Morocco introduces reverse charge for VAT non-resident traders

Sat 30th Nov 2013

The Moroccan Finance Act 2014 contains plans to close the option of non-resident traders (no permanent establishment or nexus) to VAT register.  Instead, the VAT reverse charge will apply.

Moroccan non-resident VAT registrations

Currently, foreign traders providing goods or services in Morocco must register for TVA (VAT), and there is no VAT registration threshold.  This includes submitting monthly VAT returns declaring both VAT on sales, offset by any local VAT incurred on purchases.  The current VAT rate in Morocco is 20%.

Introduction of VAT reverse charge

The new Act proposes that instead the recipient of any goods or services would instead be responsible for the recording of the sale of any transactions.  This is known as the reverse charge, and used extensively across Europe.  It helps reduce the VAT compliance burden, and the number of instance where VAT registrations are required.
The new regime will apply from 1 January 2014, when it becomes part of the Moroccan tax code.  Any current VAT registrations will have to be closed.  The VAT fiscal representative of any foreign companies will be able to arrange this.

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