In brief: VAT in Morocco is a consumption tax governed by Articles 87-89 of the General Tax Code (CGI), with a standard rate of 20% and a reduced rate of 10% since 2026. The former 7% and 14% rates have been eliminated. Agricultural activities and civil transactions fall outside its scope. Understanding VAT exemptions and declaration regimes is critical for tax compliance.
VAT in Morocco is a consumption tax that applies to a wide range of products and services. It is an essential component of taxation in Morocco. Understanding the scope of VAT in Morocco is critical for any business seeking to ensure tax compliance and optimize its accounting management.
Legal Basis: Articles 87 to 89 of the General Tax Code
VAT in Morocco applies under Article 87 of the General Tax Code. This article forms the legal foundation that defines the scope of this tax. Articles 88 and 89 complement this framework by specifying the persons liable and the territorial scope of the tax.
Article 87 states that VAT in Morocco is a turnover tax. It applies to:
- Industrial, commercial, and artisanal transactions or those related to the practice of a liberal profession, carried out in Morocco
- Import transactions of goods and services
- All transactions generating added value, including real estate development, land subdivision, and all types of services, including banking and financial services
Persons Subject to VAT in Morocco
Under Article 89 of the General Tax Code, all natural or legal persons who carry out, on a regular or occasional basis, a taxable activity are subject to VAT in Morocco. This includes commercial companies, sole proprietorships, liberal professions (lawyers, architects, notaries, chartered accountants), as well as cooperatives and associations engaged in profit-making activities.
The taxable event for VAT is the collection of the price or consideration. However, taxpayers may opt for the debit regime, where VAT becomes due upon the issuance of the invoice.
How Does VAT Work in Morocco?
VAT in Morocco is an indirect consumption tax. It applies to the supply of goods and the provision of services. Its mechanism is based on the principle of neutrality: each economic operator collects VAT on sales and deducts the VAT paid on purchases.
Every person carrying out an activity within the scope of VAT must charge it in addition to their turnover. They must then remit it to the State. In the general case, the operator has the right to recover the VAT paid to suppliers. The VAT due thus equals the difference between collected VAT and deductible VAT.
For more information, read: Value Added Tax in Morocco (VAT)
VAT Rates in Morocco
The Moroccan tax system provides several VAT rates in Morocco, each applicable to specific categories of goods and services:
Standard Rate of 20%
The 20% rate is the standard rate. It applies to the majority of goods and services that do not benefit from a reduced rate or an exemption. It is the default rate applicable to any transaction falling within the scope of VAT.
Reduced Rate of 10%
The reduced rate of 10% applies to accommodation and catering operations, banking and credit operations, urban and road transport of passengers and goods, edible oils (except palm oil), refined sugar, public water distribution, and renewable electrical energy.
The former 14% and 7% rates, in force until 2023, have been eliminated by the 2024-2026 reform. Products formerly subject to 7% have been reclassified either as exempt (art. 91 or 92 of the CGI) or at the 10% rate. Pharmaceutical products are now exempt with the right to deduction (art. 92). School supplies, powdered milk, canned sardines, and household soap are exempt without the right to deduction (art. 91).
VAT: Transactions Outside the Scope of Application
Certain sectors remain outside the scope of VAT in Morocco. It is important not to confuse out-of-scope transactions with exempt transactions: the former are simply not covered by the tax, while the latter fall within the scope but benefit from a legal dispensation.
These include:
- Agricultural sector — farming activities in their natural state
- Civil transactions — operations with no commercial purpose
Agricultural Sector: Outside the Scope of VAT in Morocco
The General Tax Code places agricultural activity outside the scope of VAT. This exclusion takes into account economic and social considerations, in a country where agriculture represents a significant share of employment and GDP.
However, one must remain vigilant about the nature of out-of-scope transactions. Indeed, certain transactions that go beyond the agricultural framework by their nature may make certain operations taxable.
We analyze some of these transactions below:
Sale of Crops in Their Natural State
Circular 717, Volume 2, specifies the nature of transactions outside the scope of VAT. Thus, a farmer who sells the products of his harvest in their natural state is outside the scope of the tax. Moreover, transactions remain outside the scope of VAT as long as the processing is minimal and in the normal course of business.
For example, the sale of cheese produced by a farmer from the milk of his own livestock is outside the scope. However, if the farmer purchases milk and processes it, that activity becomes taxable. The same applies to a beekeeper who sells his honey production in its natural state. The beekeeper becomes taxable when producing cakes, beauty products, or other items from that honey by adding other inputs.
A farmer who uses industrial processes to transform his products is also taxable.
Other Transactions by a Farmer
The circular specifies that transactions other than sales may fall within the scope of VAT. Thus, farmers are subject to VAT for services provided to third parties:
- transport,
- equipment rental,
- storage,
- lodging and feeding of livestock or horses.
Civil Transactions: Outside the Scope of VAT in Morocco
Civil transactions are those that do not have a commercial, industrial, or service provision character.
