Morocco’s 2026 Tax Overhaul: Boosting SMEs and Investment

In 2026, the business tax will disappear in favor of a value-added tax, while a new status for micro-enterprises will be introduced. Here are the keys to understanding these reforms.

These are two priority projects that crystallize the ambition to reconcile social equity, economic attractiveness and administrative efficiency that Younes Idrissi-Kaïtouni intends to tackle resolutely.

The Director General of the Tax Administration, who spoke at a recent conference-debate, wants to accelerate the revision of the Small Business Act intended for SMEs and the overhaul of local taxation, planned for 2026.

Underlying these reforms is a shared philosophy: replacing a tax system perceived as punitive with a “fair and incentive-based” system, where technical modernization serves both efficiency and transparency. The political challenge remains to be transformed: as one analyst reminds us, “a tax revolution cannot be improvised; it is built with economic actors, not against them.” This mantra sums up the challenge of reconciling urgent reform and patience to achieve social consensus. Let’s analyze the issues and the statements.

Small Business Act: Clarifying the Taxation of Small and Medium-Sized Enterprises and Self-Employed Entrepreneurs in Morocco

Idrissi-Kaïtouni’s observation is clear: the self-employed entrepreneur system, designed to integrate micro-businesses into the formal economy, has failed due to systemic abuses. Companies have used this status to circumvent their tax and social security obligations, transforming employees into bogus self-employed workers.

“It is the companies that have benefited from this system, not the self-employed,” he laments, highlighting a trend that has undermined confidence in the system and led to its collapse.

In light of this assessment, the proposed reform, via the Small Business Act, is intended as a structural response. The goal is to create a secure and incentive-based tax ecosystem, combining administrative simplification and the protection of social rights. At the heart of this project are three key areas of focus.

First, clarification of activity thresholds, with a revised turnover ceiling to avoid abuse, and a clear legal distinction between real self-employed persons and disguised employees.

Second, the adjustment of withholding tax for micro-activities, envisaged in the form of a single rate coupled with a simplified quarterly declaration, in order to reduce the administrative burden.

Finally, expanding access to tax rulings would allow startups to secure their legal structures through prior agreements with the administration, thus limiting litigation risks.

Kaïtouni emphasizes the need for a system where the entrepreneur understands his obligations, relying on intuitive digital tools and tailored support.

This overhaul aims to resolve a Moroccan paradox: despite a tax system theoretically adapted to SMEs, informality remains massively entrenched. Digitalization constitutes the operational pillar of this transition. However, a major unknown remains: will this new version of the Small Business Act be perceived as a real opportunity or a disguised constraint?

Local Taxation: A Silent Revolution Starting in June 2026

Morocco’s current local system, characterized by a plethora of taxes, is unanimously criticized for its disincentive to investment. It could, in a way, be described as an ineffective layer cake that stifles local initiative instead of stimulating it.

The reform planned by framework law 69-19, due to come into force by June 2026, aims to replace this tax labyrinth with two main levers.

First, a tax on economic activity will replace the business one, which is considered archaic and “anti-investment.” Based on value added rather than real estate assets, it aims to reward companies that create real wealth, not those that hoard land.

“The objective is to align local taxation with economic realities and to strengthen the attractiveness of the territories,” explains Kaïtouni.

Second, a unified property tax will merge the housing tax, the municipal services, and the one on undeveloped urban land, radically simplifying the landscape for taxpayers.

“This reform is underway within the Ministry of the Interior, with completion expected by June 2026,” he said.

The technical advances are notable. The abolition of the business tax, whose yield has been declining since 2018 (-12% in 2024), will free businesses from a tax perceived as “penalizing innovation.” Moderate decentralization will allow municipalities to adjust rates within a range set by the state, avoiding tax competition between territories while empowering local elected officials.

At the same time, digital integration must counter land evasion, which deprives local authorities of billions of dirhams each year. But the challenge lies in implementation. Modern local taxation requires, first and foremost, a strategic state, not a tax-piling state, highlighting the need for centralized management to harmonize information systems between the DGI, the regions, and the Ministry of the Interior.

The project’s success will also depend on the training of local officials and citizens’ acceptance of increased transparency. A bold gamble, but one that is essential to restoring meaning to the mantra of advanced regionalization.

Equity as a Compass

The reforms outlined by Idrissi-Kaïtouni are part of a quest for balance between economic competitiveness and social justice. Whether through the Small Business Act or the overhaul of local taxes, the goal is to build a system where everyone contributes according to their means, but where taxes do not stifle initiative.

The Small Business Act, by clarifying the rules for SMEs, and the overhaul of local taxation, by streamlining levies, embody this desire to replace punitive logic with incentive dynamics. However, the support of informal actors – who represent nearly 38% of GDP – constitutes the true test of credibility.

Without their gradual integration through tools such as electronic invoicing or automated regularity certificates, the risk of fiscal dualism will persist.

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(Featured image by Kelly Sikema via Unsplash)

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First published in LES ECO.ma. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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