Withholding tax on corporate income tax, personal income tax and VAT in Morocco: are you ready for July 2026?

Starting from the July 1, 2026, The Moroccan system of withholding tax is undergoing another significant change. This reform does not create a completely new system; it primarily involves expand existing mechanisms Regarding corporate income tax, personal income tax, and VAT. Since previous finance laws, companies have already had to deal with several withholding taxes: corporate income tax/personal income tax withholding on certain remuneration paid to third parties, and VAT withholding on capital goods, works, and certain services. The new element in 2026 is that the cThe field of relevant payers is widening, certain services provided by legal entities are more targeted, and a new withholding of 5 % appears for certain rental products. The challenge for companies is therefore not just knowing a rate. Above all, they need to know who should retain the funds, for which transaction, at what time, on what basis, and with what supporting documents?.

1. The context: a logic of progressive generalization of withholding taxes

Withholding tax is based on a simple principle: tax or VAT is deducted directly at the time of payment by the customer or payer, and then remitted to the tax authorities. In practice, this transfers part of the tax responsibility to the company paying the invoice. The customer no longer simply has to record and pay an invoice; they must also check whether withholding tax is applicable before making payment. This is what makes the system operationally sensitive. Errors can arise from incorrect invoice classification, an expired tax certificate, a failure to allocate charges between different services, or an incorrect assessment of the supplier's status.

2. First change: extension of the RAS IS of 5 % to new private payers

The first major new feature concerns the withholding tax IS of 5 % on certain remuneration paid to legal entities subject to corporate income tax. Until now, this mechanism primarily targeted certain public or similar payers. From the July 1, 2026, The circle of payers concerned is expanding, notably to include: credit institutions and similar organizations; ; insurance and reinsurance companies; ; large private companies exceeding certain revenue thresholds. For large private companies, entry into the scheme is gradual. The threshold used is the turnover excluding VAT for the last completed financial year: 500 million dirhams starting from July 1, 2026, Then 350 million dirhams starting from January 1, 2027, Then 200 million dirhams starting from January 1, 2028. In concrete terms, a large company falling within these thresholds will have to check, before payment, whether the invoice received from a service provider falls within the scope of remuneration subject to the RAS IS of 5 %.

3. What this means in concrete terms for service provision

The 5 % withholding tax does not automatically apply to all invoices issued by a company. It primarily targets the remuneration allocated to third parties, This includes fees, commissions, brokerage fees, and other similar remuneration. The guide emphasizes that the classification must be based on the actual nature of the service, not solely on the wording of the invoice or contract. Typically, this applies to fees for consulting, expertise, assistance, training, engineering, auditing, accounting or administrative management, as well as certain IT or intellectual services. Conversely, certain transactions may be excluded from the RAS IS/IR (Reduced Income Tax on Corporate Income) when they are not of an intellectual nature, such as the sale of goods, construction work, maintenance, repair, transportation, or certain material services. However, it's important to note that a service excluded from the RAS IS/IR may still fall under the category of... VAT refund if the specific conditions for VAT are met.

4. Second change: extension of the VAT exemption to certain services provided by legal entities

The second new feature concerns the VAT withholding tax. Since the reform introduced earlier, the VAT RAS already applies in certain cases to capital goods, works, and certain services. From the July 1, 2026, The scheme is extended to certain services provided by legal entities subject to VAT, When the payer is, in particular, a bank, an insurance company, or a large private company falling within the progressive thresholds, VAT withholding is not calculated on the pre-tax amount of the invoice. It applies only to the VAT charged. The rate then depends on the supplier's tax situation: 75 % of VAT when the tax compliance certificate is presented in the cases concerned; ; 100 % of VAT In the absence of a valid or verifiable certificate, a clear distinction must be made between two bases: the RAS IS or IR is calculated on the pre-tax amount of the remuneration, while the RAS VAT is calculated solely on the VAT charged. Therefore, the same invoice may, in some cases, be subject to both mechanisms.

5. Third change: new RAS of 5 % on certain rental products

The third major new feature concerns the rental products. As of July 1, 2026, a withholding tax of 5 % is established on certain rental income from built and unbuilt real estate and structures of all kinds. This withholding tax specifically targets rents paid to legal entities subject to corporate income tax or to individuals subject to the National Register of Non-Residents (RNR/RNS) when the property is part of their business assets. Two situations must be distinguished. When rent is paid to a legal entity subject to corporate income tax, The 5 % withholding tax applies when the payer belongs to the circle of entities concerned: public sector, banks, insurance companies, or large private companies meeting the thresholds. When rent is paid to a natural person RNR/RNS, The 5 % withholding tax applies if the property is part of the taxpayer's business assets. In this case, the circle of payers is broader: any public or private legal entity, as well as any individual subject to the RNR/RNS tax regime, may be required to withhold the tax. This new withholding tax should therefore not be confused with the standard tax regime for rental income of individuals.

6. The key point: the invoice date is not always enough

For the RAS IS/IR on rental services and products, the taxable event is the payment, there provision or the’account registration of the beneficiary. The invoice date alone is therefore not always sufficient to trigger the withholding. Regarding the extension of the VAT withholding scheme linked to Finance Law 2026, the guide reiterates that the withholding must be applied when invoices are issued from the date the scheme applicable to the payer comes into effect. In practice, businesses must therefore cross-reference three elements: the invoice date, the payment date, and the effective date applicable to their specific situation.

7. How businesses should prepare

The reform must be treated as a matter of tax compliance, but also as an internal process issue. The companies concerned should, in particular:

1. map their suppliers and landlords; ;
2. identify recurring services potentially subject to withholding; ;
3. check their own turnover threshold excluding VAT; ;
4. update invoice validation procedures; ;
5. plan for systematic checks of the tax compliance certificate when relevant; ;
6. adapt the accounting and tax settings; ;
7. train the purchasing, accounting and treasury teams; ;
8. document the analyses retained for each significant case.

The goal is not just to deduct the correct amount. It is primarily to be able to justify, in the event of an audit, why a deduction was applied, not applied, or calculated on a given basis.

Conclusion

July 1, 2026, marks not only the entry into force of new withholding tax rates, but also a further step in the widespread implementation of pre-payment controls. For the companies concerned, the challenge will lie in correctly classifying transactions, identifying the status of the supplier and the payer, verifying thresholds, checking tax certificates, and documenting the applicable tax treatment. Advance preparation is therefore essential to avoid calculation errors, payment delays, tax adjustments, and the risk of non-compliance.  

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The information presented in this article is for general informational purposes only. For an analysis tailored to your specific situation or that of your company, we recommend contacting us directly to receive personalized support that meets your unique context.