In brief: Morocco’s VAT reform, launched by the 2024 Finance Law and completed in 2026, transitioned the Moroccan tax system from 4 rates (7%, 10%, 14%, 20%) to 2 rates: 20% (standard) and 10% (reduced). Several basic goods have been reclassified as exempt. See our comprehensive guide on VAT in Morocco or use the VAT qualification tool to determine in just a few clicks the regime applicable to your transaction.
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Context: why reform VAT in Morocco?
Before 2024, the Moroccan VAT system suffered from several structural limitations. The coexistence of four rates (7%, 10%, 14% and 20%) created considerable administrative complexity and economic distortions. The “butoir” (blocking) phenomenon — a situation where a business accumulates a VAT credit that it can neither deduct nor have refunded — penalised many sectors.
The reform, introduced by the 2024 Finance Law (Circular Note No. 735), pursues three fundamental objectives:
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Social objective: Exempt essential goods (medicines, school supplies, basic food products) to reduce the cost of living, particularly for the most modest households.
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Economic neutrality: Reduce the blocking effect by aligning input and output rates. Convergence towards two rates allows businesses to recover input VAT more easily.
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Tax equity: Integrate informal circuits through reverse charge and VAT withholding mechanisms, thereby strengthening the tax base.
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From 4 rates to 2 rates: the overall vision
The table below summarises the transformation of the VAT rate schedule between 2023 and 2026:
| Situation before 2024 | Situation in 2026 |
|---|---|
| 20% — Standard rate | 20% — Standard rate (unchanged) |
| 14% — Intermediate rate | Abolished — products reclassified at 10% or 20% |
| 10% — Reduced rate | 10% — Single reduced rate (expanded) |
| 7% — Super-reduced rate | Abolished — products reclassified at 10% or exempt |
In 2026, the General Tax Code provides for only two rates: the standard rate of 20% (art. 99-A) and the reduced rate of 10% (art. 99-B), the latter being divided into 10% with right to deduction and 10% without right to deduction.
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Progressive timeline 2024-2026
The reform was implemented progressively over three fiscal years, to cushion the impact on businesses and consumers.
2024 — Finance Law 2024 (CN 735): the kick-off
2024 marks the immediate abolition of the former 7% rate and the start of the transition for the former 14% rate:
- Pharmaceutical products (medicines): moved from 7% to exemption with right to deduction (art. 92 of the CGI), effective 01/01/2024.
- School supplies: moved from 7% to exemption without right to deduction (art. 91).
- Canned sardines, powdered milk, household soap: same reclassification towards exemption without right to deduction (art. 91).
- Refined sugar: start of progressive transition — moved from 7% to 8% in 2024.
- Public water distribution: moved from 7% to 10%.
- Economy car: moved from 7% to 10%.
- Urban and road transport: start of transition — moved from 14% to 13% in 2024.
- Non-urban/road transport: start of transition — moved from 14% to 16% in 2024.
- Renewable electrical energy: start of transition — moved from 14% to 12% in 2024.
- Photovoltaic panels and solar water heaters: moved from 14% to 10%.
- Butter (except artisanal): moved from 14% to exemption without right to deduction (art. 91).
2025 — Finance Law 2025 (CN 736): continued convergence
- Urban and road transport: continued decrease — moved to 12%.
- Non-urban/road transport: continued increase — moved to 18%.
- Refined sugar: moved to 9%.
- Renewable electrical energy: convergence completed — moved to 10%.
- Insurance brokers and agents: moved from 14% to 12% (target: 10% without right to deduction).
- Dry yeast (bread-making): moved from exemption without right to deduction to the standard rate of 20%.
2026 — Finance Law 2026 (CN 737): completion of the reform
- Urban and road passenger and freight transport: target rate of 10% reached (art. 99-B-1°).
- Non-urban/road transport: standard rate of 20% reached (art. 99-A).
- Refined sugar: target rate of 10% reached.
- Insurance brokers and agents: target rate of 10% without right to deduction reached (art. 99-B-2°).
- Pasta made from soft (common) wheat: moved to exemption without right to deduction (art. 91-I-A-1°).
- Other pasta: confirmed at the rate of 10% (art. 99-B-1°).
- Fertilising materials: moved to exemption with right to deduction (art. 92).
To verify the regime applicable to a specific product or service in 2026, use our VAT qualification tool.
