★ Withholding Tax - Basic Principles

When a French company charges a service or a fee (patent, use of the mark, etc.) to a Moroccan company, to the settlement of the invoice, the Moroccan customer applies a withholding (IS) of 10% on the amount of the transaction.

The taxman is unyielding on this point. Just like the "Office des Changes", ready to reject any payment abroad that has not been withholding tax of 10% at source regardless of the type of benefit concerned. To "circumvent" this problem, many foreign companies or service providers make their Moroccan customers pay this tax by including it in the invoice.

Most agreements grant any foreign company that has paid a withholding tax in Morocco the possibility of obtaining a tax credit in its country equivalent to the amount of the withholding tax. However, very often, the French tax administration gives a completely different reading of these agreements. They systematically reject the request considering that it is on the Moroccan side that a misinterpretation of the double taxation agreement has been made. In France, Bercy authorizes at most the deduction of this deduction at source of the taxable base on the basis of a jurisprudence of the Council of State relating to the interpretation of the Franco-Italian convention.

This option mitigates the note for the company, but it is less advantageous than the tax credit because it is imputed from the amount of tax payable.