EY
37, Boulevard Abdellatif Ben Kaddour 20 050
Casablanca Morocco
Indirect tax contacts
Abdelmejid Faiz
+212 (522) 957-900 abdelmejid.faiz@ma.ey.com
Maria Chafii +212 (522) 957-900 maria.chafii@ma.ey.com
Hosana Elinam Afla +212 (522) 957-900 hosana.elinam.afla@ma.ey.com
A. At a glance
Name of the tax
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 7%, 10%, 14%
Other Zero-rated (0%) and exempt
VAT number format 12345678
VAT return periods Monthly or quarterly Thresholds
Registration Nil
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 the one-off supply or importation of goods.
C. Who is liable
A taxable person is a person or legal entity that carries out a taxable transaction. A taxable trans action is a transaction involving the sale or importation of goods or services that is subject to VAT even if such transaction occurs only once. A person liable to VAT in Morocco must register with the local tax service.
Morocco does not provide a VAT registration threshold. A business registers for VAT when it registers for corporate or income tax purposes.
Exemption from registration. Morocco does not have a VAT registration threshold, and as such all businesses must register for VAT.
However, agricultural products (non-transformed), noncommercial activities, nonindustrial activities and civil acts are outside the scope of VAT. Therefore, a VAT registration is not required for individuals/entities exercising these activities.
Voluntary registration and small businesses. There is no threshold for VAT registration in Morocco, and as such VAT registration is mandatory. However, for certain businesses, VAT registration is not mandatory and voluntary VAT registration is allowed for the following:
• Traders and service providers who directly export products, objects, goods or services for their export turnover
• Manufacturers and service providers who do not exceed an annual turnover of MAD500,000
• Traders who sell without transformation, product and foodstuffs other than those that are 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.
Non-established businesses. Non-established taxable persons that perform a taxable activity 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 (i.e., that are used in Morocco by a Moroccan customer), 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 appointed a tax representative in Morocco, the cus tomer 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 nonestablished supplier becomes liable of 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 nonestablished 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. In case the foreign entity does not appoint a tax representative, the mechanism of the VAT reverse charge applies. This mechanism provides that, in case a tax rep resentative 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. There are no domestic reverse charges in Morocco.
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).
Nonresident providers of electronically supplied services for business-to-consumer (B2C) sup plies are required to register and account for VAT due on its supplies in Morocco.
There are no other specific e-commerce rules for imported goods in Morocco.
Online marketplaces and platforms. No special rules exist for online marketplaces and platforms in Morocco.
Registration procedures. When taxable persons apply for a registration, they must provide the following documents:
• “Declaration d’existence” a printed form delivered by the Moroccan tax administration (MTA) that includes, in addition to the corporate name of the non-established taxable person, the fol lowing information:
Information regarding the non-established taxable person:
Name and place of the taxable person’s registered office
Phone number of the registered office and, where applicable, that of the taxable person’s main office in Morocco
The professions and activities carried on in each establishment and branch mentioned in the declaration
The location of all the taxable person’s establishments and branches located in Morocco
Names, professions or activities and addresses of the natural or legal person resident in Morocco, accredited by the tax authorities
The indication, where applicable, of the option for flat-rate taxation in respect of corporate income tax
Information regarding the foreign provider’s legal representatives (individuals):
Last and first name of the legal representative(s)
Function of the representative(s)
Address City
• Copy of the contract signed by the non-established taxable person with the Moroccan client
• Representation letter signed by the non-established taxable person that allows the representa tive to collect, declare and pay VAT on its behalf
• Letter from the tax representative stating that it commits itself to fulfill VAT obligations of the non-established taxable person
The MTA usually provides the VAT ID certificate within one week.
The procedure above is applicable to non-established taxable persons. For resident taxable per sons, a unique tax identification (VAT, CIT) is given upon the registration process of a taxable person in Morocco.
The VAT registration application (including the accompanying documents outlined above) must be submitted in hard copy, i.e., by paper to the tax authorities’ office in Morocco (the address where the documents must be sent depends on which office the individual taxable person is allocated to).
Deregistration. Once the non-established entity ends its activities in Morocco and has appointed a tax representative, it is required to deregister from VAT. In practice, the deregistration process consists of sending a “deregistration letter” to tax authorities in which the non-established entity requests to be deregistered from VAT. The tax authorities do not provide a deregistration certifi cate.
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: 7%, 10%, 14%
• 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.
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
• Investment goods recorded as fixed assets, acquired by taxable persons, for a period of 36 months as from the start of the activity, excluding vehicles acquired by car rental agencies
Examples of goods and services taxable at 7%
• Water
• Rental of water and electricity meters
• Pharmaceutical products and non-recoverable packaging of pharmaceutical products
Examples of goods and services taxable at 10%
• Petroleum products
• Banking transactions
• Hotel operations
• Restaurant operations
• Sales and delivery operations relating to art objects
• Edible fluid oils
• Solar water heaters and photovoltaic panels
Examples of goods and services taxable at 14%
• Transport services (excluding rail transport of passengers and goods)
• Butter, excluding homemade butter
• Electricity
• Services rendered by any direct selling agent or insurance broker in respect of contracts brought by it to an insurance business (without the possibility to offset input tax)
The term “exempt” refers to supplies of goods and services that are not liable to VAT and that do not qualify for input tax deduction.
