Kingdom of Morocco

Morocco operates a progressive personal income tax (PIT) system, where individuals are taxed on their worldwide income if they are residents, and only on Moroccan-sourced income if they are non-residents. Employers are responsible for withholding income tax from employees’ salaries through the withholding-at-source (retenue á la source) system and remitting it monthly to the Directorate General of Taxes (DGI). Income tax rates range from 0% to 37%, depending on the employee’s annual taxable income. For salary income, a statutory deduction for professional expenses applies before calculating taxable income. For most employees, the deduction is 35% where annual gross taxable income does not exceed MAD 78,000, and 25% where it exceeds MAD 78,000, subject to an annual deduction cap of MAD 35,000. Taxable income includes salaries, wages, pensions, professional income, agricultural income and investment income. The system allows for various deductions and exemptions, such as those related to family dependents, retirement contributions and certain medical or social expenses. The Moroccan tax system is regulated under the General Tax Code and overseen by the DGI.

Payroll taxes consist primarily of PIT withholding and compulsory social security contributions. Employers must deduct and remit PIT from employees’ salaries, while both employers and employees must contribute to the Caisse Nationale de Sécurité Sociale (CNSS), which covers benefits such as pensions, family allowances, short-term benefits, loss-of-employment benefits and mandatory health insurance (AMO). Employee contributions comprise 4.48% for CNSS social benefits, calculated on monthly earnings capped at MAD 6,000, and 2.26% for AMO, which is generally calculated on uncapped remuneration. Employer contributions are higher and generally range from approximately 20% to 25.5% of gross salary, depending on the components included. These contributions cover family allowances, pension schemes, short-term benefits, unemployment and mandatory health insurance. In addition to CNSS contributions, employers are also required to contribute 1.6% of payroll to the Taxe de Formation Professionnelle (TFP), which funds vocational training programmes.

Payroll reporting and payment obligations follow a monthly schedule in Morocco. Employers must declare and remit withheld income tax from salaries (Impôt sur le Revenu – IR) to the DGI on a monthly basis, typically before the end of the month following the payroll period. Social security (CNSS) contributions must be declared and paid by the 10th of the following month through the DAMANCOM portal. An annual payroll summary report must be submitted by the end of February each year.

Employers must maintain accurate and detailed payroll records, including payslips, employment contracts, tax withholdings, social security contributions and related declarations, in line with Moroccan tax regulations and audit requirements. Tax and accounting records, together with supporting documents relevant to determining taxable amounts, must generally be retained for ten years and be available for inspection by the relevant authorities. Employers must also ensure that all employees are registered with the CNSS and covered under mandatory health insurance schemes. Compliance with payroll regulations is strictly monitored and failure to meet reporting or payment obligations can result in financial penalties, late payment interest and possible audits. Penalties may be imposed for underreporting income, failing to withhold or remit taxes and contributions or submitting incorrect or late declarations. Tax penalties may include surcharges and interest on unpaid amounts, while CNSS late payment penalties generally begin with approximately 3% for the first month of delay, with additional charges applied for continued non-compliance. More severe sanctions, including fines or legal action, may apply in cases of fraud or persistent non-compliance.