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Morocco - Indirect Tax Guide

Morocco - Indirect Tax Guide

Explore the requirements and rules that apply to indirect taxes in Morocco.

Explore the requirements and rules that apply to indirect taxes in Morocco.

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General

Types of indirect taxes (VAT/GST)

VAT.

What is standard VAT/GST rate?

20 percent.

Are there any reduced rates, zero rates or exemptions?

Reduced VAT rates apply to some transactions such as:

  • 7 percent for sales and deliveries relating to widely consumed products (water, sugar, soap, etc.), low cost passenger cars, pharmaceutical products and related raw material or products included in their composition
  • 10 percent for banking and credit operations, accommodation and catering, and gas operations, etc.
  • 14 percent for passenger and freight transport excluding rail transport, electrical energy, and activities carried out by insurance brokers. 

Zero rated supplies include: 

  • export of goods and services
  • investment assets acquired within 36 months following the start of the activity
  • international transport services
  • cancer medications, antiviral drugs and medicinal products for the treatment of diabetes, asthma, cardiovascular diseases and AIDS. 

Exempt supplies include: 

  • sales of some products not consumed on-site (e.g. bread, couscous, semolina, milk, raw sugar, etc.)
  • sales of candles and paraffin used in their manufacture, excluding those used for decorative purposes
  • tree logs, debarked or roughly squared 
  • artisanal carpets produced locally
  • sales of precious metals manufactured in Morocco
  • sales of tax stamps, paper and stamped impressions issued by the State
  • sales and services provided by small manufacturers and small providers who have an annual turnover lower or equal to 500,000 Moroccan dirham (MAD)
  • sales of equipment exclusively intended for disabled persons.

What are the general and specific place of supply rules, if applicable?

A transaction is deemed to have been carried out in Morocco when:

  • in case of a sale of goods, delivery is in Morocco
  • in case of all other activities, when the services provided, the item leased or the right sold are used in Morocco.

VAT/GST registration

Who is required to register for VAT/GST?

Persons that carry on taxable transactions in Morocco.

Is voluntary VAT/GST registration possible for an overseas company?

Yes.

Does an overseas company need to appoint a fiscal representative?

Yes.

Is VAT/GST grouping* possible?

No.

VAT/GST compliance

How frequently are VAT/GST and other indirect tax returns submitted?

Taxpayers file VAT returns either on a monthly or quarterly basis. Monthly filing applies to taxpayers having a turnover that exceeds MAD1,000,000, foreign taxpayers with no establishment in Morocco, and taxpayers having opted for this regime.

Quarterly filing applies to new taxpayers during the first year of their activity, taxpayers having a turnover that does not exceed MAD1,000,000 and taxpayers having a seasonal activity.

Can returns be filed and payments be made electronically?

VAT must be filed and paid electronically.

What are the exchange rate rules?

The exchange rate to be used is the exchange rate at the day of the transaction. Exchange rates are determined by the Central Bank (Bank Al Maghrib).

VAT/GST recovery

Can an overseas company recover VAT/GST and other indirect taxes if not registered for VAT/GST locally?

No.

Is it a prerequisite that output tax be charged before input tax can be claimed?

When input tax is claimed in a tax period where no output tax is declared, the input tax is carried forward to the next tax period.

Are there any exemptions with the right to recover or deduct input VAT?

Input VAT cannot be deducted for some operations including:

  • goods and services not used for operation purposes
  • properties and premises not linked to operations
  • passenger vehicles except if used for public or personnel transport
  • petroleum products, except fuels, used for collective road transport, air transport and rail transport
  • travel and entertainment expenses
  • goods and services not justified by compliant invoices.

For what period of time may input tax not previously claimed be claimed (i.e. prescription)?

The right to deduct input VAT is prescribed within 1 year from the issuance of the customs receipts or payment of the invoices.

Where a VAT return reflects a refund due to the taxpayer, is the refund paid to the taxpayer or is the taxpayer required to utilize the refund as a credit against future payments?

The taxpayer is required to utilize the refund as a credit against future payments.

Invoices

Is a business required to issue tax invoices?

Yes.

Is it possible/mandatory to issue invoices electronically?

No, original paper invoices are required.

Is it possible to issue recipient-created tax invoices?

No.

Audits

Do tax audits take place on a regular basis?

Yes. However, there are no specific rules with regards to the frequency of tax audits.

Are audits done electronically in your country/territory (e-audit)? If so, what system is in use?

No.

What penalties can arise from non-compliance?

In the case of a tax audit, the following penalties would apply for VAT non-compliance: 

  • 30 percent penalty for filing failure
  • 20 percent late payment penalty
  • overcharges on late payment penalties calculated at 5 percent for the first month and 0.5 percent for each subsequent month.

Special indirect tax rules

Are there unique country/territory-specific indirect tax rules that differ from 'standard' indirect tax rules in other jurisdictions?

No.

Does a reverse charge mechanism apply?

Yes, in case a non-resident, performing taxable transactions for the benefit of customers established in Morocco, does not appoint a local tax representative, the VAT due has to be filed and paid by the Moroccan client.

Can VAT on reverse charges be claimed as input tax, to the extent that the expense on which the reverse charge VAT is accounted for, is used for taxable purposes?

Yes.

Can non-residents appoint local agents in order to avoid reverse charge VAT by virtue of charging standard rate VAT and accounting for such VAT through the agent?

Yes, non-residents can appoint a local tax representative in order to comply with VAT obligations.

Are there indirect tax incentives available (e.g. reduced tax, tax holidays)?

Yes, tax incentives are available with regards to VAT such as VAT exemption on export activities and VAT exemption on equipment acquisitions for the first 36 months of activity.

Rulings

Is it possible to apply for formal or informal advance rulings from the tax authority

Taxpayers may send request letters to the tax authorities regarding tax principles. Taxpayers also have the possibility to request the tax authorities to rule on the tax regime applicable to their factual situation with regard to the legislative provisions provided for in the Moroccan Tax Code, as well as the regulatory provisions made for such application. However, this request can only be made in limited situations.

Are rulings and decisions issued by the tax authorities publically available?

Some responses of the tax authorities are publicly available.

Other indirect taxes

Are there other indirect taxes not commented on above?

Import VAT and customs duties.

For further information please contact

Insaf Haitof
Partner, Tax
KPMG in Morocco
T: +212 537 633 702
E: ihaitof@kpmg.com

Chaymaa El Khidrami
Senior advisor, Tax
KPMG in Morocco
T: +212 537 633 702
E: celkhidrami@kpmg.com

Footnote

*By ‘grouping’ we mean: either a consolidation mechanism between taxpayers belonging to the same group (payment and refund are compensated but taxpayers remain distinct) or a fiscal unity for VAT/GST purposes (several taxpayers are regarded as a single taxpayer).

Disclaimer

All information contained in this document is summarized by KPMG in Morocco, a member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

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