In brief: Withholding tax on VAT is a collection mechanism introduced by the 2024 Finance Law, codified in article 117 of the CGI. It requires certain clients to withhold a portion — or even the full amount — of the VAT invoiced by their suppliers, and to remit it directly to the Treasury. This mechanism aims to secure State tax revenues and to combat VAT fraud.
Principle of VAT withholding tax
The VAT withholding tax mechanism is based on a simple principle: instead of leaving the supplier to collect the VAT and remit it to the tax administration, it is the client who withholds part or all of the VAT shown on the invoice. The client then remits this amount directly to the Public Treasury.
In practice, when a supplier issues an invoice including VAT, the client does not pay the full amount inclusive of tax. The client withholds the portion of VAT required by law and remits it to the tax administration on behalf of the supplier. The supplier therefore receives the amount exclusive of tax plus the residual VAT (where applicable).
This mechanism constitutes a collection guarantee for the State. It prevents situations where a supplier collects VAT from its clients without remitting it to the Treasury, which represented a significant shortfall for public finances.
Persons liable to withhold VAT
Article 117 of the CGI designates the persons required to operate the withholding of VAT. The scope of persons concerned was significantly extended by the 2024 Finance Law.
Regime prior to 2024
Before the 2024 Finance Law, article 117 of the CGI provided for VAT withholding in only two cases: the VAT on interest paid by credit institutions, collected by those institutions on behalf of the Treasury (Art. 117-I), and the VAT due on transactions carried out by non-residents for Moroccan clients carrying out an activity outside the scope of VAT (Art. 117-III, since the 2014 Finance Law). No general withholding existed in the context of public procurement: it was the 2024 Finance Law that introduced the obligation, for the State, local authorities, public establishments and enterprises and their subsidiaries and other public bodies, to withhold 75% of the VAT on the services listed by decree (Art. 117-V-a).
Extension by the 2024 Finance Law
Since the 2024 Finance Law (transactions carried out from 1 July 2024), article 117 of the CGI provides for two distinct mechanisms:
- Capital goods and works (Art. 117-IV): any taxable client withholds 100% of the VAT invoiced by a supplier of capital goods or works who does not present a tax compliance certificate issued less than six months earlier. However, the State, local authorities, and public establishments and other legal persons governed by public law that are required, under the legislation and regulations in force, to apply the public procurement regulations are not required to operate this withholding.
- Services (Art. 117-V): for the services referred to in article 89-I (5°, 10° and 12°) whose list is set by article 24 of decree no. 2-06-574, as worded by decrees no. 2-23-1118 and no. 2-25-1041 (for a, the services covered by service contracts within the meaning of decree no. 2-22-431 on public procurement and those on list A; for b and c, those on list B), the withholding is 75% of the VAT. It is operated: a) by the State, local authorities, public establishments and enterprises and their subsidiaries and other public bodies, towards any taxable service provider; b) by legal persons governed by private law that are subject to VAT and by taxable individuals whose income is determined under the actual net income (RNR) or simplified net income (RNS) regime, towards taxable individuals only who have presented the tax compliance certificate (100% failing that); c) from 1 July 2026 (2026 Finance Law), by credit institutions and similar bodies, insurance and reinsurance companies and companies whose turnover excluding VAT for the last closed financial year is equal to or greater than MAD 200 million, which pay the remuneration for these services to taxable legal persons that have presented the certificate provided for in IV (100% withholding failing that). On a transitional basis, this threshold is set at MAD 500 million from 1 July 2026, MAD 350 million from 1 January 2027 and MAD 200 million from 1 January 2028 (Art. 247-XXXXVI).
Outside these cases, a private company has no withholding to operate on its legal-person service providers. Non-resident providers fall under a separate, earlier regime (Art. 115 and 117-III): reverse charge by the client carrying out an activity subject to VAT, withholding at source only when the client carries out an activity outside the scope of VAT.
