Netflix, Amazon…: VAT on digital services is coming

Persons and entities not residing in Morocco and providing remote services will have to identify themselves to the tax authorities, declare sales made in Morocco and pay the tax due. This change introduced by the Finance Law 2024 brings Morocco into line with international standards. Services purchased from platforms such as Netflix and Amazon, as well as from companies producing gaming applications, are affected.

In other words, the VAT territoriality rules set out in Article 88 of the General Tax (CGI) Code have been revised. Services supplied remotely and online by a non-resident person who has no establishment in Morocco, to a customer whose head office, establishment or tax domicile is in Morocco, or to a customer who is occasionally resident in Morocco, are now subject to VAT. This minor change will enable additional revenue to be collected by the tax authorities, and consumption to be linked to the customer’s place of tax residence. The DGI (General Directorate of Taxes) has just published a circular note on the tax measures of the 2024 Finance Law, which provides a number of details on these changes. Services are deemed to have been provided in Morocco, even if the customer is abroad at the time the online service is provided, or even if the service is consumed online by the customer abroad. For chartered accountants, the implementation of this measure is likely to be complicated, especially given the diversity of online services and service providers.
Questions are also being raised, particularly with regard to controls and sanctions. «Discussions are progressing at OECD level, and mechanisms will certainly follow. That said, the mechanism will be fine-tuned in the next finance law. Of course, we can’t leave a legal vacuum when it comes to digital transactions», say some chartered accountants. In their view, the tax authorities can always have recourse to tax treaties and, in particular, to measures on administrative assistance for VAT collection, even if this tax is not included in such treaties.
It can also rely on the banking system. Pending implementation of the new measure, tax authorities have provided an indicative list of services supplied at a distance subject to VAT. These include the supply and hosting of computer sites, and remote maintenance of programs and equipment. Added to this are the supply and updating of software and applications, and the supply of digital content (music, films, online games, gambling, images, videos, texts, information, etc.).
Also on the list are subscriptions to film and TV platforms, video-on-demand (VOD) services, databases or their provision, and the remote supply of training, consulting, or assistance services.
Khadija MASMOUDI