Dividends in Morocco

The term “Dividends” refer to the profits that a company distributes to its shareholders or partners. Dividends are distributed to shareholders in proportion to their contributions in the company’s share capital.

The payment of dividends can be in cash or in the form of additional shares (stock dividends). When dividends are distributed in the form of additional shares, it automatically leads to a capital increase.

This article covers the taxation of dividends, specifically the withholding tax on dividends in Morocco. But first, let’s cover the legal background of dividends in Morocco.

Dividends in Morocco – Legal background

In Morocco, dividends’ pay-out is possible in all company forms. However, the law provides for specific rules in the case a Public Limited Company.

Thus, according to the provisions of article 331 of Law 17-95 on public limited companies: “After the approval of the financial statements of the year and ascertainment of the existence of  distributable amounts, the ordinary meeting determines the proportion allocated to the shareholders in the form of dividends“.

The profit that a company can distribute is the net profit for the year:

  • minus:
    • prior losses carried forward
    • retained earnings for legal reserve
    • statutory reserves
  • plus, prior benefits carried forward, if any.

Note that the general meeting cannot decide on the distribution of a dividend unless it has approved the accounts for the financial year. Indeed, this approval :

  • legally approves the accounts for the financial year
  • recognizes the existence of distributable profits or reserves.

The same provisions also apply in the case of Limited Liability Companies.

However, in the other forms of companies, there is no specifications on the modalities of dividend distribution. Thus, the modalities of distribution of profits of partnerships and civil companies refer to the provisions of the Dahir of Obligations and Contracts.


Generally, as long as the company is subject to corporate income tax, the rules for withholding tax on dividends apply. These rules apply whether the company is subject to the tax by right or by option.

Dividends in Morocco – Taxation

According to the provisions of Article 13 of the General Tax Code, “Income from shares and similar income subject to withholding tax (…) are:

I.- income from the distribution of profits by companies subject to corporate income tax, such as :

– dividends, interest on capital and other income from similar shareholdings;

– the amounts distributed from levied profits for capital repayments(…) ;

– liquidation surplus

– retained earnings to be distributed “

Note that the text uses the general notion of “income from shares” which is not limited to dividends.

What share income is subject to withholding tax?

Companies distributing dividends in Morocco (or share income in general) must operate a withholding tax on the gross amount of these dividends. As such, the company distributing them must:

  • Levy the withholding tax on dividends ;
  • Pay the withheld tax to the Treasury within 30 days;
  • File an annual statement of paid withholding taxes

As such, the company pays to shareholders the amount net of taxes (gross amount net of the withholding tax).

Moreover, the scope of the withholding tax goes beyond dividends. It also covers all income from variable-income financial instruments, namely:

  • Dividends, interests on capital and other income from similar shareholdings. These are amounts distributed by a general meeting to shareholders on the occasion of the distribution of profits.
  • Amounts distributed from levied profits for:
    • capital repayment
    • shares repurchase
  • Liquidation surplus plus reserves constituted for less than ten (10) years. In this case, the withholding tax must be operated even in the event of prior capitalization of these reserves;
  • Reserves to be distributed

For more information on liquidation bonuses, read Company dissolution in Morocco

What is capital repayment ?

The law on public limited companies authorizes companies to repay shareholders, partly or fully, their contributions in the share capital. In fact, this repayment is made as an advance on the future liquidation bonus.

Capital repayment is levied on reserves. Repaid shares become “dividend-right shares”. As such, they are no longer entitled to the statutory interest.

What are reserves to be distributed?

The General Meeting is solely responsible of the treatment of a financial year’s earnings. It can decide to:

  • To distribute dividends, to which the withholding tax applies;
  • To put them in retained earnings. In such a case, the withholding tax is deferred until the effective dividends’ pay-out.

Moreover, the General Meeting can decide at any time to distribute, all or part of, non-compulsory reserves.

In short, a company subject to corporate income tax must apply a withholding tax on the profits levied in favor of shareholders. This applies regardless of the form of the levied amounts.

