Morocco: the government freezes major tax reforms and targets adjustments

After the reduction in corporate tax in 2023, the gradual elimination of reduced VAT rates in 2024 and a slight adjustment to the income tax scale in 2025, the 2026 Finance Bill opts for stability. "The 2026 Finance Bill favors stability while introducing a few targeted measures," says the magazine Challenge. With the rise of Moroccan football, the government plans a series of measures to structure the private sports sector. New sports companies will thus be able to benefit from a tax exemption for five years from their first commercial operation.

Moreover, the donations received by these companies will be tax deductible, up to 10% of the taxable net profit and a ceiling of 5 million dirhams. Until now, this advantage was only reserved for associations recognized as being of public utility. Sports associations that decide to transform into companies will be able to transfer their assets and liabilities at their actual value, without tax impact. "On the income tax side, the 2026 Finance Bill proposes a progressive deduction for the remuneration of professional athletes and technical supervisors," the magazine develops. Specifically, the income of athletes will benefit from a 90% deduction in 2026, which will gradually decrease to 60% in 2029 with a view to formalizing the sector.

On the VAT side, sports federations recognized as being of public utility will be exempt without the right to deduction, like non-profit associations. Sports companies will benefit from a similar treatment, on a transitional basis until 2030. "One of the main innovations of the 2026 Finance Bill concerns the introduction of withholding tax (WHT) on rental income," the publication points out. When a company or administration pays rent, it will now have to deduct 5% of the gross amount and pay it to the Treasury. This withholding is an advance on the tax owed by the owner who will have to declare his rental income and will benefit from the 40% deduction.

In doing so, the State has two objectives: to improve the traceability of real estate income and to facilitate tax audits. The withholding tax also extends to VAT and gradually to the private sector. At the same time, a mandatory self-liquidation regime is being put in place for the purchase of industrial waste and recovery materials, in order to limit fraud. The 2026 Finance Bill also provides for several technical measures. Dividends distributed by collective investment undertakings in capital (OPCC) will now be taxed as investment income, without however being assimilated to equity income, it is specified.

Taxpayers who receive income abroad are required to declare it before April 1st, with a tax certificate from the country of origin. In the agricultural sector, a VAT exemption with the right to deduction is planned for fertilizers and growing media. As for the 36-month exemption period for investment goods, it will be extended by two additional years. Public contracts and State contracts will be subject to a symbolic contribution of 0.1%. Finally, an additional registration duty of 2% is introduced for real estate transactions paid in cash rather than by uncashed check, bank transfer or electronic payment. The aim is to reduce undeclared payments and strengthen transparency.

Also, the 2026 Finance Bill provides for two measures to strengthen tax audits: the generalization of electronic accounting for all companies in order to improve the traceability and reliability of data, and the obligation for companies to inform the tax administration electronically before filing a request for safeguard, recovery or liquidation with the commercial court. These measures aim to make the administration more responsive and to protect the interests of the public Treasury.