Morocco raises its freelancer tax tripwire, two years after rejecting the same move

Morocco eases taxes for freelancers: Morocco’s self-employed will be able to bill a single client up to MAD 100k (USD 10.1k) a year before tax withholding applies, up from MAD 80k (USD 8.1k), under amendments to the 2027 Finance Bill that the House of Representatives’ finance committee approved 23-18 on Wednesday, according to Morocco World News. A second amendment would cut the withholding rate on income above that line from 30% to 28% in 2027, with the rate falling gradually each year until it reaches 20% by 2031.

The cap exists to catch disguised employment, amid what the government believes is fraud risk from employers swapping payroll for consultancy invoices. That means some companies hire staff as contractors, who pay 1% on turnover instead of income tax rates that reach 20-25%, Lekjaa told the committee. He put registered self-employed workers at about 430k individuals.

REMEMBER- Rabat rejected the same idea in 2024: The ruling majority tabled similar changes asking to raise the threshold to MAD 100k, but Finance Minister Fouzi Lekjaa, who pushed the same threshold this year, turned down the proposal, citing fraud risk and tax evasion.

So why now? It appears that the larger income tax overhaul forced the move. That bill lifts the tax-exempt income bracket to MAD 60k (USD 6.07k) from MAD 40k (USD 4.05k) next year, and Lekjaa said the self-employed threshold had to move in the same direction. That means that those whose net monthly salaries are under MAD 10k will pay no income tax starting January, meaning the tax gain from faking contractor status would shrink at the lower end of the pay scale.

Neighbours picked different tools: Egypt went with carrots, letting freelancers and small firms with turnover under EGP 20 mn (USD 370k) pay 0.4-1.5% of turnover under the country’s Income Tax Law. South Africa uses the stick: A one-person company earning more than 80% of its income from one client is treated as a personal service provider, and the client withholds 27%. Morocco is trying to do both with one threshold.