VAT withholding rates
The withholding rate depends on the mechanism concerned and not only on the supplier’s tax situation:
| Mechanism | Supplier with tax compliance certificate (< 6 months) | Supplier without certificate |
|---|---|---|
| Capital goods and works (Art. 117-IV), taxable client | No withholding | 100% of the VAT |
| Listed services paid by the State, local authorities, public establishments and enterprises and their subsidiaries and other public bodies (Art. 117-V-a) | 75% | 75% |
| Listed services paid by taxable legal persons governed by private law and by taxable individuals under the RNR or RNS regime to taxable individuals (Art. 117-V-b) | 75% | 100% |
| Listed services paid to taxable legal persons by credit institutions and similar bodies and insurance and reinsurance companies (transactions carried out for their benefit from 1 July 2026) and, on a transitional basis, by companies whose turnover excluding VAT for the last closed financial year is equal to or greater than MAD 500 million from 1 July 2026, MAD 350 million from 1 January 2027 and MAD 200 million from 1 January 2028 (Art. 117-V-c and 247-XXXXVI) | 75% | 100% |
Example: an SARL invoices a listed service of 100,000 MAD exclusive of tax (VAT 20,000 MAD) to a private company whose turnover is below the threshold: no withholding is due. The same service invoiced to a public enterprise is subject to a withholding of 75% x 20,000 = 15,000 MAD; the provider collects 105,000 MAD. An individual consultant invoicing the same service to an SARL suffers a withholding of 15,000 MAD if they present their certificate, and 20,000 MAD failing that.
Practical point: The tax compliance certificate is issued by the tax administration to taxpayers who are up to date with their filing and payment obligations. It is an essential document for suppliers who wish to receive a portion of the VAT invoiced. It is therefore strongly recommended that businesses keep their tax situation up to date to avoid full withholding.
Transactions subject to VAT withholding
VAT withholding applies to several categories of transactions:
Services provided by non-residents
When a foreign service provider with no establishment in Morocco provides a taxable service used or exploited in Morocco, the transaction is deemed to be carried out in Morocco (Art. 88-2°). In the absence of an accredited tax representative, the client carrying out an activity subject to VAT declares the tax on its own return and deducts it at the same time (reverse charge, Art. 115). Only the client whose activity is outside the scope of VAT withholds it at source on each payment (Art. 115 and 117-III).
Dematerialised digital services
Since the 2024 Finance Law, services provided remotely in dematerialised form by non-residents to clients having their registered office, establishment or tax domicile in Morocco are deemed to be carried out in Morocco (Art. 88-2° CGI): SaaS software, cloud, online advertising, distance learning, digital content, etc. The method of collection depends on the client:
- client carrying out an activity subject to VAT: they reverse-charge the VAT on their own return (amount excl. VAT declared, VAT due calculated and deducted simultaneously) — Art. 115;
- client carrying out an activity outside the scope of VAT: they withhold the VAT at source on each payment and pay it to the tax collector in the following month — Art. 117-III;
- non-taxable private client: in the absence of a tax representative, the foreign provider must register on the DGI’s electronic platform, obtain a tax identifier and declare and pay the VAT quarterly without the right to deduction — Art. 115 bis. See our article VAT on digital services in Morocco.
Certain local services
Withholding at source also applies to the transactions of certain taxable suppliers: in particular, the State, local authorities, public establishments and enterprises and their subsidiaries and other public bodies withhold 75% of the VAT on the services referred to in article 89-I (5°, 10° and 12°) that they pay to taxable persons, where these services are covered by service contracts within the meaning of decree no. 2-22-431 or appear on list A of decree no. 2-06-574 (Art. 117-V-a; decree no. 2-06-574, art. 24). For transactions carried out since 1 July 2024, legal persons governed by private law that are subject to VAT and taxable individuals whose income is determined under the actual net income (RNR) or simplified net income (RNS) regime withhold at source the VAT due on the listed services (list B of decree no. 2-06-574) that they pay to taxable individuals: 75% of the amount of the tax where the provider has presented the tax compliance certificate issued less than six months earlier, 100% failing that (Art. 117-V-b; certificate: Art. 117-IV). Commissions paid to business introducers illustrate these rules from the client’s side.
