Taxation in Casablanca, Morocco
What are the tax rates in Casablanca, Morocco? How are corporations taxed? Here’s Teleports overview of personal, corporate and other taxation topics in Casablanca, Morocco.
Personal taxation in Casablanca
Effective personal income tax rate
| Annual income | $25,000 | $40,000 | $80,000 | $125,000 | $200,000 |
|---|---|---|---|---|---|
| Rate | 28% | 32% | 35% | 36% | 37% |
Teleport city rankings for personal income tax
Personal taxation puts Casablanca in position 243 of all Teleport Cities.
Basis
Resident individuals are taxed on their worldwide income; nonresidents are taxed only on Moroccan-source income.
Residence
The following individuals are resident in Morocco for tax purposes: (1) individuals who are habitually resident in Morocco; (2) individuals who are present in Morocco for at least 183 days in a given year, whether or not continuously; and (3) individuals whose professional activities or center of economic interests are located in Morocco.
Filing status
Joint filing is not permitted; each individual must file a separate return.
Rates
Rates are progressive from 0% to 38%.
Deductions and allowances
Various deductions and personal allowances are available in computing taxable income.
Taxable income
All compensation received by an individual is taxable, including: salaries and wages, allowances, pensions, annuities and all other employment benefits; investment income; property income; and income derived from the carrying out of a business or profession.
Capital gains
Capital gains derived from the disposal of immovable property generally are subject to a 20% tax. Higher rates are applicable in some specific cases. Capital gains derived from the disposal of shares are subject to tax at 20%.
Other taxes on individuals
Real property tax
The transfer of property is subject to the 20% tax on capital gains, but the tax payable cannot be less than 3% of the transfer price. Undeveloped land can be subject to higher rates of taxation ranging from 25% to 30%, depending on the period of ownership.
Inheritance/estate tax
There is no inheritance tax, but a gift tax is levied at a flat rate of 20%.
Social security
An employer is required to register its employees with the social fund and pay social security contributions based on the employee’s salary. Both the employer and employee are required to contribute and the employee’s contribution is withheld by the employer.
Compliance for individuals
Penalties
Interest and penalties apply for late filing, failure to file or filing an incorrect return.
Filing and payment
The global income tax return, when applicable, must be filed before 1 March of each year in the place where the taxpayer has his/her habitual residence or main business. Independent professional must file before 1 April.
Corporate taxation in Casablanca
Teleport city rankings for corporate income tax
Corporate taxation puts Casablanca in position 214 of all Teleport Cities.
Basis
Morocco operates a territorial tax system. Companies (both resident and nonresident) generally are subject to corporate tax only on income generated from activities carried on in Morocco. Foreign corporations are subject to taxation on income arising in Morocco if they have, or are deemed to have, a permanent establishment in Morocco.
Taxation of dividends
Dividends received by corporate shareholders from taxable Moroccan-resident entities must be included in business profits, but the dividends are 100% deductible in calculating taxable income.
Residence
A company is resident in Morocco if it is incorporated in Morocco or if its place of effective management is in Morocco.
Losses
Tax losses may be carried forward for four years from the end of the loss-making accounting period. However, the portion of a loss that relates to depreciation may be carried forward indefinitely. Losses may not be carried back.
Incentives
A variety of incentives are offered to encourage Moroccan and foreign investors. Incentives include an exemption from business tax for the first five years of operations for newly- incorporated companies, and a corporate income tax exemption for companies exporting goods and services or operating tourist establishments (subject to certain conditions) for the first five years of operations, followed by a reduced rate on export sales.
Rate
The corporate income tax rate ranges from 10% to 31%. A 37% rate applies to leasing companies and credit institutions. A foreign contractor carrying out engineering, construction or assembly projects, or projects relating to industrial or technical installations may opt to be taxed at 8% of the total contract price, net of VAT.
Alternative minimum tax
There is no AMT, but the tax payable by a company must be at a rate of at least 0.5%, regardless of the amount of taxable profit, calculated on turnover, financial and noncurrent income.
Foreign tax credit
Foreign tax credits are available if so provided in an applicable tax treaty.
Taxable income
Companies are taxed on the difference between their trading income and expenditure. Business expenses incurred in the operation of the business generally are deductible, unless specifically excluded. Expenses not permitted include interest on shareholder loans where the stock is not fully paid up, interest on shareholder loans in excess of the official annual interest rate, and penalties and fines.