Withholding tax basis

The basis for the withholding tax on income from shares is:

  • Actual payment: This is the direct transfer of funds into the hands of the shareholder (payment in cash).
  • Placing funds at the disposal of shareholders: This consists, for the paying party, in placing at the disposal of the beneficiary, without possibility of withdrawal, the amount to be distributed. It is therefore equivalent, in tax terms, to an actual payment.
  • Recording into accounts: It can be the shareholders’ current accounts, the recipient’s bank account or current accounts agreed upon in writing between the parties.

Withholding tax on dividends in Morocco – Companies located in Industrial Acceleration Zones

When a company located in an Industrial Acceleration Zone pays out dividends, these dividends are subject to a withholding tax in following cases:

  • The company pays out dividends to Moroccan residents
  • The dividends result from taxable profits of activities carried out outside the free zone.

However, the withholding tax does not apply if:

  • The company pays out dividends to non-residents
  • The dividends result from profit of activities carried out in the free zone.

Withholding tax on dividends in Morocco – Companies located in Casablanca Finance City

The Article 6-I-C of the General Tax Code states that:

“Dividends and other income from similar holdings paid, placed at the disposal or recorded into accounts, by companies with “Casablanca Finance City” status in compliance with the laws and regulations in force, are exempt from withholding corporate income tax”

This article excludes financial companies from the exemption.

Withholding tax on dividends in Morocco paid to non-residents

Profits of an establishment operated by a foreign company in Morocco, are considered to be dividends under Moroccan law. As a result, the establishment is subject to withholding tax on the amounts it pays or place at the disposal of  the head office.

This also applies to the profits that the company charges against the sums lent or advanced to them by the head office.

However, in the case of a tax treaty, its provisions take precedence.

Dividends paid by OPCVM et OPCR

OPCVM and OPCR must apply the withholding tax on dividend they:

  • Pay
  • Put at the disposal of recipients
  • Record into accounts

Under common law provisions

Distribution of concealed dividends

These are adjustments made to the declared results following a tax audit, as part of the rectification procedure. This is the case of :

  • Concealed profits
  • Unjustified remuneration and expenses
  • Benefits granted to shareholders

These adjustments are subject to withholding tax even if they do not fully cover reported losses. However, adjustments relating to amortization and provisions are not subject to the withholding tax, since these expenses do not result in cash disbursement. The same applies to added back amounts, namely:

  • Fees duly justified but not reported on the appropriate tax return;
  • Cash payments for justified expenses equal to or exceeding ten thousand (10 000) MAD

Withholding tax rate on dividends in Morocco

The withholding tax rate is 15% under common law.

On the one hand, when a company in Morocco pays dividends to another company subject to corporate income tax, the withholding tax does not apply. However, Article 6 of the General Tax Code specifies that in order to benefit from this exemption, the beneficiary company subject to corporate income tax must provide a statement of ownership of shares which indicates its corporate income tax identification number.

On the other hand, when the company pays these dividends to non-residents, two situations may arise:

  • In the case the country has signed a tax treaty with Morocco : the provisions of the said treaty must be applied;
  • In the absence of a tax treaty : The common law rate applies


For a specific case : request a quotation online.

Main points to remember :

  1. Generally, companies must apply withholding tax when paying out dividends.
  2. All amounts levied from profits, regardless of their form, are subject to withholding tax.
  3. The withholding tax rate is 15% under common law.
  4. In some case, the withholding tax does not apply, namely when the company:
    • Pays out dividends to other companies subject to Corporate Income Tax in Morocco under some conditions
    • Is located in a free zone, the recipient is a foreign resident, and the dividends result from profits made in the free zone
    • Has the ‘Casablanca Finance City’ Status, is not a finance company and its shareholders are legal persons
  5. Tax treaties take precedence over local law
  6. The tax basis for the withholding tax is not limited to the effective payment of dividends. Placing amounts at the disposal of recipients and recording into accounts are also included.


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