Morocco cuts tax rate for self-employed workers under 2027 budget proposal

Morocco plans to lower the tax rate on self-employed workers from 30% to 20% while tightening safeguards against employers who use the system to avoid the tax obligations associated with regular employment.

The proposed changes, approved Wednesday by the House of Representatives Finance and Economic Development Committee, seek to ease the tax burden on independent workers while preventing companies from disguising employment relationships as freelance arrangements.

Economy and Finance Minister Fouzi Lekjaa said some employers hire workers under self-employed status rather than offer them regular employment contracts to avoid income tax rates that can reach 20% or 25%. Under the self-employed system, they can instead pay a tax rate of just 1%.

Lekjaa warned that the arrangement becomes problematic when a worker generates a large share of their annual turnover from the same client. Although this can reflect a legitimate business relationship, he said it may also conceal what is effectively an employer-employee relationship.

The government wants to distinguish between people who genuinely work independently and those who are given self-employed status to help companies avoid employment-related tax obligations.

The amendments raise the annual turnover limit for services provided by a self-employed worker to the same client from MAD 80,000 to MAD 100,000. Earnings up to this amount will be exempt from income tax withholding at source.

If the worker’s turnover exceeds MAD 100,000, the applicable withholding tax rate will be 20%, down from 30%.

The government says the changes are intended to align the tax treatment of self-employed workers with the broader income tax reform, which raised the annual income tax exemption threshold to MAD 60,000.

Lekjaa said that self-employed workers should receive comparable relief, noting that their previous turnover ceiling was MAD 80,000.

The minister said that the government was not seeking to restrict self-employment or undermine independent business activity. Instead, it wants to preserve the system’s benefits while preventing companies from using it as a way to avoid taxes.

Morocco has around 430,000 businesses registered under the self-employed system, according to figures cited by Lekjaa.