All about VAT in Morocco

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  • What do we mean by VAT?
  • What is its field of application?
  • What is the chargeable event for VAT?
  • What are the different VAT rates?
  • How can I declare VAT?
  • What are the advantages and disadvantages of VAT?
1. What do we mean by VAT?

The value added tax is an indirect tax which affects the added value generated by the production or marketing of products and services. It is paid by the end consumer and collected by the State, the company is only an intermediary between the two, it is responsible for collecting this tax from consumers and paying it to the State.

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2. What is the scope of VAT?

Value added tax applies to the following activities:

Industrial activities;
Craft activities;
Commercial activities;
Building works;
The liberal professions;
Import operations...
Merchants whose turnover is greater than 2 MAD.

3. What is the chargeable event for VAT?

The generating event is the event that gives rise to the tax debt of the person liable to the public treasury, it is the moment when the VAT becomes payable.

VAT liability is the right held by the tax authorities to obtain payment of VAT from the taxpayer.

4. What are the VAT regimes in Morocco?

A distinction is made between two VAT regimes:

The collection regime: According to this regime, the triggering event is the total or partial collection of the amounts, without taking into account the date of the invoice or the date of delivery of the goods and services.
Settled by:The operative event:ChequeThe cashing of the cheque.Bank transferThe entry in the supplier's account.Factoring (factoring)The effective payment of the customer in the hands of the factoring company.
The debit regime: The triggering event in this regime is the entry of the amount debited from an account. In practice, VAT becomes payable from the moment the customer's account is debited with the amount due, either due to the delivery of the products or the performance of the service.

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5. What are the different VAT rates in Morocco?

There are two categories of rates: the normal rate and the reduced rates.

The standard VAT rate is 20%:
This is the default rate that applies to all activities that are not affected by the reduced rates.
There are three reduced rates (the rate of 7%, 10%, 14%):
The 7% rate: This rate is applied with the right of deduction to all sales and deliveries relating to: Sugar, canned sardines, powdered milk intended for human and animal food, school supplies, etc.
The 14% rate: It is applied with the right of deduction for operations relating to the transport of passengers and goods, electrical energy, etc., and without the right of deduction for services rendered by soliciting agents or brokers on the basis of contracts provided to insurance companies.
The rate of 10%: It is applied with the right of deduction for edible fluid oils, pasta, petroleum gas and other gaseous hydrocarbons….
NB: Alcoholic beverages are subject to VAT for an amount of 100MAD per hectolitre. Products made from gold, platinum are subject to a VAT of 5MAD per gram, and those made from silver to a VAT of 0.10 MAD per range of silver.

6. Recoverable VAT and invoiced VAT?

The VAT due by a company is calculated by the difference between the invoiced VAT and the recoverable VAT.

Recoverable VAT: Recoverable VAT represents the amount of VAT on the company's expense invoices. A distinction is generally made between (i) recoverable VAT on purchases of goods and services and (ii) recoverable VAT on the acquisition of fixed assets.
VAT invoiced: VAT invoiced represents the amount of VAT invoiced to customers, which is collected on behalf of the State. This sum is determined on the basis of receipts if the company is subject to the receipts regime.

The VAT due:
The VAT due is the difference between the invoiced VAT and the recoverable VAT. It is to be paid by the company to the State. If the recoverable VAT for a period is greater than the invoiced VAT, we speak of a VAT credit. In this case, the company has nothing to pay to the State. The VAT credit can thus be carried over to subsequent periods, or in certain cases be reimbursed by the State to the company.

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7. What is the frequency of VAT reporting?

In Morocco, there are two VAT declaration frequencies, a monthly declaration and a quarterly declaration, which is determined on the basis of the turnover collected.

The quarterly statement:
All taxpayers who have a turnover of less than 1.000.000 MAD must draw up a quarterly declaration and file it no later than the end of each month following the quarter concerned.
The monthly statement:
All taxpayers who achieve a turnover of more than 1.000.000 MAD must prepare a monthly declaration. Thus, at the end of each month the taxpayer must file a VAT return for the previous month, and pay the amount of VAT due.

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