VAT withholding in Morocco: how it works, obligations and impact on businesses.

VAT withholding in Morocco: why and how to apply it

VAT withholding in Morocco was extended by the 2024 Finance Law, for payments made from 1 July 2024 (Article 117 of the General Tax Code). In the cases provided for by law, the customer withholds all or part of the VAT at the time of payment and pays it directly to the Treasury. The aim is to secure tax collection and limit fraud.

What is VAT withholding?

Instead of collecting all the VAT invoiced and then paying it over, the supplier receives only part of the tax, or none at all: the customer withholds a share (75% or 100%) and pays it to the State itself. The supplier then offsets this withholding in its own VAT return.

Who must withhold, and at what rate?

Not every business is required to withhold VAT. The obligation depends on the status of the customer, the status of the supplier and the nature of the transaction:

• Purchases of capital goods and works: a VAT-registered customer withholds 100% of the tax when the supplier does not provide a tax compliance certificate (ARF) less than six months old. If the certificate is valid, no withholding applies.
• Services paid for by the public sector (the State, local authorities, public institutions and enterprises and their subsidiaries): 75% of the VAT is withheld.
• Services provided by individuals: VAT-registered legal entities and individuals taxed under the actual or simplified net income regime withhold 75% of the VAT if the provider presents an ARF, and 100% otherwise.
• Services provided by legal entities: the 2026 Finance Law extended withholding to payments made by banks, insurance companies and large companies, on a phased timetable from 1 July 2026 (75% with an ARF, 100% without).

Before relying on a tax compliance certificate, the customer must check its authenticity on the website of the Directorate General of Taxes.

Transactions covered

For services, withholding applies to a list set by decree: including installation and repair work, contract manufacturing, rental of premises, transport, warehousing, brokerage and the assignment of patents and trademarks.

Excluded transactions

Some transactions are outside the scope of VAT withholding, including:

• Sales of electricity and water to public networks.
• Sanitation services.
• Rental of water and electricity meters.
• Telecom operators’ services.
• Services of insurance intermediaries (agents and brokers).
• Services of 5,000 dirhams or less including VAT, up to a limit of 50,000 dirhams including VAT per month and per supplier.

The withholding process

When a transaction is covered, the mechanism follows three steps:

1. 1
   The customer checks the supplier’s situation (status, ARF) and applies the relevant rate: 75% or 100% of the VAT invoiced.
2. 2
   It pays the amount withheld to the Treasury during the month following the month of payment.
3. 3
   It attaches a detailed statement of the amounts withheld to its VAT return.

This process requires businesses to manage their purchasing and accounting with greater rigour.