Examples of exempt supplies of goods and services (i.e., exempt without credit)
• Sales, other than for consumption on the spot, of goods including fresh, frozen, whole or cut fish products
• Sales of recovered metals and water pumps that use solar energy or any other renewable energy used in the agricultural sector
• Services provided by insurance and reinsurance taxable persons
Option to tax for exempt supplies. The option to tax exempt supplies is not available in Morocco.
E. Time of supply
The time when VAT becomes due is called the “time of supply” or “tax point.” In Morocco, the “tax point” generally corresponds to the time when the payment is made.
The Moroccan tax code provides that the tax point is the date of cash receipt. After a taxable person receives cash for a taxable supply, the output tax becomes due, even if the cash received represents only part of the total outstanding amount for the goods or services provided.
The Moroccan tax code provides an optional regime under which VAT is due when the invoice is issued, or the transaction is booked in the accounts of the seller or service provider (which ever is earlier). However, if the payment precedes the invoicing, the time of payment constitutes the tax point.
Any taxable person that wants to use the optional system must file a declaration to the MTA before 1 January. A list of the taxable person’s customers that sets forth the unsettled VAT for each of the customers must be attached to the declaration. Newly registered taxable persons must file the declaration within one month after the commencement of its activity.
Deposits and prepayments. A prepayment or deposit constitutes a tax point. As a result, the time of effective delivery of the goods or services is ignored for VAT purposes.
Continuous supplies of services. If services are received continuously but payment is made periodically, a tax point is created each time payment is made, unless the “debit system” is opted for (see the Leased assets subsection below for more detail) or a VAT invoice is issued, whichever is earlier. No specific regulation provides for the VAT treatment of continuous services.
Goods sent on approval for sale or return. The tax point for goods sent on approval is when the customer accepts the goods and a supply is made.
Reverse-charge services. The declaration and the payment of VAT to the tax authorities must be performed during the month following the payment of the non-established provider of services.
Leased assets. The time of supply for leased assets is the date of rent income cash collection. However, under the debit regime, the VAT is due when the rent income is booked in the accounts of the owner/lessor.
The following types of leases are not subject to VAT:
• Rental of unfurnished premises, whether or not intended for professional use
• Rental of equipped premises that does not exceed MAD500,000
The following types of leases are subject to VAT:
• Furnished premises
• Premises that are equipped for professional use
• Premises located in commercial complexes (malls)
• Machines
• Vehicles
Imported goods. VAT on imported goods is due at the time of customs clearance.
F. Recovery of VAT by taxable persons
Input tax is VAT charged on goods and services acquired by a taxable person for taxable purposes. A taxable person generally recovers input tax by deducting it from output tax (VAT charged on supplies made). Input tax consists of VAT charged on goods and services purchased in Morocco and VAT paid on imports of goods.
The time limit for a taxable person to reclaim input tax in Morocco is one year. The right to deduct arises at the end of the month in which the customs receipts are issued, or the invoices or statements issued in the name of the beneficiary are paid in full. This right must be exercised within a period not exceeding one year, starting from the month or the quarter of the start of the said right.
Nondeductible input tax. Input tax may not be recovered on purchases of goods and services that are not used for business purposes and that are considered to be nondeductible expenses for corporate tax purposes (for example, goods acquired for private use by an entrepreneur). VAT charged on purchases, works or services, where the amount exceeds MAD5,000 per day and per supplier and MAD50,000 per month and per provider, is not recoverable unless a settlement is 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 any other renewable energy used in the agricultural sector (introduced by the 2019 finance law)
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 sup plies without credit, it may recover only the 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 transac tions 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 deter mined 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 nonfer rous)
• 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 trans port 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., a bad debt) 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 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 maintain 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. However, in case of a VAT refund request, the MTA requires the original invoice in hard-copy format, includ ing the company stamp.
If taxable persons issue electronic invoices, then they must use an electronic billing system con nected to the central billing station of the MTA.
Simplified VAT invoices. Simplified invoices are not allowed in Morocco. As such, 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 domes tic 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 Records. Taxable persons are required to preserve the following records for VAT purposes in Morocco: duplicates of sales invoices or sales receipts; supporting documents for expenses and investments; accounting documents required for the tax audit (in particular the books on which the operations were recorded); the general ledger; the inventory book (the detailed inventories if they are not copied in full to this book); the journal book; and the customer and supplier files; as well as any other document provided by the legislation or regulations in force.
There is no provision in the Moroccan VAT law outlining where the records should be held. Therefore, in practice, records may be held in or outside of Morocco. However, wherever the records are held, in the case of a tax audit, the taxable person must be able to present such records to the tax inspectors in a timely manner.
Record retention period. Accounting records must be kept for no less than 10 years.
Electronic archiving. Electronic archiving is allowed in Morocco, but not mandatory.
