Morocco Begins Gradual Implementation of Withholding VAT at Source
The General Directorate of Taxes in Morocco has announced a new mechanism for the gradual implementation of withholding value-added tax (VAT) on operations carried out by service providers subject to this tax, as outlined in the 2026 Financial Law.
In a notice directed to credit institutions, deemed entities, insurance and reinsurance companies, and enterprises with revenue exceeding 200 million dirhams, the directorate clarified that this mechanism will be gradually activated from July 1, 2026, to January 1, 2028.
According to the announced timeline, the withholding will commence on July 1, 2026, for credit institutions, deemed entities, insurance and reinsurance companies, in addition to enterprises with revenue equal to or exceeding 500 million dirhams in the last completed fiscal year. The mechanism will expand on January 1, 2027, to include enterprises with revenue equal to or exceeding 350 million dirhams, before being applied from January 1, 2028, to those with revenues of 200 million dirhams or more.
The directorate mandates the relevant institutions and enterprises to withhold 75% of the VAT amount when paying the dues owed to service providers, provided that these providers present a certificate proving their tax compliance. In the absence of such a certificate, a 100% withholding rate will be imposed on the due tax amount to ensure full collection of treasury dues, based on Articles 117-V-C and 247-XXXXVI of the General Tax Code.
This measure is part of the government’s efforts to enhance VAT collection and ensure its effective retrieval, reflecting its commitment to improving financial transaction management between institutions and service providers in Morocco. This aims to foster transparency in dealings and reduce delays in settling tax obligations.
