Morocco Raises VAT Shares for Local Authorities in 2025

Rabat – Local authorities in Morocco recorded a notable increase in their share of value-added tax revenues in 2025, with gains that ranged from 10% to 15% depending on local conditions, Interior Minister Abdelouafi Laftit said Tuesday in Rabat.

Addressing lawmakers at the Chamber of Counselors, Laftit said the Interior Ministry continues to reinforce the financial base of territorial collectivities so they can respond to economic shifts and everyday demands from citizens. 

He explained that this policy relies on a gradual rise in annual VAT allocations.

According to the minister, these transfers grew for the second year in a row. After stronger increases recorded in 2024, allocations continue to rise in 2025, with adjustments that reflect the financial profiles and development needs of each territory.

Laftit also pointed to direct state support for local authorities that face structural budget shortfalls. 

In 2025, this support reaches more than MAD 600 million ($65 million), a measure intended to help these collectivities cover essential management costs and maintain basic services.

The Interior Ministry also continues to shoulder part of the financial burden for resource constrained local authorities, particularly in areas that suffer from infrastructure gaps. 

Around MAD 5 billion ($543 million) per year from VAT revenues now finance municipal investment projects across the country, he said.

The minister recalled that the 2025 Finance Law raises the share of VAT revenues allocated to territorial collectivities by two percentage points, bringing it to 32%. This increase aims to strengthen local financial autonomy and expand room for public investment.

State support also covers development projects carried out through partnership agreements with public and private actors. These projects concern weekly market rehabilitation, sanitation networks, road construction equipment, and student housing facilities.

In parallel with traditional funding channels, local authorities now gain access to more advanced financing tools. Laftit said new regulatory texts now govern credit operations, which opens additional options for local project financing.

He described these changes as a sign of gradual progress in territorial financial governance. The Interior Ministry, he added, stands ready to support local authorities that seek to benefit from environmental financing mechanisms as part of their development strategies.