International Taxation of Interest in Morocco: Withholding Tax (WHT) and Tax Treaties 2026

Understanding International Interest Taxation in Morocco

This comprehensive guide from iHub clarifies the nuances of international interest taxation when payments are made from Morocco to non-residents. Effective for 2026, the general rule under Article 15 of the Moroccan General Tax Code (CGI) imposes a 10% Withholding Tax (WHT) on such interest payments. However, crucial exemptions exist, particularly for long-term foreign currency loans, and bilateral tax treaties can further reduce this rate. We'll delve into the 2026 regime, country-specific conventional rates, regulations from the Office des Changes, and a practical numerical example.

The Moroccan Legal Framework: CGI Article 15 (2026)

The Moroccan General Tax Code distinguishes various interest taxation regimes based on the beneficiary's status and the nature of the transaction.

Withholding Tax on Interest Paid to Non-Residents

Article 15 of the CGI stipulates a 10% WHT on interest of Moroccan source paid, made available, or credited to non-resident individuals or legal entities. This WHT constitutes a final tax for the non-resident, unless a tax treaty provides otherwise.

This 10% rate applies to all fixed-income investment products, including interest on loans, bonds, treasury bills, and term deposits.

General Regime for Residents

For resident beneficiaries in Morocco, the regime differs. A 20% WHT is applied as an advance payment on interest received by legal entities subject to Corporate Income Tax (IS), while a 30% WHT applies as income tax for resident individuals, with the option for global declaration. Rigorous management of these financial flows is essential, and our experts in accounting services can assist you.

Exemption for Long-Term Foreign Currency Loans

Article 6-I-C-3° of the CGI grants a total exemption from WHT on interest related to loans contracted in foreign currencies for a duration of ten years or more. This measure aims to encourage the use of long-term international financing to support productive investment in Morocco.

The cumulative conditions to benefit from this exemption are:

• The loan must be denominated in foreign currencies.
• The initial contract duration must be at least 10 years.
• The funds must be effectively repatriated to Morocco.
• The borrower must provide a certificate from the Office des Changes.

Conventional Rates: Country Comparison

Bilateral tax treaties signed by Morocco can reduce the domestic WHT rate. Here are the main rates applicable to interest in 2026:

Important: The taxpayer must always compare the domestic law rate (10%) with the conventional rate and apply the most favorable one. When the conventional rate is equal to or higher than the domestic rate, the 10% rate from the CGI applies.

Office des Changes (IGOC) Rules: Framework for Cross-Border Interest Flows

The General Instruction on Exchange Operations (IGOC) regulates the transfer of interest related to the following operations:

External Loans

Interest related to external loans contracted by Moroccan residents from non-resident lenders is freely transferable, subject to justification of the operation to the authorized intermediary bank. The transfer is made after the applicable WHT has been applied.

Loans from Non-Resident Shareholders

Shareholder current accounts funded by non-resident shareholders are subject to a specific regime. The interest thereon must respect the maximum deductible interest rate fixed annually by order of the Minister of Finance, based on the average interest rate of 6-month Treasury bonds from the previous year (Art. 10-II-A-2° CGI).

The transfer of interest is subject to the production of a tax compliance certificate issued by the General Tax Directorate, a step where the guidance of specialized legal counsel can be invaluable.

Structured External Financing

For structured financing operations (syndication, international bonds, sukuk), the IGOC provides specific procedures for prior declaration to the Office des Changes. Interest is transferable in the loan currency, at the exchange rate on the day of transfer.

Numerical Example: Interest Paid to a Spanish Bank

Let's consider a Moroccan company paying interest to a Spanish bank as part of a 5-year euro loan.

Operation Data:

• Loan Amount: 2,000,000 EUR
• Annual Interest Rate: 4.5%
• Gross Annual Interest: 90,000 EUR
• Duration: 5 years (not eligible for Article 6-I-C-3° exemption)

Application of Morocco-Spain Treaty Rate:

• Domestic Law Rate (Art. 15 CGI): 10%
• Morocco-Spain Treaty Rate: 10%
• Applicable Rate: 10%

Calculation:

• WHT = 90,000 EUR x 10% = 9,000 EUR
• Net Amount Transferred to the Spanish Bank: 81,000 EUR

The Moroccan company must declare and pay the 9,000 EUR WHT to the DGI within the month following the interest payment. The Spanish bank can credit this withholding tax against its tax due in Spain under the double taxation convention.

Conditions for Applying the Conventional Rate

To benefit from the reduced rate provided by a tax treaty, the non-resident must meet several conditions:

• Tax Residence Certificate: The beneficiary must provide a tax residence certificate issued by the tax administration of their country of residence, covering the year of interest payment.
• Beneficial Owner Status: The recipient of the interest must be the beneficial owner within the meaning of the treaty. Interposed structures without economic substance do not allow claiming the application of the conventional rate.
• Prior Declaration: The Moroccan debtor company must submit a declaration of remuneration paid to non-residents (form ADC040F) to the DGI, a task often integrated into accounting services.
• Claim Period: In case of initial application of the domestic rate, the non-resident has a statute of limitations period to claim a refund of the overpaid amount, subject to providing the required documentation.
• Limitation on Benefits Clause: Some recent treaties include a LOB (Limitation on Benefits) clause that restricts access to treaty benefits to residents meeting substance conditions.

Declarative Obligations and Calendar

The Moroccan company paying interest to a non-resident must:

• Apply the WHT at the time of payment, provision, or crediting to the account.
• Pay the WHT to the Treasury within the month following the interest payment (Art. 160 CGI).
• Submit the annual declaration of remuneration paid to non-resident third parties before April 1st of the following year.

Navigating the complexities of international interest taxation requires careful attention to detail and a thorough understanding of both domestic law and bilateral tax treaties. Adhering to these regulations is paramount for compliance and optimizing financial outcomes for companies operating with international funding.