Morocco Digital Services VAT 2026: 20% Rate, Reverse Charge & Withholding Tax (WHT)

Understanding Digital Services for VAT Purposes

Moroccan tax law does not define "digital services" as a distinct category. Instead, these services fall under the general scope of VATable operations as per Article 89 of the General Tax Code (CGI), provided they are rendered by a VAT-registered provider or are deemed performed in Morocco under the territoriality rules of Article 88.

In practice, digital services encompass a wide range of offerings, including:

• Software as a Service (SaaS): Subscriptions to management platforms, CRM, online accounting tools, and collaborative suites (e.g., Microsoft 365, Google Workspace, Salesforce).
• Streaming and Digital Content: Subscriptions to video platforms (Netflix, Amazon Prime Video), music (Spotify, Deezer), digital books, and online games.
• Online Advertising: Purchases of ad spaces on social media (Meta Ads, Google Ads, LinkedIn Ads, TikTok Ads) and programmatic platforms.
• E-commerce of Intangible Goods: Downloads of software, mobile applications, online training (e-learning), and digital licenses.
• Hosting and Cloud Computing Services: Cloud infrastructure (AWS, Azure, Google Cloud), website hosting, and data storage.

All these constitute service provisions from a tax perspective. The applicable VAT regime depends on where the service is performed and the provider's status.

Applicable Rate: 20% (Standard Rate)

Digital services are not listed among the reduced-rate categories specified in Article 99-B of the CGI 2026. They do not fall under hospitality, banking operations, urban and road transport, or any other category benefiting from the 10% rate.

Consequently, digital services are subject to the standard VAT rate of 20% (Article 99-A of the CGI).

It's important to note that by 2026, following the reform initiated by the Finance Law 2024, Morocco will operate with only two VAT rates: 20% (standard) and 10% (reduced). The former 7% and 14% rates, progressively abolished between 2024 and 2026, are no longer applicable.

VAT Registration for Foreign Providers: The Reverse Charge Mechanism

Territoriality Principle

For Moroccan VAT purposes, a remotely provided digital service by a non-resident without an establishment in Morocco is deemed performed in Morocco if the client has its head office, establishment, or tax domicile in Morocco (Article 88 of the CGI, as amended by the Finance Law 2024). This new territorial attachment criterion, aligned with OECD recommendations, complements the traditional criterion of use or exploitation in Morocco.

Thus, a digital service provided by a foreign company (American, European, Asian) to a client established in Morocco is taxable in Morocco, regardless of where the service is executed or the provider is located.

Reverse Charge Mechanism (B2B)

When the foreign provider is not established in Morocco and does not have a permanent establishment in the territory, it cannot collect Moroccan VAT. Therefore, the Moroccan client (a VAT-registered company) must reverse charge the VAT:

• The client receives a tax-exclusive (HT) invoice from the foreign provider.
• The client calculates the VAT due at the 20% rate on the HT amount.
• This VAT is declared on its periodic VAT return (SIMPL TVA) as VAT due on services acquired from non-residents.
• If the client is fully VAT-registered (100% of its activity is taxable), it can simultaneously deduct this reverse-charged VAT, making the operation cash-flow neutral.

Cases of Non-VAT-Registered Clients (B2C)

For individuals and non-VAT-registered persons, the foreign provider is liable. Since January 1, 2024, Article 115 bis of the CGI mandates that any non-resident provider of remotely provided digital services, failing to accredit a tax representative in Morocco (Article 115), must:

• Register on the dedicated electronic platform of the DGI and obtain a tax identifier.
• Submit, before the end of the first month of each quarter, a declaration of the turnover generated in Morocco from non-VAT-registered clients for the preceding quarter and remit the corresponding tax, without the right to deduction.
• Maintain a register of services provided, kept for ten years and electronically accessible to the administration.

A client is deemed to have their tax domicile in Morocco if one of the indicators in Article 88-2° is present: billing address in Morocco, payment by a bank card issued by an establishment in Morocco, Moroccan IP address, or Moroccan telephone dialing code. Therefore, Netflix, Spotify, or similar subscriptions by Moroccan individuals are subject to the 20% VAT collected and remitted by the platform.

VAT Withholding Tax: The Case of Out-of-Scope Clients

Legal Basis

Article 117-III of the CGI establishes a VAT withholding tax (WHT) on VAT due for taxable operations performed by non-resident persons for clients established in Morocco who are engaged in activities excluded from the scope of VAT (administrations, out-of-scope entities, pure holdings, etc.). The specific obligations for non-resident providers are detailed in Articles 115 and 115 bis of the CGI. This mechanism secures VAT collection when the Moroccan client does not file a VAT return where it could reverse charge the tax.

Who Withholds, Who Reverse Charges?

The partial withholding of 75% with a tax regularity certificate provided for in Article 117-V targets resident VAT-registered providers and does not apply to foreign suppliers.

Example Calculation

A SaaS subscription from a US publisher for 10,000 DH excl. VAT per month:

For assistance with your tax obligations, consider our accounting services.

Taxable Event and Chargeability: The Cash Basis Regime

For service provisions, the VAT taxable event is the receipt of the price, remuneration, or an advance payment (Article 95 of the CGI). This principle fully applies to digital services.

In practice, for a monthly SaaS subscription:

• VAT becomes chargeable upon payment of each monthly installment, not on the billing date.
• If the Moroccan client pays by credit card or bank transfer, the chargeability date corresponds to the actual debit date.
• For an annual subscription paid in advance, VAT is fully chargeable on the date of full payment.

