5% Withholding Tax on Rent: What Changes in Morocco on July 1, 2026

Since July 1, 2026, a new tax rule quietly but concretely applies to part of the Moroccan rental market: certain tenants must now withhold 5% of the rent before paying their landlord, and remit that amount to the state. Introduced by the 2026 finance law and detailed in DGI circular note No. 737, this measure does not concern individuals renting out their apartment, but it changes the picture for a significant share of professional landlords and investors in Marrakech.

Who is affected by this withholding tax

The 5% withholding tax applies broadly to income from leasing real estate: offices, commercial premises, factories, warehouses, hangars, land, and more generally any built or unbuilt property leased in a professional context.

Two situations trigger the obligation for the tenant:

• Corporate tenant to corporate landlord: from July 1, 2026, any legal entity paying rent to another legal entity (a company subject to corporate tax, or an individual taxed under the actual or simplified net income regime) must apply the 5% withholding on the amount excluding VAT.
• Large corporate tenants: for other tenants, the obligation applies once their turnover excluding VAT for the last closed fiscal year reaches or exceeds 500 million dirhams.

“The withholding is applied to the gross rent amount, excluding VAT, and must be remitted by the tenant to the Treasury — it’s a mechanism for early tax collection, not an additional tax.”

The withheld amount is not a new charge for the landlord: it is later credited against their corporate tax or income tax due for the year, with any excess refundable. In practice, it is mainly a cash-flow shift from the landlord to the state, via the tenant.

A phased rollout through 2028

Lawmakers chose a gradual scale-up over time rather than an abrupt application to all companies:

1. July 1, 2026: obligation for companies with turnover excluding VAT reaching 500 million dirhams, and for all corporate tenants renting from corporate landlords.
2. January 1, 2027: the threshold drops to 350 million dirhams in turnover excluding VAT.
3. January 1, 2028: the threshold drops further to 200 million dirhams in turnover excluding VAT.

This trajectory means a growing number of tenant companies — including mid-sized SMEs in Marrakech — will gradually fall within the scope of the measure by 2028, even if they are not subject to it today.

What this means in practice for landlords

For an owner leasing a commercial unit, office, or warehouse to a company falling within the scope of the measure, the mechanics work as follows:

• The rent received each month or quarter is reduced by 5% as soon as the tenant issues payment.
• The tenant must issue a withholding certificate, to be kept for the landlord’s annual tax filing.
• This withholding is credited against the landlord’s corporate tax or income tax due at year-end — it does not increase the overall tax burden, but it reduces available cash flow during the year.
• A landlord managing several commercial leases with large corporate tenants may see a regular cash flow reduced by 5% for several months before settlement.

For investors in Marrakech who own commercial premises leased to brands or sizeable companies — a common profile in areas like Guéliz or business districts — the annual impact remains limited, but it deserves a place in forward cash-flow planning, particularly for landlords who themselves have loan repayments tied to those same rents.

Key takeaways

This reform does not affect standard residential leases between individuals, which remain outside the scope of this withholding tax. It primarily aims to secure the collection of tax on professional rental income, a segment where the DGI historically observed room for under-reporting. For a professional landlord in Marrakech, three reflexes matter: check whether your tenant falls within the scope of the measure, systematically request the withholding certificate, and factor this cash-flow timing gap into your budget rather than discovering it on the first reduced payment.

This article offers an educational summary of the mechanism as described in DGI circular note No. 737. It does not replace personalized tax advice: the exact tax regime (corporate tax, actual or simplified net income) and the tenant’s status determine the precise application of the withholding in each situation.