Tax-Exempt Allowances in Morocco 2026

Key takeaways: Article 57 of Morocco’s General Tax Code (CGI) lists the allowances and benefits exempt from income tax (IR). In 2026, these exemptions cover severance pay (capped at MAD 1,000,000), family allowances, CNSS daily sickness/maternity benefits, internship stipends (capped at MAD 6,000/month for 12 months) and various professional expense allowances. Understanding these exemptions is essential for optimising payroll while complying with tax law.

Legal Framework: Article 57 of the CGI

Article 57 of the General Tax Code provides an exhaustive list of allowances, allocations and benefits excluded from the salary income tax base. This list constitutes an exception to the general principle of taxation of all salary income under Article 56 of the CGI.

It is essential to distinguish allowances that are fully exempt from those that are only exempt up to caps set by law or regulation. Any amount exceeding these caps is added back to taxable income.

Complete List of Tax-Exempt Allowances in 2026

Family Allowances and Family Assistance

Family allowances paid by the CNSS are fully exempt from income tax. They amount to MAD 300/month per child for the first three children and MAD 36/month from the fourth child onwards. Family assistance benefits (disability support, death allowance) also benefit from this exemption.

Severance Pay

Severance pay is exempt from income tax up to a cap of MAD 1,000,000 (introduced by the 2023 Finance Act), assessed on the total amount of severance pay, voluntary departure allowance and damages awarded in the event of dismissal, whether these sums are statutory, collectively agreed or contractual. For reference, the statutory severance under Article 53 of the Labour Code is calculated based on seniority:

96 hours of salary per year for the first 5 years
144 hours per year from the 6th to the 10th year
192 hours per year from the 11th to the 15th year
240 hours per year beyond 15 years

The portion exceeding MAD 1,000,000 is subject to income tax under ordinary rules.

Voluntary Departure Allowance

The voluntary departure allowance benefits from the same exemption conditions as severance pay. Where several allowances are combined (severance pay, voluntary departure allowance and damages), the total exempt amount may under no circumstances exceed MAD 1,000,000.

Disability Pensions

Disability pensions paid by the CNSS or by a social welfare body are fully exempt from income tax, regardless of the disability category (1st, 2nd or 3rd category). This exemption also applies to disability pensions of occupational origin.

Life Annuities for Work Accidents

Life annuities and temporary allowances granted to victims of work accidents are fully exempt from income tax under Article 57-5° of the CGI.

CNSS Daily Sickness and Maternity Benefits

CNSS daily benefits for sickness, maternity and work accidents are exempt from income tax. For sickness, the benefit corresponds to 2/3 of the capped salary, paid from the 4th day of leave. For maternity, the benefit covers 14 weeks (100% of the capped salary).

CNSS Death Benefit

The death benefit paid by the CNSS to the beneficiaries of a deceased insured person is fully exempt from income tax. This benefit corresponds to a lump sum set by CNSS regulations.

Internship Stipends

Gross monthly internship stipends capped at MAD 6,000 paid by private-sector companies are exempt from income tax for 12 months (Art. 57-16° CGI), provided the intern is registered with ANAPEC, benefits from the exemption only once (they may continue with a new employer within the 12-month limit) and the employer undertakes to hire at least 60% of its interns on a permanent basis. If the stipend paid exceeds MAD 6,000, both the company and the intern lose the exemption on the entire stipend. Where the intern is then hired on a permanent contract (CDI), their gross monthly salary capped at MAD 10,000 is exempt for 24 months.

Study Grants

Study grants awarded by the State or public bodies are exempt from income tax. This exemption does not extend to grants paid by private companies to their employees, which constitute taxable additional remuneration.

Representation Allowances

Representation allowances paid to employees are exempt from income tax provided they are duly justified by actual expenses. The exemption requires the employee to produce supporting documents in the event of an audit. Otherwise, the DGI may reclassify these allowances as taxable salary supplement.