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Summary table of reclassifications
The table below summarises all products and transactions that changed VAT regime between 2024 and 2026:
| Product / Transaction | Former rate | New regime 2026 | Source |
|---|---|---|---|
| Pharmaceutical products (medicines) | 7% | Exempt WRD (art. 92) | CN 735 |
| School supplies | 7% | Exempt WORD (art. 91) | CN 735 |
| Canned sardines | 7% | Exempt WORD (art. 91) | CN 735 |
| Powdered milk | 7% | Exempt WORD (art. 91) | CN 735 |
| Household soap | 7% | Exempt WORD (art. 91) | CN 735 |
| Butter (except artisanal) | 14% | Exempt WORD (art. 91) | CN 735 |
| Common wheat pasta | 7% | Exempt WORD (art. 91) | CN 737 |
| Fertilising materials | — | Exempt WRD (art. 92) | CN 737 |
| Refined sugar | 7% | 10% (transition 8%→9%→10%) | CN 735 |
| Public water distribution | 7% | 10% | CN 735 |
| Economy car | 7% | 10% | CN 735 |
| Pasta (except common wheat) | 7% | 10% | CN 737 |
| Photovoltaic panels | 14% | 10% | CN 735 |
| Renewable electrical energy | 14% | 10% (transition 12%→10%) | CN 735 |
| Insurance brokers/agents | 14% | 10% WORD (transition 12%→10%) | CN 735 |
| Urban and road transport | 14% | 10% (transition 13%→12%→10%) | CN 735 |
| Non-urban/road transport | 14% | 20% (transition 16%→18%→20%) | CN 735 |
| Dry yeast (bread-making) | Exempt WORD | 20% | CN 736 |
WRD = with right to deduction | WORD = without right to deduction
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Impacts for businesses
The VAT reform involves concrete adjustments for Moroccan businesses. Here are the main points to watch:
Invoicing update
Businesses must ensure that their invoicing systems reflect the new rates in force. Applying a former rate (7% or 14%) on an invoice issued in 2026 constitutes an irregularity likely to be flagged during a tax audit. Management software and cash registers must be configured with only the 20% and 10% rates. The new electronic invoicing rules reinforce this requirement.
Adaptation of VAT returns
VAT returns filed on the SIMPL TVA portal must reflect updated rates. For businesses with transactions spanning multiple fiscal years (ongoing deliveries, multi-year contracts), it is important to distinguish the taxable event: VAT is chargeable at the rate in force on the date of the taxable event, not the invoicing date.
Management of transitional VAT credit
The reform may have generated transitional VAT credit situations, particularly for businesses whose suppliers applied higher upstream rates. These credits are carried forward and may, in certain cases, be the subject of a VAT credit refund application.
Impact on the deduction prorata
For businesses carrying out mixed transactions (taxable and exempt), the reclassification of certain products as exempt may modify the VAT deduction prorata. It is recommended to recalculate the provisional prorata at the beginning of each fiscal year and to carry out the annual adjustment in accordance with the CGI provisions.
Support from a chartered accountant
The tax transition requires a case-by-case analysis. Upsilon Consulting supports businesses in bringing their invoicing into compliance, reviewing their returns and optimising their VAT credit. Book an appointment to discuss your situation.
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Reference texts: General Tax Code 2026 (PDF) — Circular Note No. 717 — VAT (Volume 2) — Circular Note No. 735 (FL 2024) — Circular Note No. 737 (FL 2026)
— TOOLS
VAT Qualification Morocco 2026 — Free tool: Determine in just a few clicks whether your transaction is outside scope, exempt or taxable, and at what rate. Compliant with the 2026 CGI.
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Frequently asked questions
What are the VAT rates in force in Morocco in 2026?
Since 1 January 2026, Morocco applies only two VAT rates: the standard rate of 20% and the reduced rate of 10%. The former rates of 7% and 14% were abolished by the reform launched by the 2024 Finance Law and completed by the 2026 Finance Law. The 10% rate is divided into two categories: 10% with right to deduction (accommodation, catering, banking, urban/road transport, food products, renewable energy) and 10% without right to deduction (insurance brokers and agents).
Which products moved from 7% to exemption?
Pharmaceutical products (medicines) moved to exemption with right to deduction (art. 92 of the CGI) from 01/01/2024. School supplies, canned sardines, powdered milk and household soap moved to exemption without right to deduction (art. 91). Pasta made from soft (common) wheat joined the exemption without right to deduction in 2026 (CN 737).
Is transport still at 14%?
No. The former 14% rate has been abolished. In 2026, urban and road passenger and freight transport is taxed at 10% (after a progressive transition: 13% in 2024, 12% in 2025, 10% in 2026). Non-urban/road transport has moved to the standard rate of 20% (transition: 16% in 2024, 18% in 2025, 20% in 2026).
How to manage the transition in VAT returns?
For transactions spanning multiple fiscal years, the applicable rate is the one in force on the date of the VAT taxable event. VAT credits accumulated during the transition period are carried forward to subsequent returns. In case of structural VAT credit linked to the rate change, a refund application can be filed with the tax administration. It is strongly recommended to precisely document transitional transactions to facilitate any subsequent audit.
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