Withholding tax in Morocco: how the mechanism works, simply explained

What is withholding tax?

In an ordinary payment, each party declares and pays its own taxes. With withholding tax, the administration hands collection to whoever pays the money: at the time of payment, the payer keeps part of the amount, declares it and pays it to the Treasury in the recipient's name. The recipient receives a net amount, but the corresponding tax counts as paid on its behalf.

It is not an extra tax: it is a way of collecting an existing tax (income tax, corporate tax or VAT) as close as possible to the source of the income. Depending on the case, the withholding settles the tax or is an advance that the recipient offsets in its own return. Cases, rates, thresholds and deadlines are set by the General Tax Code and change with the finance laws: this guide explains the principles, to be checked for your situation with your expert-comptable (chartered accountant).

What are the main withholding taxes in Morocco?

Six families concern most businesses. The table further down summarises, for each, who withholds, on what and what to check.

• Income tax (IR) on salaries, withheld every month by the employer.
• Part of the VAT, since the 2024 finance law: certain customers (the State, public bodies, companies above a turnover threshold) withhold all or part of the VAT invoiced by certain suppliers.
• Certain payments to non-residents, such as services or royalties paid to a foreign company.
• Investment income: dividends and interest.
• Certain fees and remuneration paid to self-employed individuals.
• The auto-entrepreneur same-customer rule: above a certain annual amount of services invoiced to the same customer, that customer withholds tax.

Withholding on salaries: how is IR deducted?

Every month, the employer computes IR on each employee's net taxable salary, withholds it on the payslip and pays it to the DGI. Employees therefore do not pay tax on their salary themselves: they see it on their payslip. Each year, the employer summarises the salaries paid and the IR withheld in the état 9421 return, filed on SIMPL-IR.

Example for a single employee with no dependants and a monthly gross salary of 10,000.00 DH, using the rates and scale in force at the time of writing (scale from the 2025 finance law, to be checked): CNSS 268.80 DH (4.48% of a 6,000.00 DH cap), AMO 226.00 DH (2.26%), professional expenses allowance 2,500.00 DH (25%). Net taxable salary is 7,005.20 DH and monthly IR is 7,005.20 × 30% − 1,500.00 = 601.56 DH. The employer withholds and pays over these 601.56 DH; the employee receives 10,000.00 − 268.80 − 226.00 − 601.56 = 8,903.64 DH.

VAT withholding: what changes for a supplier?

Since the 2024 finance law, certain customers, including the State, local authorities and public bodies and companies above a turnover threshold, withhold all or part of the VAT invoiced by certain suppliers of goods, works or services, and pay it to the Treasury themselves. Exclusions exist, notably for certain sectors and small amounts. For the supplier, the rule is simple: the invoice does not change. It still shows the amount excluding VAT, the full VAT and the total including VAT.

What changes is collection: the customer pays the total including VAT minus the VAT withheld, and must give you proof of the amount withheld. You then offset this withholding against the VAT you owe, based on that proof. In some cases, the share withheld also depends on presenting a recent tax compliance attestation (attestation de régularité fiscale). In practice, on the supplier's side:

• Invoice as usual: amount excluding VAT, full VAT, total including VAT.
• Ask the customer whether it applies the withholding, and on what basis.
• Record the payment for the amount actually received.
• Claim the statement of VAT withheld and, if needed, proof that it was paid over.
• Offset the withholding in the right VAT return, with your accountant.

What must the withholding company do?

Withholding tax at source means becoming a collector on the State's behalf, with real liability: if a mandatory withholding was not made or not paid over, the payer may in principle be required to pay the corresponding tax, with penalties and surcharges. Withholding and then not paying over is even more serious, because the money belongs to the Treasury.

If in doubt, ask your accountant before paying, not after. The right reflexes are always the same.

• Before paying, identify whether the transaction falls under a withholding case (salary, purchase subject to VAT withholding, payment abroad, dividend, fees…).
• Compute the withholding on the right base, with the rates in force on the payment date.
• Declare and pay over the amounts withheld online, within the regulatory deadlines.
• Give the recipient proof of the amount withheld and keep the records.

Which common mistakes should you avoid?

The same mistakes come up on the supplier's side and on the payer's side.

• Issuing a credit note for an invoice paid net of withholding: the invoice was right, only the collection differs.
• Booking the gap as a loss or a discount instead of following it as an amount to justify.
• Forgetting to claim the withholding statement, and then being unable to offset the VAT withheld.
• Applying a rate or a scale from a previous year.
• Paying a foreign invoice without checking whether a withholding applies.
• For an auto-entrepreneur, not tracking the amount invoiced to each customer over the year.

How does SOGESTIO help you track withholding tax?

With the Payroll module (Pro and Groupe packs), SOGESTIO computes the IR withheld at source on each payslip, together with CNSS, AMO and seniority, and prepares the état 9421 as a preparatory XML file to transfer into SIMPL-IR. The payroll entry is generated automatically in the accounts, on the Moroccan chart of accounts (CGNC).

For VAT, SOGESTIO does not compute the withholding for you. You record each payment for the amount actually received: the invoice keeps its total including VAT, and the amount already paid and the balance due remain visible, which reminds you to claim the withholding statement. With the Documents module, that statement can be attached to the invoice; the accounting treatment of the withholding is validated with your accountant. Free 14-day trial, no card required.