Client obligations regarding VAT withholding
The client who operates the withholding assumes several obligations:
Withhold VAT from the amount paid
Upon each payment, the client must calculate the amount of VAT withholding and deduct it from the payment made to the supplier. The withholding rate (no withholding, 75% or 100%) depends on the applicable mechanism (Art. 117-IV or V) and on whether or not the supplier presents a tax compliance certificate issued less than six months earlier.
File returns and remit the VAT withheld
The amount withheld must be paid to the tax collector during the month following that of each payment, whatever the client’s filing regime (monthly or quarterly). Each payment is accompanied by a payment slip (bordereau-avis) drawn up on the form prescribed by the administration, via the SIMPL TVA portal. Amounts withheld by public administrations and public accountants are paid directly to the accountants of the General Treasury of the Kingdom.
The following are excluded from withholding (Art. 117-IV and V): sales of electricity and water to public distribution networks, sanitation services and meter rental, sales and services of telecommunications operators, services of insurance agents and brokers, and services whose amount is equal to or below MAD 5,000 incl. VAT, up to a limit of MAD 50,000 incl. VAT per month and per supplier.
Retain supporting documents
The client must retain all supporting documents relating to the withholding:
- The supplier’s invoices showing the VAT;
- A copy of the supplier’s tax compliance certificate (where applicable);
- Proof of remittance of the withholding to the Treasury;
- Returns filed on SIMPL TVA.
These documents must be retained for 10 years in accordance with Article 211 of the CGI and presented in the event of a tax audit.
Issue, on request, a document attesting the withholding
According to Circular Note No. 735, the client that operates the withholding under article 117-IV or 117-V-b issues to the supplier, at the supplier’s request, a document attesting the withholding at source.
Right to deduction for the supplier
The supplier subject to VAT withholding retains its right to deduct the tax charged on the components of the price of its transactions (Art. 101). The VAT withheld by the client and paid to the Treasury is all or part of the tax due on the supplier’s transactions (Art. 117-IV and V): it reduces the VAT for which the supplier is liable on its own returns.
In practice, where its turnover is taxable by way of withholding at source, the supplier attaches to its VAT return a detailed statement of that withholding, on a form prescribed by the tax administration (Art. 112-II). Late filing of this statement is penalised by a fine of MAD 500 and failure to file it by a fine of MAD 2,000 (Art. 204-III). Where the application of the withholding gives rise to a tax credit, that credit may be carried forward or refunded, on a request made on a form prescribed by the administration and accompanied by the supporting documents provided for by decree, up to the amount of VAT withheld at source (Art. 103-6°; decree no. 2-06-574, art. 25-VII).
This mechanism ensures, in most cases, the fiscal neutrality of VAT for the supplier: the withholding does not constitute an additional tax burden but merely a transfer of the remittance obligation from the supplier to the client.
It is not, however, without effect on cash flow. The supplier must wait for any tax credit it may have to be offset or refunded. The client, for its part, must remit the withheld VAT to the tax collector even when it is itself in a VAT credit position: this is third-party tax, remitted via a payment slip (bordereau-avis) outside its own return, which cannot be netted against its credit, while the deductible VAT invoiced by the supplier simply increases that credit. This is known as “payment while in a VAT credit position”.
Non-resident suppliers: reverse charge
Where a non-resident person that has no establishment in Morocco and has not appointed an accredited representative there carries out taxable transactions for a client established in Morocco, that client withholds the tax at source on each payment if it carries out an activity outside the scope of VAT (Art. 115 and 117-III); if it carries out an activity subject to VAT, it applies the reverse charge of the tax (Art. 115). This mechanism, distinct from but complementary to withholding, works as follows:
- The Moroccan client calculates the VAT due on the service invoiced by the non-resident;
- It declares this VAT as output VAT in its return;
- If it has a right to deduction, it can simultaneously deduct this VAT as recoverable input VAT.
