Morocco Moves Ahead with Comprehensive Tax Reforms in 2025 Finance Bill

Rabat – Fouzi Lekjaa, Morocco’s Delegate Minister for Budget, presented an ambitious array of reforms to the 2025 Finance Bill (PLF No. 60.24) during yesterday’s session at the House of Councillors.

The proposed amendments target income tax (IR), value-added tax (VAT), and customs duties, looking to ease financial burdens on households, promote market stability, and bolster territorial development.

From raising tax exemptions for low-income earners to incentivizing businesses and streamlining customs operations, the reforms reflect the government’s commitment to fostering economic growth while supporting local communities.

The new bill was approved by a majority in the House of Representatives during a plenary session last Friday. It seeks to balance fiscal responsibility with social equity as it prepares for implementation in 2025.

Income tax reforms

Lekjaa announced changes to the progressive income tax brackets, raising the tax-exempt income threshold from MAD 30,000 ($2,910) to MAD 40,000 ($3,880) annually, effectively exempting monthly incomes below MAD 6,000 ($585).

Adjustments were also made to other tax brackets, reducing applicable rates, and increasing the deduction for family dependents from MAD 360 ($35) to MAD 500 ($48.50) per dependent.

Employers offering meal vouchers to employees will see the daily allowance increased from MAD 30 ($2.91) to MAD 40 ($3.88) per employee, with electronic payment now an option.

Additionally, tax exemptions on internship stipends for higher education and vocational graduates were revised, allowing continued exemption for up to 12 months if the intern changes employers.

VAT reforms

To stabilize market prices, a temporary VAT exemption for 2025 will apply to limited imports of certain live animals and agricultural products.

Additionally, local government budgets will receive an increased share of VAT revenues, rising from 30% to 32%, to support regional development initiatives.

Customs and duties

Customs-related measures include exempting local governments from penalties for late electronic payment of duties and aligning them with other public institutions.

A new infraction penalizes the unauthorized possession or use of customs seals. Sanctions for customs violations have been softened, with provisions for refunding overpaid duties in certain cases.

Specific changes in duties include:

– Reducing import duty on bulk honey (over 20 kg containers) from 40% to 2.5%.

– Increasing import duty on fiber optic cables from 10% to 17.5%.

Consumption tax and cigarettes

This year’s bill introduces significant changes to excise taxes, including a MAD 50 ($4.85) tax per unit on disposable electronic cigarettes, marking the first specific tax targeting this growing product category.

The measure aligns with global efforts to regulate electronic nicotine delivery systems amid health concerns.

In addition, fiscal stamps will now be required on gasoil and super gasoline during circulation. Non-compliance with this requirement will be penalized under the updated tax regime.

For tobacco products, the bill also maintains a commitment to strengthening control measures and ensuring proper labeling to curb tax evasion and improve public health.

Import duties on limited quantities of live animals and agricultural products will meanwhile be suspended throughout 2025 to ensure market supply.