Holding company regime
Under the offshore holding company regime, companies can be established in financial centers, provided the exchange office is notified within 30 days of the date of registration in the trade register. The main tax advantages available to offshore holding companies are: (1) corporation tax of USD 500 per year on their activities for the first 15 years; (2) a tax exemption on dividend distributions and the transfer of profits abroad; (3) an exemption from VAT; and (4) the same customs benefits and staff rules as apply to offshore banks.
Capital gains
Capital gains are treated as noncurrent income and taxed at the normal corporate tax rate.
Participation exemption
See “Taxation of dividends” above.
Other taxes on corporations
Stamp duty
Legal documents subject to registration duty also are subject to stamp duty at a flat rate of MAD 20 per sheet.
Social security
An employer is required to register its employees with the social fund and pay social security contributions based on the employee’s salary.
Other
A 4% registration duty is levied on the sale of shares in nonlisted companies.
Transfer tax
Registration duty at rates ranging from 4% to 6% and a 1% real estate tax are levied on the acquisition of real property.
Capital duty
No, but capital increases are subject to a 1% registration duty.
Real property tax
No, but see “Transfer tax” and “Other” below.
Payroll tax
Payroll tax (called professional training tax) is imposed on the gross monthly remuneration of employees subject to social security contributions, at a rate of 1.6%.
Compliance for corporations
Consolidated returns
Consolidated returns are not permitted; each company must file its own individual return.
Penalties
Interest and penalties apply for late filing, failure to file or filing an incorrect return.
Rulings
An optional advance pricing agreement ruling procedure was introduced in 2015.
Tax year
The calendar year normally is the fiscal year, although a company may opt for a different fiscal year.
Filing requirements
Accounts for income tax purposes must be filed within three months of the end of the relevant accounting period. Corporate tax is payable in four equal installments, based on the previous year’s assessment. The actual amount payable is adjusted in the three months following the end of the accounting period.
Other taxation in Casablanca
Value added tax
Filing and payment
VAT returns must generally be filed on a monthly basis.
Other
Nonresident taxpayers carrying out taxable transactions in Morocco are required to appoint a fiscal representative in Morocco. However, under the reverse charge mechanism, a Moroccan customer of a nonresident taxpayer who has not appointed a fiscal representative should declare the VAT on the transaction on its own VAT return and account for the VAT due.
Rates
The standard rate of VAT is 20%, with reduced rates of 7%, 10% and 14% applying to certain transactions.
Taxable transactions
VAT is levied on all industrial, commercial and craft activities, and on services rendered in Morocco, as well as on import transactions.
Registration
All persons subject to VAT must make a declaration of existence within 30 days of the start of their operations in order to register for VAT purposes.
Anti-avoidance rules
Disclosure requirements
No, but information on transactions involving dependent entities should be maintained by the Moroccan resident entity.
Transfer pricing
There is no formal transfer pricing legislation in Morocco, but transactions between related parties must be on arm’s length terms. Two methodologies are used by the tax authorities: the
Thin capitalization
There is no formal thin capitalization legislation but the deduction of interest on shareholder loans is subject to some conditions and limitations. Interest is deductible provided the shareholder’s stock is fully paid up, the interest rate does not exceed the official annual rate and the debt-to-equity ratio does not exceed 1:1.
Investment basics
Foreign exchange control
Transactions in foreign currency generally are not restricted, but there are some administrative formalities. Certain transactions, including the payment of management fees, require the prior approval of the exchange authorities. The export of MAD is prohibited.
Accounting principles/financial statements
Moroccan GAAP. Financial statements must be filed annually.
Principal business entities
These are the limited liability company, private limited company, general or limited partnership and branch of a foreign company.
Withholding tax
Royalties
Royalties paid to a nonresident are subject to a 10% withholding tax unless the rate is reduced under a tax treaty.
Dividends
Dividends paid to a nonresident are subject to a 15% withholding tax unless the rate is reduced under an applicable tax treaty.
Branch remittance tax
A 15% branch remittance tax is imposed on profits remitted to a nonresident head office unless the rate is reduced under a tax treaty.
Other
Companies that do not have their registered office in Morocco are subject to a (final) 10% tax withheld at source on the gross amount of the following: payments for technical assistance, or technical, scientific or similar information; fees for the use of, or the right to use, certain equipment; remuneration for the transport of goods or persons from Morocco; and certain other commissions and fees. Certain payments (e.g. rents and maintenance) related to aircraft used for international transport are exempt.
Interest
Interest paid on a loan from a nonresident is subject to a 10% withholding tax, unless the rate is reduced under a tax treaty. A loan granted for 10 years or more is exempt from withholding tax.
Technical service fees
See “Other” below.
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