rate of VAT applies to all supplies of goods or services unless a specific measure provides for a reduced rate, the zero rate or an exemption. The 2024 Finance Law introduced a phased reform of VAT rates on certain products over a period of three years with the objective of converging toward two rates (10% and 20%) from 2026 onward. Transitional reduced rates will be increased or decreased in 2025 and 2026 to achieve either the 20% standard rate or the 10% reduced rate.
As a result of the changes of the 2024 Finance Law, the previous 7% and 14% rates have been phased out as follows:
• Downward adjustments – no changes for 2023, 2024, 2025, 2026
• Sale of electricity generated from renewable energy sources – 14% (2023), 12% (2024), 10% (2025), 10% (2026)
• Services provided to insurance companies by direct marketers or insurance brokers (contracts brought to the company by the direct marketer or broker) – 14% (2023), 12% (2024), 10% (2025), 10% (2026)
• Urban and road passenger and freight transport operations – 14% (2023), 13% (2024), 12% (2025), 10% (2026)
• Upward adjustments – no changes for 2023, 2024, 2025, 2026
• Refined or agglomerated sugar – 7% (2023), 8% (2024), 9% (2025), 10% (2026)
• Rental of electricity meters – 7% (2023), 11% (2024), 15% (2025), 20% (2026)
• Electric power – 14% (2023), 16% (2024), 18% (2025), 20% (2026)
• Passenger and freight transport (non-urban and non-road) – 14% (2023), 16% (2024), 18% (2025), 20% (2026)
Examples of goods and services taxable at 0% (i.e., exempt with credit)
• Exported goods/services
• Goods placed under customs suspensive regime
• Fertilizers
• Machinery for exclusively agricultural use
made by a check, bill of exchange, magnetic means of payment, bank transfer, electronic process or by compensation.
Examples of items for which input tax is nondeductible
• Goods and services not related to the business requirements
• Transport cars not used for the business needs
• Petroleum products not used as fuel
• Water pumps that run on solar energy or other renewable energy used in the agricultural sector
Examples of items for which input tax is deductible (if related to a taxable business use)
• Purchases and services related to a business use
• Transport cars of a business use
Partial exemption. Input tax deduction is granted for taxable supplies and for supplies that are exempt with a right to deduct. If a taxable person makes both taxable supplies and exempt supplies without credit, it may recover only input tax related to supplies that are taxable or exempt with a right to deduct.
The portion of deductible input tax is calculated as follows:
• In the numerator, the amount of turnover taxable and exempt with credit
• In the denominator, the numerator amount increased by the amount of turnover from transactions exempt without credit or transactions out of VAT scope
Approval from the tax authorities is not required to use the partial exemption standard method in Morocco. Special methods are not allowed in Morocco. The taxable person is required to comply with the calculation method as defined by the tax provisions in force (refer to the calculation details above).
Capital goods. Taxable persons may offset input tax incurred on purchases of fixed assets (noncapital expenses) against output tax on the same month’s VAT return. No specific rules apply for the input tax recovery for capital goods. In cases when capital goods are used for both taxable and nontaxable activities, the portion of VAT that can be offset is determined as detailed in the previous section. Capital goods are defined as production tools that aim to create wealth within the business for a period of use of more than one year.
The basis of input tax calculation is the acquisition cost, which is calculated as follows:
• The purchase price plus customs duties and other non-recoverable taxes and duties, less trade discounts obtained and taxes legally recoverable
• Related ancillary purchasing expenses such as transports, transit costs, hospitality expenses, insurance – transport excluding legally recoverable taxes
Refunds. If the amount of input tax recoverable in a period exceeds the amount of output tax 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. Refunds of the excess are generally only available with respect to the following VAT:
• VAT incurred on supplies of exported goods except for recycling metals (ferrous and nonferrous)
• VAT incurred on supplies of goods and services that are exempt with a right to deduct
• VAT incurred on purchases of equipment goods (fixed assets)
• VAT incurred on purchases of other assets except office equipment and certain passenger transport vehicles
• VAT incurred on financial leasing activities
Pre-registration costs. Input tax incurred on pre-registration costs in Morocco is not recoverable.
Bad debts. Output tax accounted for on supplies that do not get paid by the recipient (i.e., bad debts) can be recovered in Morocco, when the client is defaulting, except when the loss is justified through a complete judicial remedy.
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Morocco.
G. Recovery of VAT by non-established businesses
Input tax incurred by non-established businesses that are not registered for VAT in Morocco is not recoverable.
H. Invoicing
VAT invoices. Moroccan taxable persons must provide VAT invoices for taxable supplies, including exports, made to other taxable persons. Recipients of supplies must keep copies of invoices.
