In March 1984, King Hassan II announced that Moroccan farmers would be exempt from taxation until the year 2000, in order to help them recover from the effects of the drought of the early 1980s.
The professional profits and gains tax, at 35% since 1 January 1996 (except for insurance and banking institutions taxed at the previous rate of 39.6%), is the most important tax in Morocco, and can be assessed on either annual turnover or on net annual profits. The minimum tax in 2002 was 0.5% of turnover or 1,500 Dirhams (about $162), whichever was greater. Nonresident companies under contractual arrangements can opt for an alternative tax amounting to 8% of their contracts. The capital gains are taxed at 35%. Dividends are subject to 10% withholding which can be used as a tax credit. Branches of foreign companies are subject to the same taxes as Moroccan companies.
All wage earners are liable to a progressive tax on salaries, remunerations, and allowances under the General Income Tax (IGR) which in 2002 had five tax bands, 0% (up to 20,000 Dirham or about $2,164 per year), 13%, 21%, 35% and 44% (on the increment of income above 60,000 Dirham or about $6,500 per year). There are several types of deductions that can be applied in calculating an individual's taxable base income. There are also social security taxes and supplementary taxes on professional and rental income.
The main indirect tax is Morocco's value-added tax with a standard rate of 20%, but with various reduced rates from 7% to 14% for more basic goods and services. As of 1 July 2001 imported barley was exempted from VAT.