What Is The Status Of The Tax Reform?

If there is one government that has played a fundamental role in implementing the tax reform enacted by Framework Law No. 69-19 on tax reform, promulgated on July 26, 2021, it is certainly the one led by Aziz Akhannouch, appointed head of government in September 2021 by His Majesty the King.

The five-year term of the majority (2021-2026) coincided with the timeline for implementing the priority measures as defined by the aforementioned framework law, over a five-year horizon.

The implementation of the framework law is a roadmap capable of solving a complex equation with multiple variables: providing the Kingdom with a stable, more profitable, and fairer tax system, while reducing the tax burden on taxpayers (individuals and legal entities).

These priority measures set in stone

Drawing up an objective assessment of tax reforms requires, first of all, recalling the priority measures set by the framework law. In this regard, we cite the establishment of the principle of neutrality for value-added tax (VAT), through the expansion of its scope and the reduction in the number of rates.

Next comes the gradual convergence toward a unified corporate income tax (CIT) rate, particularly for industrial activities.

Other priority measures: the gradual reduction of the minimum contribution rates, the restructuring of the progressive scale of income tax (IR) rates applicable to individuals, and the broadening of the base for this direct tax. To this is added the improvement of the single professional contribution (CPU) regime to accelerate the integration of the informal sector.

The main reforms carried out

An analysis of the various Finance Laws passed by Parliament in recent years makes it possible to measure the scale and centrality of the tax reforms undertaken by the Executive to implement Framework Law No. 69-19.

First, the 2023 Finance Law marked the beginning of the implementation of the corporate income tax (CIT) reform, with the ultimate goal of gradually unifying the applied rates. And this, with the aim of reaching the targeted levels by 2026.

For reference, the target rates are: 20% (common rate applicable to all companies), 35% (for companies with a net profit equal to or greater than 100 million dirhams), and 40% (rate applicable to insurance companies, credit institutions, Bank Al-Maghrib, CDG, etc.).

For its part, the VAT reform, which also aims to limit the threshold by ultimately retaining only two rates, was carried out through the 2024 Finance Law. Its particularity: the gradual alignment of rates to the levels of 20% and 10% by 2026.

Furthermore, it established the generalization of the exemption for certain basic necessities, with a 0% rate (medicines, school supplies, domestic water, etc.), while limiting the threshold.

Regarding the gradual reduction of the minimum contribution rates, as a major orientation of the framework law, the 2023 Finance Law consolidated the rate reduction introduced by the 2022 Finance Law.

Concretely, it reduced the normal rate to 0.25% and to 0.15% for operations related to sales of certain basic products.

In the same vein, the 2022 Finance Law improved the single professional contribution (CPU) regime, introduced a year earlier. In short, it revised the margin coefficients (ranging from 3% to 45%) applied to declared turnover by grouping activities of the same nature.

Another positive change in this area: the clarification of the taxation method in cases where the taxpayer engages in several activities or professions subject to different coefficients.

That said, the IR reform via the 2025 Finance Law is one of the most popular new fiscal measures implemented by the Executive. The reason: it was carried out in accordance with commitments made in the April 2024 social agreement, aimed at improving the salaries of civil servants, employees, and retirees.

Among the flagship measures are the raising of the exemption threshold, the widening of brackets with a reduction in tax rates of up to 50%, and the reduction of the marginal IR rate to 37%.

In accordance with the priority measures of the aforementioned framework law, the 2025 Finance Law broadened the base of this direct tax, by integrating the taxation of income related, among others, to gambling winnings and various income from lucrative operations not attached to another category of income.

Exceptional fiscal profitability

Several factual and numerical elements prove that the Kingdom, which has opened a major capital upgrading of infrastructure in anticipation of co-hosting the 2030 World Cup, is reaping the benefits of the tax reforms carried out by the government.

Indeed, between 2020 and 2024, tax revenues increased by nearly 100 billion dirhams. They rose from approximately 199 billion dirhams in 2020 to nearly 300 billion dirhams in 2024, representing an average annual growth of over 11%.

The feat credited to the current majority is that this profitability of the tax system was achieved without increasing the tax burden on taxpayers (tax pressure).

Other enlightening indicators: between 2020 and 2024, ordinary revenues increased by over 143 billion dirhams, representing an average annual growth of 13%. Consequently, these performances positively impacted the level of the budget deficit.

It fell from 7.1% of GDP in 2020 to 4.3% in 2023, and then decreased to 3.5% of GDP at the end of 2024. And this, with a reduction in the public debt ratio (Treasury), which fell from 72.2% of GDP in 2020 to 67.7% in 2024.

It is encouraging to note that the same upward dynamic in tax revenues prevails for the year 2025, thus providing the government with comfortable margins to accelerate the multiple projects underway, while controlling the levels of budget deficit and debt.

As an illustration, at the end of June 2025, year-on-year tax revenues increased by 16.6% to 176.9 billion dirhams.

Given the positive assessment and the pace of the various tax reforms undertaken to comply with the framework law, there is no doubt that the government will redouble its efforts to complete the priority measures through the 2026 Finance Law.