Credit notes. Credit notes must be issued with VAT included. These are generally issued in cases of return of goods or products to the supplier; additional commercial/financial discounts; billing error to the advantage of the customer, etc. No specific conditions apply in Morocco to credit notes.
Electronic invoicing. Electronic invoicing is allowed in Morocco, but not mandatory.
Scope of electronic invoicing. For B2B, B2C and business-to-government (B2G) supplies, electronic invoicing is allowed but not mandatory in Morocco. There is no threshold beyond which taxable persons are required to adopt electronic invoicing in Morocco. The requirements related to electronic invoicing are the same as those for paper invoicing.
However, in the case of a VAT refund request, the MTA requires the original invoice in hard-copy format, including the company stamp. If taxable persons issue electronic invoices, then they must use an electronic billing system connected to the central billing station of the MTA.
Simplified VAT invoices. Simplified invoices are not allowed in Morocco. Full VAT invoices are required. However, see the Supplies to nontaxable persons subsection for more detail.
Self-billing. Self-billing is not allowed in Morocco.
Proof of exports. Moroccan VAT is not chargeable on supplies of exported goods. However, to qualify as VAT-free, export supplies must be supported by evidence confirming that the goods have left Morocco. The evidence required is the customs declaration, which must clearly identify the exporter, the customer, the goods and the export destination; and it must provide invoice information.
Foreign currency invoices. A VAT invoice for a domestic supply is generally issued in the domestic currency, which is the Moroccan dirham (MAD). VAT based on the applicable VAT rate must be shown on the invoice. It is possible to issue a VAT invoice in a foreign currency. This is, however, not allowed for supplies made to a resident business, (generally, VAT is invoiced in foreign currency if it is invoiced to a non-established business).
Supplies to nontaxable persons. For supplies to nontaxable persons (i.e., private individuals), the receipt may be used as an invoice. Such receipt must include at least the following information:
• The date of the operation
• The identification of the seller or service provider
• The description of the product or service
• The quantity and selling price, with an indication, where applicable, of the VAT
An increase of 1% is applicable on the VAT due or that would have been due in the absence of exemption, in the case of noncompliance with the obligations of electronic filing and payment.
Penalties for errors. When the MTA identifies material errors in submitted returns, it will notify the taxable person by way of a letter, inviting the taxable person to submit a corrective return within 30 days as of the date of receipt of the said letter.
For late submission of a VAT return, a 5% surcharge applies. If the rectification gives rise to payment of a supplementary tax, the additional penalties/surcharges apply:
• A 10% penalty
• A 5% surcharge for the first month of delay
• A 0.50% for each additional month or fraction of a month of delay
In the event of adjustment of the turnover for a fiscal year in the frame of a tax audit, a 30% surcharge is applicable, in addition to the abovementioned penalties and surcharges for late payment. The 30% surcharge is increased to 100% when the taxable person’s bad faith is revealed.
As such, a fine equal to MAD50,000 per financial year is applicable to taxable persons who do not keep their accounting documents or copies thereof in electronic form for 10 years or failing that, in paper form.
Failure to comply with the VAT record-keeping requirements (as outlined above in the subsection Records) may result in a fine of MAD50,000 per year.
The late notification or failure to notify the tax authorities of changes to a taxable person’s VAT registration details (specifically a change in the details of the head office) may result in a penalty of MAD500. There is no specific penalty associated with late notification or failure to notify changes to a taxable person’s VAT regime. For further details, see the subsection, Changes to VAT registration details, above.
Penalties for fraud. A fine equal to 100% of the amount of tax evaded shall be applicable to any person who has participated in maneuvers designed to evade the payment of tax or assisted or advised a taxable person in the execution of such maneuvers, regardless of disciplinary action if they perform a public function.
No implications are foreseen for tax advisors unless their direct involvement in the fraud is demonstrated.
Personal liability for company officers. In the event of noncompliance with VAT reporting and payment obligations, any person responsible for the financial or administrative management of the business or any beneficial owner of the amount of unpaid VAT remains jointly and severally liable, both directly and indirectly, for any tax due amount, as well as any penalties and increases arising therefrom.
Statute of limitations. The statute of limitations in Morocco is four years. Note that the four-year (calendar) time limit is the statute of limitation in respect of VAT, exceeding which the tax authorities cannot claim any VAT regularization (such as in the frame of a tax audit).
However, in the case of a VAT credit carried forward, the MTA is entitled to audit four additional years. In such case, reassessments from these additional years shall not exceed the total VAT credit that were used during the audited period.