I. Returns and payment
Periodic returns. The filing of VAT returns may be on a monthly or quarterly cycle based on certain criteria.
The following taxable persons must file monthly VAT returns:
• Taxable persons that had taxable turnover during the preceding year of MAD1 million or more
• Non-established persons that carry out taxable activities in Morocco
The following taxable persons must file quarterly VAT returns:
• Taxable persons that had taxable turnover during the preceding year of less than MAD1 million
• Taxable persons operating through seasonal establishments, practicing periodic activities or car rying out occasional activities
• New taxable persons in their first calendar year of activity
The above taxable persons can opt for the monthly declaration system by filing a request with the MTA before 31 January.
Taxable persons under the tele-declaration and tele-payment system must file VAT returns within one month after the end of the relevant month or quarter.
Other taxable persons must file their VAT returns before the 20th day of the month following the relevant month or quarter.
Periodic payments. Taxable persons under the tele-declaration and tele-payment system must make VAT payments within one month after the end of the relevant month or quarter.
Other taxable persons must pay VAT due before the 20th day of the month following the relevant month or quarter.
Electronic payment of VAT due is mandatory for all taxable persons, regardless of the turnover performed. Electronic payment is made online through the portal of the Moroccan tax depart ment (simpl-tva.tax.gov.ma).
Electronic filing. Electronic filing is mandatory in Morocco for all taxable persons. This is regard less of the turnover performed and is carried out through the MTA’s platform (“SIMPL”).
Payments on account. Payments on account are not required in Morocco.
Special schemes. Debit regime. An optional method allows a taxable person to declare output tax upon invoice issuance or accounting record. Input tax under such system remains recoverable at cash payment.
Margin regime. Travel agencies that carry out purchase and sale operations of travel services used in Morocco are subject to the margin regime. The margin is determined by the difference between, on the one hand, sums collected by the travel agency and invoiced to the beneficiary of the service, and on the other hand, the total expenses, including VAT, invoiced to the agency by its suppliers.
In addition, the sale and delivery of secondhand goods by taxable persons are subject to VAT on the margin in case the goods were initially purchased from a nontaxable person (i.e., not registered for VAT). The taxable basis is determined by the difference between the sale price and the purchase price under certain conditions.
Annual returns. Annual returns are not required in Morocco.
Supplementary filings. Input tax incurred on petroleum products, which is claimed by a taxable person, must be reported in a special VAT return. Such supplies must be reported:
• Gasoline used for the operating requirements of vehicles of collective road transport of persons and goods and road transport of goods carried out by taxable persons on their behalf and by their own means
• Gasoline used for the operating needs of rail transport of persons and goods
• Gasoline and kerosene used for air transport purposes
Correcting errors in previous returns. Corrective returns can be filed voluntarily online through the electronic filing system. The corresponding penalties are calculated automatically. Such penal ties are charged at 10% (5% if payment is made in a delay of less than 30 days) for late payment of tax due, plus 5% late payment interest for the first month of delay, and 0.5% late payment interest per additional month of delay. No supporting documents or letter explaining the corrections is required to be submitted to the tax authorities.
Digital tax administration. There are no transactional reporting requirements in Morocco.
J. Penalties
Penalties for late registration. Late filing of the statement of corporate existence (Declaration d’existence) is subject to a penalty of MAD1,000. Besides, VAT due for the period preceding registration results in late filing and payment penalties.
Penalties for late payment and filings. In case of late filing of the VAT return beyond the deadline:
• 30 days within the deadline: 5% penalty
• Beyond 30 days following the deadline: 15% penalty
In the case of tax reassessment procedure due to lack of filing, the above penalty is increased up to 20%. In the case of a tax audit, the applicable penalty is increased up to 30%.
In the case of a tax audit, the applicable penalty is increased up to 30%.
If no VAT is due, the penalty equals MAD500. In case of late payment of VAT due:
• A penalty of 20% on the VAT amount due
• Additional 5% penalty in case of late payment within the first month and 0.50% per additional month (or fraction of month)
If the VAT declaration provides that no tax is due, the amount of any VAT credit is reduced by 15%. This means that where input tax exceeds output tax in the same period, this generates a VAT credit in the VAT return for the taxable person. However, where the return is filed late (after the legal deadlines), then the VAT credit for that period is decreased by 15%.
An increase of 1% is applicable on the VAT due or that would have been due in the absence of exemption, in 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. In case 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 pay ment. 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.
Failure to notify the tax authorities, or late notification regarding changes to a taxable person’s head office may result in a penalty MAD500. No penalty applies for failure to notify or late notification for change in the VAT regime of a taxable person. For further details, see the subsec tion above Changes to VAT registration details.
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 dem onstrated.
Personal liability for company officers. Company officers cannot be held personally liable for errors and omissions in VAT declarations and reporting in Morocco.
Statute of limitations. The statute of limitations in Morocco is four years. However, in case of a VAT credit carried forward, the MTA is entitled to audit four additional years. In such case, reas sessments from these additional years shall not exceed the total VAT credit that were used during the audited period.