With VAT withholding, the client no longer pays all the VAT to its provider: it withholds part of it and pays it directly to the Treasury. The tax authority’s aim is to secure VAT collection. For providers, the main effect is a cash timing gap.
How it works
Take a service of MAD 100,000 excluding tax, subject to 20% VAT:
| Amount | |
|---|---|
| Price excluding tax | MAD 100,000 |
| VAT invoiced (20%) | MAD 20,000 |
| Withheld by the client (75% of the VAT) | MAD 15,000, paid to the Treasury |
| Amount received by the provider | MAD 105,000 |
The provider declares the VAT on its invoice as usual, and offsets the VAT withheld by its client against the VAT it owes. If the withholding exceeds what it owes, it has a credit, which may be refunded up to the VAT withheld.
The withholding rate
- 75% of the VAT when the provider presents a valid tax compliance certificate;
- 100% of the VAT otherwise.
The tax compliance certificate becomes a commercial document: without it, the provider no longer receives any of the VAT on its invoice. It is requested online from the Tax Directorate (DGI), provided returns and payments are up to date.
Who must withhold?
Since 2024
The 2024 Finance Act introduced the withholding for payments made by the State, local authorities, public institutions and companies, and certain other bodies, to their providers.
From July 2026
The 2026 Finance Act extends the withholding to services provided by legal entities to new categories of clients, on a gradual timetable:
| Clients required to withhold | From |
|---|---|
| Credit institutions, insurance and reinsurance companies, companies with turnover of at least MAD 500 million | 1 July 2026 |
| Companies with turnover of at least MAD 350 million | 1 January 2027 |
| Companies with turnover of at least MAD 200 million | 1 January 2028 |
The services covered are listed in the General Tax Code. Some transactions are excluded, in particular small amounts or certain sectors: check line by line whether your services are concerned.
On the same timetable, the Finance Act also extends a 5% corporate income tax withholding on payments to legal entities. We present it in our article on withholding on fees and commissions.
What providers should do
- Identify the clients concerned: public bodies, banks, insurers, large companies.
- Renew your tax compliance certificate before it expires.
- Track withholdings client by client, with supporting documents, to offset them in your returns.
- Anticipate the cash effect and, where needed, prepare refund claims.
What clients should do
- Check whether you reach the turnover thresholds, and from when.
- Adapt the supplier payment process: calculating the withholding, checking certificates.
- Declare and pay over the withholdings on time.
For an overview of VAT in 2026, see our article VAT in Morocco in 2026.
Ascensu builds VAT withholding into the management of its clients’ tax returns, on both the provider and the client side.
Official sources
This article is provided for general information, as at its publication date. It is not personalised advice: the rules change and every situation must be reviewed on its own facts.