The reverse charge applies, in the absence of an accredited representative, to taxable transactions carried out by non-resident persons with no establishment in Morocco for a client established in Morocco that carries out an activity subject to VAT, including the dematerialised digital services covered by the FL 2024 reform (Art. 88-2° and 115). The tax due by the non-resident person is then declared and paid by its client. On the other hand, a non-resident person that provides services remotely by dematerialised means to non-taxable clients having their registered office, establishment or tax domicile in Morocco, without having appointed an accredited representative, must register on the dedicated electronic platform and obtain a tax identifier (Art. 115 bis).
Note: A single client may be subject to both mechanisms, for different transactions, for example: reverse charge of the VAT due on the taxable transactions of a non-resident person that has not appointed an accredited representative, where the client carries out an activity subject to VAT (Art. 115); withholding at source on the transactions of certain taxable suppliers (Art. 117-IV and V). On the transaction of a non-resident without a representative, the client reverse-charges or withholds the tax depending on whether its activity is subject to VAT or excluded from its scope (Art. 115 and 117-III). The client must be vigilant regarding the obligations incumbent upon them in each situation and ensure the correct application of the CGI provisions.
Reference texts
- Article 117 of the CGI: defines the VAT withholding mechanism, the persons liable, the applicable rates and the filing obligations. See the General Tax Code 2026.
- Circular Note No. 735: specifies the modalities of VAT withholding application within the framework of the reform launched by the 2024 Finance Law.
- Article 88 of the CGI: VAT territoriality rules determining the connection of transactions to Moroccan territory.
- Circular Note No. 717 — Volume 2: general comments on the VAT regime.
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
Who must operate VAT withholding in Morocco?
VAT withholding is operated, as the case may be (Art. 117 CGI): by any taxable client, at 100%, on invoices for capital goods and works from a supplier who does not present a tax compliance certificate issued less than six months earlier; by the State, local authorities, public establishments and enterprises and their subsidiaries and other public bodies, at 75%, on services covered by service contracts within the meaning of decree no. 2-22-431 on public procurement or appearing on list A of decree no. 2-06-574; by taxable legal persons governed by private law and taxable individuals under the RNR or RNS regime, at 75% (100% without certificate), on the services on list B of decree no. 2-06-574 when rendered by taxable individuals; and, from 1 July 2026, by credit institutions and similar bodies, insurance and reinsurance companies and, on a transitional basis, companies whose turnover excluding VAT for the last closed financial year is equal to or greater than MAD 500 million (MAD 350 million from 1 January 2027, MAD 200 million from 1 January 2028), on those same services when rendered by taxable legal persons (Art. 117-V-c and 247-XXXXVI). Clients carrying out an activity outside the scope of VAT also withhold the VAT due by their non-resident providers (Art. 117-III).
What is the difference between 75% and 100% VAT withholding?
The rate depends on the mechanism. For capital goods and works (Art. 117-IV), the taxable client withholds nothing if the supplier presents a tax compliance certificate issued less than six months earlier, and withholds 100% of the VAT failing that. For services listed by decree (Art. 117-V), the State, local authorities, public establishments and enterprises and their subsidiaries and other public bodies withhold 75%, whether or not the provider presents the certificate; the other persons required to withhold (taxable legal persons governed by private law and taxable individuals under the RNR or RNS regime, towards taxable individuals; credit institutions and similar bodies, insurance and reinsurance companies and companies reaching the turnover threshold, towards taxable legal persons) withhold 75% if the provider presents their certificate and 100% failing that. It is therefore in the supplier's interest to keep their tax situation up to date.
Does the supplier lose the VAT withheld at source?
No. The VAT withheld by the client and paid to the Treasury is all or part of the tax due on the supplier's transactions (Art. 117-IV and V): it reduces the VAT for which the supplier is liable on its own returns. Where the application of the withholding gives rise to a tax credit, that credit may be carried forward or, up to the amount of VAT withheld at source, be the subject of a VAT credit refund (Art. 103-6°; decree no. 2-06-574, art. 25-VII). The withholding therefore does not constitute an additional tax burden for the supplier, but, in most cases, merely a cash flow timing difference.