Businesses may opt for the accrual basis regime (Article 95, para. 2 of the CGI), in which case VAT becomes chargeable upon invoicing or booking the receivable in accounts; however, partial payments and deliveries prior to accrual remain taxable. The option is declared to the local tax office before January 1st or within thirty days following the start of activity; the taxpayer must attach a list of their debtor clients and pay the corresponding tax within thirty days of sending this declaration. For personalized guidance on these options, our legal and dispute resolution advisory services can assist.

Moroccan Client Declaration Obligations

Moroccan businesses acquiring digital services from foreign providers must comply with the following obligations:

1. Declaration of Reverse-Charged VAT

Reverse-charged VAT must appear on the periodic VAT return (monthly or quarterly, depending on the company's regime) submitted via the SIMPL TVA portal. The amount is shown as:

• VAT due (line for service acquisitions from non-residents)
• Deductible VAT (if the client benefits from full deduction rights, the operation is neutral; if the client applies a deduction pro-rata, only the corresponding fraction is deductible)

2. Remittance of Withholding Tax (Out-of-Scope Clients Only)

When the Moroccan client engages in an activity excluded from the scope of VAT, they cannot reverse charge the tax on a VAT return. They must withhold it from each payment made to the non-resident provider and remit it to the tax administration's receiver during the month following payment, accompanied by a remittance slip according to the administration's model (Article 117-III of the CGI). A VAT-registered client has no withholding to operate: they reverse charge the VAT on their periodic return (point 1 above).

3. Retention of Supporting Documents

The company must retain for 10 years (Article 211 of the CGI), a duration distinct from the 4-year tax prescription period:

• Invoices from the foreign provider (including those issued in foreign currencies)
• Proof of payment (bank statements, transfer orders)
• Contracts or general terms and conditions of the subscribed service
• Details of the reverse-charged VAT and WHT calculation

4. Electronic Invoicing

New electronic invoicing rules impose enhanced traceability. Invoices from foreign digital providers must be integrated into the company's accounting system, mentioning the applied reverse charge regime. For comprehensive accounting support, iHub can help.

VAT and Export of Digital Services from Morocco

Conversely, a Moroccan company providing digital services to foreign clients (software development, IT consulting services, digital marketing for foreign clients) benefits from the exemption with right to deduction provided by Article 92-I-1° of the CGI.

The conditions are as follows:

• The service must be intended for exploitation or use outside Moroccan territory.
• The invoice must be issued in the name of the foreign client.
• Payment must be made in foreign currency via an approved intermediary.

This exemption allows the exporting company to recover input VAT paid on its purchases (premises, IT equipment, licenses, cloud hosting) and, if applicable, obtain a VAT credit refund if the credit is structural. The exporter can also use the suspension regime (Article 94 of the CGI) for its current purchases related to export. For assistance in setting up your export-oriented business, explore our startup legal entity creation and domiciliation services.

Frequently Asked Questions

Who pays VAT on Netflix or Spotify in Morocco?

It depends on the client. For individuals (B2C), the foreign platform (Netflix, Spotify, Apple Music, etc.) is liable for the Moroccan VAT of 20%: it must register on the DGI's electronic platform, declare its quarterly turnover generated in Morocco, and remit the tax (Article 115 bis of the CGI). For VAT-registered businesses that subscribe to these services for professional purposes, the Moroccan client reverse charges the VAT on its periodic return and deducts it simultaneously if its activity allows (Article 115 of the CGI), with no withholding tax. Only clients engaged in an activity out of scope for VAT operate a withholding tax on each payment (Article 117-III of the CGI).

Is a foreign SaaS publisher subject to Moroccan VAT?

A foreign SaaS publisher without an establishment in Morocco performs services taxable in Morocco if the service is exploited or used in Morocco or provided remotely to a client with its head office, establishment, or tax domicile there (Article 88 of the CGI). It can accredit a tax representative domiciled in Morocco who declares and pays VAT on its behalf (Article 115). Failing this, two situations arise: for its VAT-registered clients, VAT is reverse-charged by the client on its own return (out-of-scope clients withhold it, Article 117-III) and the publisher has no declaration to file; for its non-VAT-registered clients (individuals), the publisher must register on the DGI's electronic platform, declare quarterly turnover generated in Morocco, and remit the corresponding VAT (Article 115 bis).

How to declare reverse-charged VAT on digital services?

Reverse-charged VAT is declared on the periodic VAT return submitted via the SIMPL TVA portal, for the month or quarter of payment. The VAT amount calculated at the 20% rate on the foreign provider's tax-exclusive invoice appears as VAT due; if the company has full deduction rights, it enters the same amount as deductible VAT (Article 115 of the CGI), making the operation cash-flow neutral; in the case of a pro-rata, only the deductible fraction is recovered. No withholding tax is to be operated by a VAT-registered client: the withholding under Article 117-III concerns only clients engaged in an activity out of scope for VAT, who remit it to the receiver during the month following payment. For professional assistance with your declarations, contact iHub for expert accounting services.

Are digital services exported from Morocco taxable?

No. Digital services provided by a Moroccan company to foreign clients and exploited outside Moroccan territory benefit from exemption with right to deduction (Article 92-I-1° of the CGI). The Moroccan provider invoices tax-exclusive and retains the right to deduct input VAT incurred, which can generate a refundable VAT credit (Article 103 of the CGI). This offers a significant advantage for Moroccan businesses engaged in international digital trade.