Key takeaway: Article 11 of the CGI prohibits the deduction of certain expenses from taxable income, even if they are recorded in the accounts. The most common errors — cash payments above thresholds, fines, invoices without IF/ICE — expose the company to add-backs and surcharges of up to 30% of the reassessed amount. Here are the 10 pitfalls to avoid.
Why Certain Expenses Are Not Deductible
The principle of expense deductibility for IS purposes is set out in Article 10 of the CGI: any expense incurred in the interest of the business and supported by proper documentation is, in principle, deductible. However, Article 11 provides an exhaustive list of expenses expressly excluded from deduction, regardless of the circumstances.
Ignorance of these exclusions is one of the main sources of tax reassessment in Morocco. Here are the 10 most frequent errors found during tax audits.
The 10 Most Common Non-Deductible Expenses
1. Fines, Penalties, and Surcharges
Fines, penalties and surcharges of any kind charged to the company for breaches of legal or regulatory provisions — tax, customs, criminal, social, traffic, exchange control or pricing — are non-deductible (Art. 11-I). Payment terms: Art. 11-I, para. 2 still excludes from this rule the late-payment indemnities governed by Law No. 32-10, but this reference is historical. Law No. 69-21 abolished that indemnity payable to the supplier and replaced it with a monetary fine paid to the Treasury, which is not deductible from taxable profit (Art. 11-I; Circular Note No. 734). The tax treatment of late-payment indemnities, for both debtor and creditor, is covered in a dedicated article.
Common mistake: recording CNSS late-payment penalties as deductible expenses.
Reassessments arising from a tax audit (principal tax on one side, surcharges and penalties on the other) are covered in our article on whether tax reassessments and penalties are deductible for corporate tax.
2. Cash Payments Exceeding Thresholds
Expenses paid in cash are not deductible when they exceed:
- MAD 5,000 per day per supplier
- MAD 50,000 per month per supplier
Two separate mechanisms, not to be confused (Art. 11-II and Art. 193): on the one hand, the portion of expenses paid in cash above MAD 5,000 per day and per supplier — or MAD 50,000 per month and per supplier — is not deductible from taxable income, nor is the depreciation of fixed assets acquired under these conditions (Art. 11-II). On the other hand, any settlement of a transaction of an amount equal to or greater than MAD 20,000 made outside the authorised means of payment gives rise to a fine of 6% of the amount, charged to the selling or service-providing company (Art. 193).
Common mistake: splitting cash payments over several days to stay under the daily threshold while exceeding the monthly one.
Settlement by offsetting and the other cash-related limits are analysed in our article on offsetting receivables and cash payments.
3. Invoices Without Tax ID (IF) and ICE
Since the 2018 Finance Act, invoices lacking the supplier’s tax identification number (IF) and ICE number are not accepted as supporting documents for deductible expenses. The corresponding expense must be added back.
Common mistake: accepting invoices from informal providers without verifying the IF and ICE.
4. The IS Itself
Corporate tax is never deductible from its own base: Article 10-I-C of the CGI allows the deduction of taxes and duties borne by the company “with the exception of corporate tax”. While this seems obvious, errors sometimes occur in the accounting treatment of IS provisions or adjustment entries.
5. Social Solidarity Contribution (CSS)
The CSS, introduced by the 2021 Finance Act and extended, is expressly non-deductible from taxable income (Art. 11-IV). It applies to companies with net profit ≥ MAD 1M.
Common mistake: deducting the CSS as a standard tax expense.
6. Gifts and Unauthorised Donations
Gifts — donations, subsidies, financial aid to third parties without consideration — are not deductible unless they fall within the scope of donations to social works exhaustively listed in Article 10-I-B-2° (donations to associations recognised as being of public utility, Habous, National Mutual Aid, etc.). Debt waivers granted without any commercial interest for the company follow the same logic: see our article on debt waivers.
Common mistake: deducting donations to associations not recognised as being of public utility.
Eligible recipients, caps and supporting documents are covered in our article on the deductibility of donations and sponsorship for corporate tax.
7. Promotional Gifts > MAD 100 or Without Branding
Promotional gifts are deductible only if they have a maximum unit value of MAD 100 and bear the company name, trade name, acronym or the brand of its products (Art. 10-I-B-1°). One failure is enough: a gift with a unit value above MAD 100, or a gift without branding, is not deductible and is treated as a gratuitous expense added back in full (Art. 11-IV).
