Withholding Tax in Morocco: Understanding the Products and Rates Subject to this Essential Fiscal Mechanism | iHub

Withholding tax is a fundamental pillar of the Moroccan tax system, ensuring efficient tax collection directly at the time certain incomes are paid. This mechanism, governed by Articles 158 to 170 of the General Tax Code (CGI), requires companies subject to Corporate Tax (IS) to deduct a portion of the tax from amounts they pay to third parties.

At iHub, we assist you in mastering these obligations. Whether you are in the phase of creating your startup's legal status or need rigorous accounting services, a good understanding of withholding tax is essential.

What Products Are Specifically Subject to Withholding Tax?

Article 4 of the CGI clearly lists three main categories of products paid by a company to third parties that must be subject to withholding tax:

• Income from shares, equity interests, and similar income (mainly dividends).
• Income from fixed-income investments.
• Gross income received by non-resident individuals or legal entities in Morocco.

The withholding tax is generally borne by the paying party. However, in some cases, this responsibility may fall on a third party, such as a banking institution or an approved intermediary.

1. Income from Shares, Equity Interests, and Similar Income (Dividends)

This category primarily concerns dividends distributed by capital companies. It also includes liquidation bonuses, income distributed by UCITS (Undertakings for Collective Investment in Transferable Securities), as well as director's fees and attendance allowances. For any statutory modifications or distribution decisions, it is crucial to know the rules in force.

The withholding tax rate on dividends has seen recent adjustments. As of January 1, 2026, the rate is 11.25% for distributed amounts, then it will be reduced to 10% from January 1, 2027. This rate is determined solely by the distribution date, regardless of the fiscal year in which profits were realized (Art. 247-XXXVII-C of the CGI).

For resident individuals, this withholding tax is final. Conversely, for resident legal entities subject to corporate tax (IS), dividends may benefit from an exemption from withholding tax, subject to the production of a title ownership certificate and a 100% deduction at the beneficiary (parent-subsidiary regime).

2. Fixed-Income Investment Products

This second category includes interest from bonds and Treasury bills, term deposits, savings bonds, blocked accounts, as well as income from Sukuk certificates. The tax treatment varies depending on the beneficiary:

• For resident legal entities subject to corporate tax (IS), the rate is 20% and is not final. The amount withheld is then creditable against the corporate tax due by the company.
• For resident individuals, the rate is 30% and is final for Income Tax (IR).

Credit institutions are generally responsible for deducting and remitting this withholding tax to the Treasury.

3. Gross Income Paid to Non-Residents

This category is broad and covers various types of remuneration paid to individuals or legal entities who are not tax residents in Morocco. Article 15 of the CGI provides an exhaustive list, including:

• Royalties for the use of copyrights, patents, designs, and models.
• Remuneration for the provision of scientific or technical information.
• Fees for technical assistance or provision of personnel.
• Remuneration related to artistic or sports activities carried out in Morocco.
• Remuneration for services of any nature used in Morocco or provided by non-residents.

The standard withholding tax rate for these products is 10%. However, it is crucial to note that this rate can be modified, reduced, or even eliminated thanks to international tax conventions signed by Morocco, which number over 60. Good legal advice is often indispensable for navigating these specifics.

Summary of Withholding Tax Rates in Morocco

For an overview, here is a summary of the main rates:

• Dividends and distributions: 11.25% in 2026, then 10% from 2027.
• Interest (resident legal entities): 20% (non-final).
• Interest (resident individuals): 30% (final).
• Gross income (non-residents): 10% (unless tax conventions apply).
• Commissions, brokerage, fees (residents): 5% (legal entities) or 10% (individuals under RNR/RNS), creditable. Application by debtor companies is progressive based on their turnover.
• Real estate rental income: 5% (progressive application from 2026, depending on the debtor's turnover).

These rates are regularly adjusted by annual Finance Laws.

What Triggers Withholding Tax?

The triggering event that initiates the tax withholding obligation is the effective payment of the products. Nevertheless, legislation extends this notion to two other situations, as specified in Circular 717:

• Payment: This refers to the direct remittance of funds to the beneficiary, whether in cash, by check, or bank transfer. It is an effective payment.
• Availability: When the paying company makes the funds available to the beneficiary without the possibility of retraction. For example, the dividend enjoyment date set by an Ordinary General Assembly.
• Account credit: Introduced into the CGI in 2011, this concept covers crediting a partner's current account (for dividends) or a bank current account (when the credit institution is the paying party).

Withholding tax is due whether the payment is in cash or in kind. Be careful: the tax administration could interpret a gratuitous abandonment as equivalent to payment.

Declaration Obligations and Payment Deadlines

The paying party has strict obligations. It must file a declaration of the products subject to withholding tax, accompanied by the payment to the Public Treasury. The deadline is set for no later than the end of the month following that in which the payment, availability, or account credit occurred. For example, for a withholding tax operated in March, the payment and declaration must be made before the end of April.

The declaration must include the beneficiary's identity, the nature and gross amount of the products paid, the applied rate, and the amount of tax withheld. Non-compliance with these obligations results in surcharges and penalties. Rigorous accounting management is essential to avoid these risks.

Crediting and Refund of Withholding Tax

For a resident company subject to corporate tax (IS), the withholding tax suffered is creditable against the IS due for the same fiscal year. If the withholding tax exceeds the IS due, the excess is refundable upon request. For individuals, the final or non-final nature of the withholding tax determines the tax treatment. If it is final, it constitutes the definitive tax. If it is non-final, it is creditable against the overall income tax.

Exemptions and Reduced Rates

Certain products may be exempt or benefit from reduced withholding tax rates. This is the case for dividends distributed within a group under the parent-subsidiary regime, or for certain organizations. Furthermore, the numerous international tax conventions signed by Morocco can provide for reduced rates for dividends, interest, and royalties paid to residents of partner countries. It is therefore imperative to consult these conventions for correct application.

In summary, withholding tax is a complex but central mechanism of Moroccan taxation. Its mastery is crucial for corporate tax compliance. For any specific questions or support, iHub experts are available to offer you relevant legal advice & dispute resolution.