In brief: Participative finance (Sharia-compliant) is fully integrated into the Moroccan VAT framework since the FL 2020 (CN 730). The fundamental principle is tax neutrality: each participative product is subject to the same VAT treatment as its conventional equivalent. The Mourabaha margin, Ijara rentals, Salam and Istisna’a remuneration are subject to the reduced rate of 10% (art. 99-B-1° of the CGI). Check the applicable regime with the VAT qualification tool.
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Context: integration of participative finance into the VAT framework
Participative finance, also known as Islamic finance, is based on contracts compliant with Sharia principles: prohibition of riba (interest), gharar (excessive uncertainty) and maysir (speculation). In Morocco, these financial products have been progressively integrated into the VAT tax framework:
- FL 2016: introduction of Mourabaha and Ijara Mountahia Bitamlik contracts into the scope of VAT
- FL 2020 (CN 730): extension to Salam, Istisna’a, Moucharaka Moutanakissa and Wakala Bilistithmar contracts
- FL 2024 (CN 735): clarifications on Ijara for personal housing
Circular Note No. 730 constitutes the main authoritative source for the VAT treatment of participative finance. It enshrines a fundamental principle: participative products are subject to VAT under the same conditions as conventional banking transactions (art. 89-I-11° of the CGI).
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The principle of tax neutrality
The Moroccan legislator has chosen tax neutrality: a client who finances the acquisition of an asset through a Mourabaha contract should not bear a different tax burden from one who takes out a conventional loan for the same asset.
This neutrality is expressed on three levels:
- Identical rate: participative finance transactions are subject to the same VAT rate as conventional banking transactions, i.e. 10% with right to deduction (art. 99-B-1°).
- Transposed exemptions: if the underlying transaction benefits from an exemption (social housing, export), the equivalent participative transaction also benefits from it.
- Comparable taxable base: VAT is levied on the institution’s remuneration (margin, rental, yield), which is the economic equivalent of interest and commissions on conventional products.
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Mourabaha: the margin at 10%
Contract principle
Mourabaha is the flagship product of participative finance in Morocco. The banking institution purchases an asset (real estate or movable) and resells it to the client with a profit margin known and agreed in advance. Payment is made in instalments.
VAT treatment
The Mourabaha margin (difference between the resale price and the acquisition price) is subject to VAT at the rate of 10% with right to deduction (art. 99-B-1° of the CGI), in the same way as interest on conventional loans.
Taxable base: the margin agreed between the institution and the client. VAT does not apply to the price of the asset itself (which has already been subject to its own VAT regime upon acquisition by the bank), but only to the remuneration of the financial intermediary.
Real estate Mourabaha and social housing
If the Mourabaha relates to the acquisition of social housing within the meaning of art. 92-I-28° of the CGI (area 50-80 m², price equal to or below 250,000 MAD excl. VAT, primary residence), the exemption mechanism applies under the same conditions as for a conventional loan. The State pays to the buyer, via the notary, the corresponding VAT amount.
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Ijara Mountahia Bitamlik: participative leasing
Contract principle
Ijara Mountahia Bitamlik (lease ending with transfer of ownership) is the participative equivalent of leasing. The institution acquires the asset and makes it available to the client in exchange for rental payments. At the end of the contract, ownership is transferred to the client.
VAT treatment
Ijara rentals are subject to the rate of 10% with right to deduction (art. 99-B-1°), in the same way as conventional leasing rentals.
CN 735 clarification (FL 2024): Ijara Mountahia Bitamlik relating to real property intended for the client’s personal housing benefits from the reduced rate of 10%. This clarification, added by FL 2024, removes any ambiguity regarding the treatment of residential real estate transactions.
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Moucharaka and Moudaraba: partnership contracts
Moucharaka Moutanakissa
Moucharaka Moutanakissa (diminishing participation) is a contract whereby the bank and the client co-acquire an asset. The client progressively buys back the bank’s share. This product is commonly used for participative real estate financing.
VAT treatment: Revenue received by the institution in respect of the share of ownership it holds (rentals corresponding to the portion not yet acquired by the client) is subject to VAT at 10%, in accordance with the treatment of banking and credit transactions.
Moudaraba
Moudaraba is a delegated management contract: a capital provider (rab el mal) entrusts funds to a manager (moudarib). Profits are shared according to an agreed key; losses are borne by the capital provider.
VAT treatment: When a banking institution acts as moudarib, its remuneration (share of profits) is treated as a management commission and falls under the rate of 10% (art. 99-B-1°).
