VAT in Morocco: rates, calculation, regimes and returns

How does VAT work in Morocco?

Value added tax is a consumption tax. In principle the business does not bear it: it charges VAT to its customers (output VAT), recovers the VAT it paid to suppliers (input VAT), and pays the difference to the State. The final consumer, who cannot deduct anything, carries the actual cost.

Each sales invoice shows the amount excluding VAT, the VAT rate and amount, and the total including VAT. At each filing deadline, monthly or quarterly depending on the company's situation, you work out the balance: output VAT minus input VAT. A positive balance is paid; a negative balance is a VAT credit. Confirm your filing frequency and the detailed rules with your expert-comptable (chartered accountant).

What are the VAT rates in Morocco?

The standard rate is 20 % and covers the large majority of goods and services. Reduced rates of 14 %, 10 % and 7 % apply to categories of products and services specifically listed in the General Tax Code. Some transactions are exempt, with or without the right to deduct input VAT; exports are the best-known case, exempt with the right to deduct.

Be careful: the list of products under each reduced rate changes regularly with the annual finance laws, and several reduced rates have been modified in recent years. Before applying anything other than 20 %, check the rule in force for your specific product with your accountant or the DGI's publications. That is also why software should let you configure rates rather than hard-code them.

Output VAT vs input VAT: what is the difference?

Output VAT is the VAT you charge customers on your sales and services. Input VAT is the VAT you paid on purchases, expenses and investments used in the business. To be deductible, it must appear on a proper invoice in the company's name with the required details, and the expense must serve the taxable activity.

In Moroccan practice, the deduction covers purchase invoices that have actually been paid, listed in a statement of deductions attached to the return. Some expenses are excluded from deduction, and limits exist for cash payments: your accountant will tell you what applies in your case.

• Keep every supplier invoice, showing the supplier's ICE number and yours.
• Record the payment date and method of each purchase.
• Split VAT by rate, on both sales and purchases.
• Reconcile total input VAT with the statement of deductions before filing.

Cash basis or accrual basis: which regime applies?

The default regime in Morocco is the cash basis (encaissement): output VAT becomes payable when the customer pays you, not on the invoice date. An invoice issued but not yet paid is therefore not part of the period's VAT due. This helps cash flow when customers pay late.

A business can opt for the accrual basis (débits): VAT is then due as soon as the invoice is issued, whether or not the customer has paid. It is simpler to track, since you just total the invoices issued, but the business advances the VAT to the State. Discuss the choice and its conditions with your accountant.

Worked example: calculating VAT due in dirhams

Take an SME on the cash basis. During the period it collects payment for two sales and pays one purchase. VAT is calculated line by line, then totalled by rate.

VAT due: 2,826.00 DH of output VAT minus 1,569.10 DH of input VAT, i.e. 1,256.90 DH. If in the next period output VAT is only 900.00 DH while input VAT reaches 1,400.00 DH, nothing is payable and the business has a 500.00 DH VAT credit to carry forward.

• Sale collected: 12,500.00 DH excluding VAT at 20 %, VAT 2,500.00 DH, total 15,000.00 DH including VAT.
• Sale collected: 3,260.00 DH excluding VAT at 10 %, VAT 326.00 DH, total 3,586.00 DH including VAT.
• Total output VAT: 2,500.00 + 326.00 = 2,826.00 DH.
• Purchase paid: 7,845.50 DH excluding VAT at 20 %, input VAT 1,569.10 DH, total 9,414.60 DH including VAT.
• VAT due: 2,826.00 − 1,569.10 = 1,256.90 DH.

What is a VAT credit, and how do you file on SIMPL-TVA?

A VAT credit arises when input VAT exceeds output VAT, for example after a large investment or a month of low sales. As a general rule the credit is not refunded: it is carried forward and offset against later returns. Refunds are only available in cases provided for by law, such as certain export or investment situations; ask your accountant.

Returns are filed and paid online on SIMPL-TVA, the DGI's e-filing service. The return shows turnover by rate, output VAT, input VAT and any credit, together with the statement of deductions listing the paid purchase invoices. Errors in that statement, such as a missing ICE number or a wrong amount, are among the most frequent causes of tax reassessment.

How does SOGESTIO handle VAT?

SOGESTIO offers VAT rates configurable per company, pre-filled with 20 %, 14 %, 10 %, 7 % and exempt (0 %), so you can follow finance-law changes. On every quote, invoice or credit note, the server calculates VAT line by line and totals it by rate. Expenses are recorded with their deductible VAT, and the matching accounting entries are generated automatically on the Moroccan CGNC chart of accounts.

The VAT return is prepared on the cash or accrual basis, with output VAT, input VAT and credit carried forward. The statement of deductions is exported in EDI XML format for SIMPL-TVA. SOGESTIO prepares and automates; the return is still validated by the business or its accountant. You can try it free for 14 days, no card required.