Taxes play a substantial role in the economy of this small African country. With a large part of the territory still under the influence of Morocco, the tax scheme is greatly influenced by the Moroccan taxation policy. Taxes deducted are utilized in the provision of certain services such as public health, education, etc., in the state. There are several types of taxes charged by the government and they apply to citizens and entities depending on their income and profits earned.
Types of Taxes
There are four main taxes; direct taxes such as corporate tax and income tax, special taxes such as VAT, municipality tax, etc. Every tax has its specific tax rates and sometimes, special conditions that attract exemption.
Direct Tax
These types of taxes are directly deducted by the government without a third party in the picture.
Income tax
Income tax is imposed on the income and revenues owned by persons or firms that have not registered for corporate income tax. Incomes chargeable by this tax include wages and salaries, income from agricultural activities, income and property profits, profits made from movable capital, etc.
| total taxable net income (per year) | tax rate |
| 1 to 30 000 | 0% |
| 30 001 to 50 000 | 10% |
| 50 0001 to 60 000 | 20% |
| 60 001 to 80 000 | 30% |
| 80 001 to 180 000 | 34% |
| 180 001 and above | 38% |
Housing tax
This tax applies to the rent collected from residents on rented buildings.
| Annual rental value | Rate |
| 0 to 5 000 | 0% |
| 5 001 to 20 000 | 10% |
| 20 001 and 40 000 | 20% |
| 40 001 and above | 30% |
Corporate tax
Corporate income tax is imposed on income and revenues generated by corporations, businesses, and legal entities carrying out lucrative transactions.
| Types | Tax Rate |
| 0 to 300, 000 | 10% |
| 300,001 to 1,000,000 | 10% |
| 1,000, 000 | 20% |
| Leasing companies and credit institutions | 37% |
| The standard rate for insurance companies, banks, and financial institutions | 31% |
The tax rate for foreign companies
Foreign firms are subject to taxes on locally-sourced income generated from their permanent establishments set up in the country. A tax rate of 8% of the contract amount applies to qualifying activities of the contract. The tax return of this tax has to be submitted before the 1st of April during a tax year.
Capital gains tax
A 20% tax rate is charged on capital gains gotten from disposing of immovable property. Higher rates apply in certain cases. When capital gains are obtained from disposed shares, they are subjected to a 20 percent rate. When they are obtained from disposed of residence used as a permanent residence for at least six years, they are tax-exempt.
Payroll tax
Also called the professional training tax, it is imposed on the total monthly payments made to employees at an 8% tax rate.
Municipal tax
This kind of tax is charged at a 10.5 percent rate of the rental value of properties in urban areas and 6.5 percent of properties on the outskirts of cities. The tax includes the tax on the rental value of business premises either rented or owned and fixed assets. The rates vary from 10 percent to 30 percent, but the five first years of activity are exempted. Tax is exempted for the part of rental value exceeding 50 million.
Value-added tax (VAT)
This applies to purchased goods and payable services in the country. A fixed rate of 20 percent applies to such products. However, reduced rates such as 7 percent for specific consumer products, 10 percent for food products, beverages, and the hotel industry, and 14 percent for other products.