Thus, the following are outside the scope of application:
Real Estate Rentals
The following are civil transactions outside the scope of VAT, namely rentals involving:
- Either bare land
- Or an unfurnished or unequipped building for professional purposes
Furnished rentals, fitted-out premises, or commercial property rentals are therefore within the scope of VAT.
Transfer of a Going Concern
The transfer of a going concern is a civil transaction outside the scope of VAT.
However, VAT must apply to the sale of goods occurring simultaneously with the transfer of the going concern.
Works of Art
Sales of works of art by painters and sculptors are civil transactions outside the scope of VAT.
However, when works are sold by merchants, they must be subject to VAT.
VAT Exemptions in Morocco
Within the scope of application, the General Tax Code provides two categories of VAT exemptions in Morocco that are essential to distinguish:
Exemptions Without Right to Deduct (Article 91)
Transactions exempt without right to deduct are relieved from VAT on output, but the operator cannot recover the VAT borne on input purchases. These include:
- Bread, couscous, semolina, and cereals used in the manufacture of these products
- Milk, raw sugar, and packaged dates produced in Morocco
- Fishery products in fresh, frozen, or canned form
- Fresh or frozen meat
- Transactions carried out by small manufacturers and small service providers whose annual turnover does not exceed 500,000 MAD
Exemptions With Right to Deduct (Article 92)
Transactions exempt with right to deduct allow the operator not to charge VAT while recovering the VAT paid on inputs. This is the most favorable regime. It covers:
- Exports of goods and services
- Fertilizers and agricultural equipment
- Capital goods acquired by certain sectors
- Anticancer and antiviral medications
- Social housing construction operations
VAT Declaration Regimes in Morocco
VAT in Morocco can be declared under two main regimes:
Monthly Declaration Regime
This regime applies mandatorily to taxpayers whose taxable turnover in the previous year reached or exceeded 1,000,000 MAD. The declaration must be filed by the end of the following month.
Quarterly Declaration Regime
This regime applies to taxpayers whose taxable turnover is below 1,000,000 MAD, newly registered taxpayers during the first 12 months of activity, and taxpayers engaged in seasonal or occasional activity.
Territorial Scope of VAT in Morocco
VAT in Morocco applies to transactions carried out on Moroccan territory. A transaction is deemed to have been carried out in Morocco when the delivery of goods is made in Morocco or when the service is used or exploited in Morocco. Imports are systematically subject to VAT in Morocco, regardless of the importer’s status.
For services rendered by non-resident foreign providers, the Moroccan client is required to self-assess the VAT, meaning they must declare and pay the VAT on behalf of the foreign provider.
Frequently Asked Questions
What transactions fall within the scope of VAT in Morocco?
VAT applies to industrial, commercial, artisanal, and liberal activities carried out in Morocco. It also covers import operations and certain specific transactions such as real estate development and construction works. The General Tax Code provides an exhaustive list of taxable operations.
Are agricultural activities subject to VAT in Morocco?
Agricultural activities benefit from a specific regime. Small farmers whose annual turnover does not exceed MAD 5,000,000 are exempt from VAT. However, large-scale agricultural operations and agro-industrial activities may be subject to VAT under general rules.
How is the scope of VAT different from VAT exemption?
A transaction outside the scope of VAT is simply not covered by the tax at all, and the operator has no right to recover input VAT. An exempt transaction falls within the scope but is specifically exempted by law, either with or without the right to deduct input VAT.
What happens when a business carries out both taxable and out-of-scope transactions?
The business must apply a prorata deduction to determine the recoverable portion of input VAT. The prorata is calculated as the ratio of taxable turnover to total turnover. Only the portion of input VAT corresponding to taxable activities may be deducted.
Treatment of Transactions Outside the Scope of VAT
When a transaction falls outside the scope of VAT, this has two consequences:
- No output VAT: the operator must not charge VAT on the sale or service in question
- No input VAT recovery: the operator has no right to recover the VAT charged on the inputs of the activity
When a taxpayer simultaneously carries out taxable and out-of-scope transactions, the taxpayer is entitled to deduct VAT on a prorata basis relative to the taxable turnover. The prorata calculation determines the percentage of recoverable VAT and must be established with precision to avoid any tax adjustment.
Practical Guide: How to Classify a Transaction
To determine the VAT treatment of a transaction in Morocco, a structured approach should be followed:
- Check whether the transaction falls within the scope of application: is it of an industrial, commercial, artisanal, or liberal nature? Is it an import?
- If within the scope, check whether it qualifies for an exemption (with or without right to deduct)
- If taxable, determine the applicable rate (20% or 10%)
- Determine the applicable declaration regime (monthly or quarterly)
If you are uncertain about the classification of a transaction, it is recommended to consult a chartered accounting firm to secure your tax position and avoid penalties.
Tools
Morocco VAT Qualification 2026 — Free Tool: Determine in a few clicks whether your transaction is out of scope, exempt, or taxable, and at which rate.
READ ALSO
Branch of a Foreign Company in Morocco
Electronic Invoicing in Morocco 2026: E-Invoicing for VAT Compliance