Mileage Allowances

Mileage allowances reimbursed to employees using their personal vehicle for business travel are exempt from income tax to the extent that they correspond to expenses actually incurred and justified (nature and frequency of trips, mileage, calculation method), in accordance with Article 57-1° of the CGI. The exemption does not apply to employees who benefit from the special rates of professional expense deduction (Art. 59-I-B and C). Any reimbursement exceeding the justified expenses is taxable.

Meal and Food Allowances

Meal vouchers (including in electronic form) are exempt from income tax up to MAD 40 per employee per working day, without exceeding 20% of gross taxable salary, and cannot be combined with the food allowances granted to employees working on sites far from their place of residence (Art. 57-13°). Meal allowances paid in cash to employees who cannot eat at home fall under Article 57-1°: they are exempt only if they correspond to expenses actually incurred and justified.

CIMR Supplementary Pension

Employee contributions to the CIMR supplementary pension are deductible from taxable income up to 50% of net taxable salary (Art. 28-III and 59-II-A). In addition, pensions paid by the basic schemes (CNSS, CMR, RCAR) have been exempt from income tax since 1 January 2026 (2025 Finance Act), and the 2026 Finance Act extended this exemption to pensions and annuities paid by the CIMR to private-sector retirees under group supplementary pension insurance contracts (Art. 57-27°). Pensions paid under other supplementary schemes, in particular individual contracts, remain taxable after the 70% allowance (up to MAD 168,000) and 40% above that.

General Exemption Conditions

To qualify for exemption, each allowance must meet specific conditions:

Legal compliance: the allowance must correspond to a case provided for in Article 57 of the CGI
Cap compliance: amounts paid must not exceed the set limits
Documentation: expense allowances must be supported by receipts
Actual expenditure: reimbursements must correspond to expenses actually incurred

Reclassification Risks by the DGI

The General Tax Directorate (DGI) conducts regular audits and may reclassify any allowance that does not meet exemption conditions as taxable salary:

Unjustified lump-sum allowances: systematic payments unrelated to actual expenses
Cap exceedances: failure to add back the excess portion
Salary concealment: use of exempt allowances to circumvent income tax
Missing documentation: inability to produce receipts during an audit

Reassessments result in payment of the income tax that should have been withheld, plus the 20% surcharge for insufficient salary declaration (Art. 200-II CGI, minimum MAD 500), the 20% penalty for failure to pay over the withholding tax and the late-payment surcharge of 5% for the first month then 0.50% per additional month or part of a month (Art. 208 CGI).

FAQ

Which allowances are exempt from income tax in Morocco in 2026?

The main exempt allowances are: CNSS family allowances, severance pay (capped at MAD 1,000,000), CNSS sickness/maternity daily benefits, death benefit, disability pensions, work accident annuities, internship stipends (capped at MAD 6,000/month for 12 months), study grants, meal vouchers (MAD 40/day), justified mileage allowances and justified representation allowances.

Is severance pay always exempt from income tax?

Severance pay, whether statutory, collectively agreed or contractual, has been exempt since the 2023 Finance Act up to an overall cap of MAD 1,000,000, assessed on the total of severance pay, voluntary departure allowance and damages awarded in the event of dismissal. Beyond this cap, the excess is subject to income tax at the progressive scale, through withholding tax, for the year in which it is paid.

Are transport allowances exempt from income tax?

Mileage allowances are exempt to the extent that they correspond to expenses actually incurred and justified (Art. 57-1° CGI). Lump-sum transport bonuses paid without justification constitute taxable salary supplement. It is advisable to retain all travel documentation.

What is the risk of non-compliance with exemption caps?

In the event of an audit, the DGI may reclassify allowances as taxable salary. The employer then bears the income tax that should have been withheld, plus the 20% surcharge for insufficient declaration (Art. 200-II), the 20% penalty for failure to pay over the withholding tax and the late-payment surcharge of 5% then 0.50% per month (Art. 208). The employer is responsible for the withholding tax.

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This article is written by the team of chartered accountants at Upsilon Consulting, a firm registered with the Order of Chartered Accountants (OEC) of Morocco.

Tax-Exempt Allowances in Morocco 2026 | Upsilon Consulting