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Salam and Istisna’a: forward contracts
Salam
The Salam contract is a forward sale: the price is paid in cash and delivery of the goods (generally raw materials or agricultural products) is deferred. In participative finance, the bank purchases goods under Salam and resells them to the client.
VAT treatment (CN 730): The institution’s remuneration (margin between the Salam purchase price and the resale price) is subject to VAT at 10% with right to deduction, under the same conditions as conventional credit transactions.
Istisna’a
Istisna’a is a manufacturing or construction contract to order. The bank finances the construction of an asset (real estate or movable) which it delivers to the client according to a defined schedule.
VAT treatment (CN 730): Same treatment as Salam — the institution’s margin is subject to VAT at 10% (art. 99-B-1°).
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Wakala Bilistithmar and participative investment accounts
Wakala Bilistithmar
Wakala Bilistithmar is an investment mandate: the client entrusts funds to the institution which invests them as agent (wakil). The wakil’s remuneration is a fixed commission or a percentage of the yield.
VAT treatment (CN 730): The management commission received by the institution is subject to VAT at 10%, like any banking commission.
Participative investment accounts
Participative investment accounts (participative savings or deposit accounts) operate on the profit and loss sharing principle. Returns paid to depositors do not constitute interest in the conventional sense, but participations in the profits of investments made by the bank.
VAT treatment: Returns received by depositors are not subject to VAT (they are not services). However, the bank’s remuneration for managing these accounts (management commission, account maintenance fees) remains subject to VAT at 10%.
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Summary table: VAT and participative products in 2026
| Participative product | Conventional equivalent | VAT rate 2026 | Taxable base | Source |
|---|---|---|---|---|
| Mourabaha | Interest-bearing loan | 10% WRD | Profit margin | CN 730 |
| Ijara Mountahia Bitamlik | Leasing | 10% WRD | Rentals | CN 730 + CN 735 |
| Moucharaka Moutanakissa | Mortgage loan | 10% WRD | Rentals on bank’s share | CN 730 |
| Moudaraba | Management mandate | 10% WRD | Share of profits (moudarib) | CN 730 |
| Salam | Financing credit | 10% WRD | Resale margin | CN 730 |
| Istisna’a | Construction credit | 10% WRD | Institution’s margin | CN 730 |
| Wakala Bilistithmar | Investment mandate | 10% WRD | Management commission | CN 730 |
WRD = with right to deduction
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Applicable exemptions: transposition from conventional to participative
The principle of tax neutrality means that any exemption applicable to a conventional transaction extends to its participative equivalent:
- Social housing (art. 92-I-28°): Mourabaha or Ijara relating to social housing benefits from the exemption with right to deduction, under the same conditions (area 50-80 m², price equal to or below 250,000 MAD excl. VAT, primary residence for 4 years).
- Export (art. 92-I-1°): participative financing of export transactions benefits from the exemption with right to deduction.
- Capital goods (art. 92-I-6°): acquisition of capital goods via a participative contract benefits from the exemption for 36 months, subject to the usual conditions (recorded as fixed asset, held for 5 years).
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Reference texts: General Tax Code 2026 (PDF) — Circular Note No. 717 — VAT (Volume 2) — Circular Note No. 730 (FL 2020) — Circular Note No. 735 (FL 2024)
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FAQ
Is Mourabaha subject to VAT in Morocco?
Yes. The Mourabaha margin — i.e. the difference between the bank’s resale price and the acquisition price of the asset — is subject to VAT at the reduced rate of 10% with right to deduction (art. 99-B-1° of the CGI). This treatment is identical to that of interest received on a conventional loan. If the underlying transaction is exempt (social housing for example), the Mourabaha benefits from the same exemption.
What VAT rate applies to Ijara Mountahia Bitamlik?
Ijara Mountahia Bitamlik rentals are subject to the reduced rate of 10% with right to deduction (art. 99-B-1°). CN 735 (FL 2024) expressly confirmed that this 10% rate applies including when the Ijara relates to real property intended for the client’s personal housing.
Is participative finance fiscally neutral compared to conventional finance?
Yes, this is the fundamental principle established by CN 730 (FL 2020). Each participative finance product is subject to the same VAT regime as its conventional equivalent: same rate of 10%, same exemptions, same taxable base. The legislator’s objective is to avoid any fiscal distortion between the two systems, so that the choice between conventional and participative finance is guided by ethical rather than fiscal considerations.
Are participative investment accounts subject to VAT?
Returns paid to depositors of participative investment accounts are not subject to VAT, as they represent a participation in profits and not a provision of services. However, commissions and management fees charged by the banking institution for managing these accounts are subject to the rate of 10% (art. 99-B-1°), like any banking commission.
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