Morocco's 2027 Finance Bill proposes income tax cuts, higher fuel company taxes and FIFA exemptions

Morocco’s draft 2027 Finance Bill proposes substantial income tax cuts for workers, higher taxes on profitable fuel companies and exemptions on essential food imports, alongside rising tobacco duties and extensive tax benefits for organizations involved in the 2030 World Cup.

The measures, included in Finance Bill 60.26 presented to Parliament on Friday, form part of Prime Minister Fatima Ezzahra El Mansouri’s first budget, combining household tax relief with changes to corporate taxation, public employment and regional financing.

Workers to benefit from lower income taxes

The government proposes raising the annual income tax exemption threshold to MAD 60,000, equivalent to MAD 5,000 in monthly taxable income.

The reform would be phased in over five years, progressively reducing the highest marginal tax rate from 37% to 30% by 2031.

By that year, annual taxable income between MAD 60,001 and MAD 150,000 would face a 10% marginal rate, rising to 20% between MAD 150,001 and MAD 500,000 and 30% above that threshold.

The bill also increases the deduction for eligible professional expenses to 45%, capped at MAD 35,000 annually.

The changes could eliminate income tax liability for some lower-paid workers and reduce deductions for those earning more, although the financial benefit will vary by income level.

Fuel companies face higher taxes

Companies importing or distributing hydrocarbons would face a 40% corporate tax rate when annual net profits reach MAD 100 million.

The measure targets profitable fuel businesses rather than directly taxing petrol or diesel purchases. Its impact on government revenue and consumer prices remains to be established.

The bill also proposes VAT exemptions on imports of live cattle, sheep, goats and camels, along with specified meat products.

While the exemptions could lower import costs, their effect on retail prices will depend on whether savings reach consumers.

Tobacco and electronic cigarettes face higher duties

The government proposes progressively increasing cigarette excise duties through 2031, when the minimum tax collection would reach MAD 1,346 per 1,000 cigarettes.

The proposed schedule raises the minimum collection from MAD 1,025 per 1,000 cigarettes in 2027 to MAD 1,097 in 2028, MAD 1,176 in 2029 and MAD 1,261 in 2030, before reaching the final amount in 2031.

Electronic cigarettes would also face an excise duty of MAD 100 per unit, extending taxation to devices regardless of whether they contain nicotine.

The measures could increase retail prices, although the final impact would depend on manufacturers’ and distributors’ pricing decisions.

Public employment and regional financing

Beyond taxation, the budget provides for 33,954 public-sector positions, including 5,400 allocated to the Health and Social Protection Ministry.

A separate allocation of 500 positions, distributed by the head of government, includes 200 reserved for people with disabilities.

The bill also allocates 5% of corporate income tax receipts and 5% of personal income tax receipts to Morocco’s regions, although the provisions alone do not establish whether regional funding will increase compared with 2026.

FIFA receives extensive tax exemptions

The government also proposes corporate tax, VAT and customs exemptions for FIFA and qualifying organizations, broadcasters and commercial partners involved in the 2030 World Cup.

Some exemptions would extend until 2032, two years after Morocco co-hosts the tournament with Spain and Portugal.

The measures raise questions about the fiscal cost of the exemptions, particularly as the government seeks to reduce taxes on workers while increasing collections from certain businesses and tobacco products.

The Finance Bill does not, by itself, establish how much revenue the Treasury will forgo through income tax reductions or World Cup exemptions, or how much additional revenue the other tax measures will generate.