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The Basics of Morocco's Tax System

May 05, 2021
At least once in your life, you should visit Morocco. It's one of the most beautiful countries in the world! Its rich heritage and culture remain a source of inspiration for everything, ranging from fashion and art to literature and movies. It's no wonder the country, as a whole, has become a top tourist destination. But what if you want to live here? To see all this magnificent beauty on a day-to-day basis? Well, you'll need to know a couple of things first. Not the least of which is how Morocco does taxes. Here are some basic tidbits on the country's tax system.
The Basics of Morocco's Tax System

Moroccan Residency Leads To Tax Requirement

First thing's first, you need to know that the moment you become a resident of Morocco, you're automatically required to pay taxes here. It's the same in other countries like France, Spain, and more. But what makes a legal tax resident in Morocco? For one thing, if you've relocated to the country and changed your status to 'resident,' that, in itself, makes you a part of the country's tax system. But also if you work in a Moroccan company even if you live outside of the country. As well as if you spend around 183 days (approximately six months in total) within a year in Morocco regularly.

Income Tax Rates in Morocco

Of course, what you probably have to pay attention to the most will be your income tax. Just like in other countries, your income tax rate will depend on how much you earn in a year. If you earn less than MAD 30,000.00, your tax rate is 0%. It will become 10% if you earn around MAD 30,001.00 to MAD 50,000.00 per year. Then it goes up to 20% when your annual salary rises up to about MAD 50,001.00 to MAD 60,000.00. Earning around MAD 60,001.00 to MAD 80,000.00 a year will inevitably increase your income tax rate to 30%. And so on and so forth!

The Basics of Morocco's Tax System

Getting Taxed Based On Your Home

Do note that, despite your residency status, where you actually live will also affect your income tax rate. This is because those whose legal residence is outside of the country will be taxed differently from those who live here. In a nutshell, when you've become a legal resident of Morocco, be it in the capital city of Marrakech or any other place in the country, you will be taxed on all of your income. However, if you're only staying in Morocco for a period of time and have not applied for legal residency, only your income earned from Moroccan businesses and other local ventures will be taxed.

Capital Gains Taxes in Morocco

Morocco also has a capital gains tax, imposed on any property or asset you sell within the country. Ordinarily, the rate for this tax is a flat 20% of all your earnings and a minimum of 3% of the total selling price. If you sell your own shares of a Moroccan company, on the other hand, the capital gains tax you'll have to pay is at a rate of 10%. And if you rent out your own property to others, your capital gains tax rate will depend on the annual gross revenue. It's 10% for those under MAD 120,000.00 per year and anything above that will be 15%.

The Basics of Morocco's Tax System

Morocco's Corporate Taxes

Now, let's talk about corporate taxes! Since Morocco is a major business hub in the Middle East, the country's corporate taxes contribute a lot to its economy and various operations in the country. Just like a person's individual income tax rate, a company's corporate tax rate depends on how much it earns per year. Those who earn less than or equal to MAD 300,000.00 per year, will have to pay 10% in corporate taxes. Earning around MAD 301,000.00 to MAD 1,000,000.00, on the other hand, will make the corporate tax rate increase to 20%. And so on and so forth!

Morocco's Value-Added Tax

Finally, there's Morocco's Value-Added Tax, or 'VAT.' This tax is imported to everyone, regardless of residency status, who purchases goods and services within the country. The standard rate is 20%, included in most goods and services throughout the country. More often than not, the prices you see in stores and such have already included the VAT, letting you automatically pay for the tax the moment you make your purchases. And while the standard rate is flat, there are lower rates that depend on the degree of necessity of the taxed items. Banking transactions and petroleum products, for instance, have a reduced rate of 10%. While public transport only has a VAT of 14%.

The Basics of Morocco's Tax System

Don't let the beauty of Morocco distract you from your obligations as a new resident of the country. Most especially when it comes to taxes! If you want to live a hassle-free life in Morocco, make sure you understand its tax system first!