The General Directorate of Taxes has published a guide explaining the tax breaks available to farmers and agricultural businesses. The measures are designed to encourage investment and support the development of the agricultural sector.
The guide covers corporate tax, income tax, VAT, professional tax and registration duties.
It defines agricultural income as profits earned by farmers or livestock breeders from growing crops or raising animals for human or animal consumption. It also includes processing agricultural products, as long as the work is a natural part of farming and does not use industrial methods.
Livestock covered by the rules includes poultry, cattle, sheep, goats, camels and horses. Agricultural income also includes revenue earned by farming groups operating under Morocco’s agricultural aggregation programmes.
Corporate tax
Agricultural water users’ associations are fully exempt from corporate tax on activities needed to manage their operations.
Agricultural companies with an annual turnover below MAD 5 million are also permanently exempt from corporate tax on their agricultural income.
The exemption does not apply to non-agricultural income. Companies whose turnover falls below MAD 5 million only qualify if it stays below that level for three consecutive accounting years.
Agricultural companies that pay corporate tax are subject to the standard rate of 20%.
Companies with net profits of MAD 100 million or more pay a 35% corporate tax rate.
Farmers and co-owners with annual agricultural turnover of at least MAD 5 million can also postpone tax on capital gains when they transfer all the assets and liabilities of their farms into a company. The assets must be valued by an authorised auditor.
Income tax
Farmers with annual turnover below MAD 5 million are permanently exempt from income tax.
Taxpayers using either the real net income or simplified net income system can also reduce their income tax by investing in newly created technology companies, provided the shares are recorded as fixed assets.
Partnerships and other non-corporate businesses are exempt from the minimum tax during the first 36 months after they start operating. The exemption ends 60 months after the business is created.
People who pay income tax are exempt from the minimum tax during the first three accounting years after starting their professional or agricultural activity.
The minimum tax rate is 0.25%.
Registration duties
Several land transactions are exempt from registration and stamp duties.
These include the allocation of state-owned agricultural land under agrarian reform programmes and the transfer of collective agricultural land in irrigated areas.
Transfers of jointly owned agricultural land outside urban areas qualify for a reduced registration duty of 1.5%, provided the seller has owned their share for more than four years.
VAT
Agriculture generally falls outside the VAT system.
Farmers do not pay VAT when selling crops such as cereals, fruit and vegetables in their natural state. The exemption also applies when products are processed as a natural extension of farming, whether they are sold wholesale or retail.
Farmers become liable for VAT if they process products using industrial methods or process agricultural products they have bought from others.
The guide also exempts several imports from VAT. They include cereals used to make flour for human consumption, excluding maize and barley, live cattle and camels within approved quotas, chickpeas, lentils, broad beans, and water pumps powered by solar or other renewable energy sources for agricultural use.
Professional tax
Farmers are exempt from professional tax when selling crops outside permanent business premises, transporting their own harvests, selling livestock they have raised, and selling animal products that have not been processed using industrial methods.
The exemption does not apply to businesses that buy, sell or fatten livestock as a commercial activity.
