The 2026 Finance Act extends withholding tax mechanisms to certain payments for services rendered by legal entities. Circular note no. 737 sets out a phased entry into force according to the status of the payer and its turnover.
Who must withhold the tax?
From 1 July 2026, the scheme applies to credit institutions, similar bodies and insurance or reinsurance companies. It also covers other businesses whose turnover excluding VAT for the last closed financial year is at least 500 million dirhams.
The threshold falls to 350 million dirhams on 1 January 2027, then to 200 million dirhams on 1 January 2028.
Which rates?
For payments within the scope, the corporate income tax withholding is set at 5% of the amount excluding VAT. The VAT withholding applies to 75% of the amount of the tax for services covered by the applicable regulatory list.
The tax withheld must be paid over within the month following payment, making available or crediting to an account. A detailed statement of the payments must accompany the corresponding return.
In practice
The businesses concerned must map their corporate suppliers, classify the services against the tax lists, configure the withholdings in their ERP and document the amounts paid over. Service providers should anticipate the cash flow effect and reconcile the withholdings with their corporate income tax and VAT returns.
Sources
- DGI — circular note no. 737, 27 February 2026.
- Médias24 — The DGI circular explained: extension of withholding tax to corporate income tax and VAT, 28 February 2026.
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This publication is provided for information purposes only and does not constitute personalised tax or legal advice.