Common mistake: offering year-end gifts without branding and recording them as deductible expenses.
Gifts to employees, gift vouchers and their income tax and VAT consequences are covered in corporate gifts and gift vouchers: tax treatment in Morocco.
8. Vehicle Depreciation > MAD 400,000 (Tax-Inclusive)
The depreciable base for passenger vehicles is capped at MAD 400,000 tax-inclusive (Art. 10-I-F-1°, amended by the 2025 Finance Act). Excess depreciation is not deductible. For vehicles that are rented or leased, see the tax cap on vehicle rental and leasing payments.
Example: for a vehicle acquired at MAD 600,000 (TI), depreciated over 5 years on a straight-line basis, only the allowance calculated on MAD 400,000 is deductible — MAD 80,000/year instead of MAD 120,000/year. The annual add-back is MAD 40,000.
9. Provisions Without Legal Action Within 12 Months
Provisions for doubtful receivables are only deductible if legal proceedings have been initiated within 12 months of the provision being set up (Art. 10-I-F-2°). Otherwise, the provision must be added back.
Common mistake: setting up provisions for old receivables without initiating legal action, hoping for an amicable settlement.
10. Unrecorded Depreciation = Permanent Loss
Depreciation not recorded in the accounts for the fiscal year to which it relates constitutes a permanent loss for the company (Art. 10-I-F-1°). It cannot be recovered in a subsequent year. This rule, specific to Moroccan tax law, prohibits the recovery of deferred depreciation.
Common mistake: omitting the depreciation charge for an asset during one year and attempting to catch up the following year with a double charge.
Summary of Add-Backs
| Non-Deductible Expense | Legal Basis | Additional Sanction |
|---|---|---|
| Fines and penalties | Art. 11-I | — |
| Cash > MAD 5K/day or 50K/month | Art. 11-II | 6% fine (Art. 193, transaction ≥ MAD 20,000, borne by the seller/service provider) |
| Invoices without IF/ICE | Art. 11-III (referring to Art. 145) — can be regularised during the reassessment procedure | — |
| IS | Art. 10-I-C (a contrario) | — |
| CSS | Art. 11-IV | — |
| Unauthorised donations | Art. 11-IV | — |
| Gifts > MAD 100 or without branding | Art. 10-I-B-1° (a contrario), Art. 11-IV | — |
| Vehicles > MAD 400K TI | Art. 10-I-F-1° | — |
| Provisions without legal action 12 months | Art. 10-I-F-2° | — |
| Unrecorded depreciation | Art. 10-I-F-1° | Permanent loss |
Frequently Asked Questions
Are late-payment penalties on supplier debts deductible?
A distinction must be made. Fines, penalties and surcharges for breaches of legal or regulatory provisions are non-deductible (Art. 11-I of the CGI). The fine introduced by Law No. 69-21 on payment terms, paid to the Treasury by the company that pays late, is one of them: it is not deductible (Circular Note No. 734). The exception in Art. 11-I, para. 2 still refers to the late-payment indemnities of the former Law No. 32-10, which Law No. 69-21 replaced with this fine: the reference is historical.
Can travel expenses paid in cash be deducted?
Yes, provided the thresholds of MAD 5,000/day and MAD 50,000/month per supplier are respected. Beyond these limits, the expense is added back (Art. 11-II); in addition, if the transaction reaches MAD 20,000, the supplier incurs the 6% fine under Art. 193. It is recommended to use bank transfers or crossed cheques.
How do I correct a non-deductible expense already recorded?
The expense remains in the accounts but must be added back on the taxable income reconciliation schedule (Form No. 3 of the tax return). There is no need to modify the accounting entry: the adjustment is purely extra-accounting.
Legal references:
- General Tax Code 2026 (PDF) — Art. 11 (non-deductible expenses), Art. 10-I-F (depreciation and provisions)
- Circular Note No. 737 — Commentary on the 2026 Finance Act
- Circular Note No. 734 — Payment terms (Law No. 69-21)
READ ALSO:
- Corporate Tax Rates Morocco 2026
- Taxable Income: From Accounting Profit to Tax Base
- Tax Depreciation in Morocco
- Deductible Provisions: Conditions and Risks
- Deductible Expenses for IS in Morocco
- Tax Audit in Morocco: Preparation Checklist
