VAT on Imports and Exports

Welcome back to our module on the Moroccan VAT system. In our last lesson, we mastered the core calculation of TVA due or Crédit de TVA for domestic transactions. We learned how to balance the VAT collected from customers (TVA facturée) against the VAT paid on business expenses (TVA récupérable).

Today, we expand our focus to international trade. The learning outcome for this lesson is to apply VAT rules specific to import and export transactions. Many Moroccan businesses, from small artisan workshops to large industrial firms, operate globally. As an accountant, you must be able to correctly handle the VAT implications of these cross-border activities.

We will first dissect the process for imports, which involves a specific calculation at the customs level, and then we will examine the favorable regime applied to exports, which is designed to boost the competitiveness of Moroccan products abroad.

1. VAT on Imports (TVA à l'importation)

When a company in Morocco buys goods from a foreign supplier, the transaction is an import. Unlike a domestic purchase where VAT is paid to the supplier, on an import, VAT is paid directly to the Moroccan customs authority (Administration des Douanes et Impôts Indirects - ADII) at the time the goods enter the country.

A critical point to understand is that the base for calculating this VAT is not simply the purchase price of the goods.

a) Calculating the VAT Base for Imports

The tax base includes the value of the goods plus all other import-related duties and taxes (except for the VAT itself). To understand these components, please study the following resource.

As you have read, the VAT base for an import is calculated as follows:

Assiette TVA = Valeur CAF + Droits d'Importation (DI) + Taxe Parafiscale à l'Importation (TPI)

Let's define these terms:

• Valeur CAF: Stands for Coût, Assurance, Fret (Cost, Insurance, Freight). This is the total value of the goods, including the cost of shipping and insuring them up to the point of arrival in Morocco.
• Droits d'Importation (DI): These are customs duties. The rate varies significantly depending on the nature of the product, as defined by the customs tariff schedule.
• Taxe Parafiscale à l'Importation (TPI): A tax levied to finance various state bodies. Its rate is fixed at 0.25% of the Valeur CAF.

Once you have the Assiette TVA, you apply the standard VAT rate (usually 20%) to find the TVA à l'importation.

b) Practical Example: Importing Machinery

Let's apply this with a concrete example, similar to the one in the resource you just reviewed.

Scenario: A Moroccan SME, "IndustrieMaroc SARL," imports a machine from Germany.

• Valeur CAF: 200,000 MAD
• Droits d'Importation (DI) applicable to this machine: 10%
• Standard VAT rate: 20%

Calculation:

1. Calculate Droits d'Importation (DI):
   $200,000\text{ MAD}\times 10\%=20,000\text{ MAD}$
2. Calculate Taxe Parafiscale (TPI):
   $200,000\text{ MAD}\times 0.25\%=500\text{ MAD}$
3. Calculate the Assiette TVA:
   $200,000+20,000+500=220,500\text{ MAD}$
4. Calculate the TVA à l'importation:
   $220,500\text{ MAD}\times 20\%=44,100\text{ MAD}$

IndustrieMaroc SARL will have to pay 44,100 MAD in VAT to customs to clear the machine.

c) Recovering the Import VAT

This brings us to the crucial question for the company's accounting: can this VAT be recovered? The answer is generally yes. This TVA à l'importation is treated as deductible VAT, just like the VAT paid on domestic purchases.

To confirm the conditions for this, please review the following section from the same resource.

As stated, provided the company is subject to VAT and the imported goods are used for its taxable business activities, the VAT paid at customs is deductible. It is recorded as TVA récupérable (specifically, 34551. Etat, TVA récupérable sur immobilisations for the machine in our example) and included in the company's periodic VAT declaration. The proof of payment is the customs clearance document, known as the Document Unique de Dédouanement (DUM).

2. VAT on Exports (TVA à l'exportation)

The treatment of exports is much simpler and is a cornerstone of Morocco's trade policy.

a) The Main Principle: Exemption with Right to Deduction

The governing rule is that exports of goods and services are exonérées de TVA avec droit à déduction (exempt from VAT with the right to deduction).

To see this rule stated clearly, refer to the following resource.

This principle has two distinct parts:

1. Exempt from VAT (exonérées): When a Moroccan company sells goods or services to a foreign customer, it does not charge Moroccan VAT on the invoice. This makes the product's final price more competitive on the international market. The principle behind this is that VAT is a consumption tax and should be applied in the country where the good is consumed, not where it is produced.

2. With Right to Deduction (avec droit à déduction): This is the most important part. Even though the company does not collect any TVA facturée on its export sales, it retains the right to deduct all the VAT it paid on its domestic inputs (raw materials, electricity, services, machinery, etc.) that were used to produce the exported goods.

b) Practical Implications

This dual mechanism means that exporting companies often find themselves in a situation where their TVA récupérable is consistently higher than their TVA facturée (which might be zero if they only export). This results in a structural Crédit de TVA.

This is intentional. The policy aims to relieve Moroccan exports of any embedded VAT cost, ensuring they can compete on a level playing field globally.

When you look at an official VAT declaration form, you will see a specific line item for this.

Test your understanding!

A Moroccan textile company, "ExportTiss SARL," performs the following operations in June:

• Imports raw cotton with a Valeur CAF of 300,000 MAD. The applicable Droits d'Importation (DI) are 2.5%.
• Has local expenses (electricity, services) of 50,000 MAD (excluding 20% VAT).
• Exports all finished garments to France for a total of 500,000 MAD.

Calculate the company's net VAT position (TVA due or Crédit de TVA) for the month of June.

Show answer

Step 1: Calculate TVA facturée

• The company's only sales are exports. Exports are exempt from VAT.
• TVA facturée = 0 MAD

Step 2: Calculate TVA récupérable
This has two components: VAT on imports and VAT on local expenses.

• VAT on Imports:

  • DI = 300,000 * 2.5% = 7,500 MAD
  • TPI = 300,000 * 0.25% = 750 MAD
  • Assiette TVA = 300,000 + 7,500 + 750 = 308,250 MAD
  • TVA à l'importation = 308,250 * 20% = 61,650 MAD (Deductible)

• VAT on Local Expenses:

  • VAT = 50,000 * 20% = 10,000 MAD (Deductible)

• Total TVA récupérable:

  • 61,650 + 10,000 = 71,650 MAD

Step 3: Calculate the Net VAT Position

• Net VAT = TVA facturée - TVA récupérable
• Net VAT = 0 - 71,650 = -71,650 MAD

Result: ExportTiss SARL has a Crédit de TVA of 71,650 MAD for the month of June. This credit can be carried forward to offset future VAT due or, as we will see, potentially be refunded.

Conclusion

You have now integrated the rules for international transactions into your understanding of the Moroccan VAT system. This is a significant step towards managing the complete accounting cycle for a modern SME.

Key Takeaways:

• Imports: VAT is calculated on a base that includes the Valeur CAF, customs duties (DI), and the parafiscal tax (TPI). This VAT, paid to customs, is generally deductible for the importing company.
• Exports: Transactions are exempt from VAT, meaning no VAT is charged to the foreign customer. Crucially, this exemption comes with a right to deduction, allowing the exporter to recover the VAT paid on all its inputs.
• Economic Rationale: These rules ensure that VAT is a neutral tax in international trade. Goods are ultimately taxed in their country of final consumption. The export regime is specifically designed to make Moroccan products more competitive abroad by relieving them of any domestic tax burden.

Preview of the Next Lesson:
The export VAT regime frequently leads to companies accumulating significant VAT credits. What happens then? In our next lesson, we will address this directly by learning about the procedure and conditions for requesting a VAT refund, a process that allows businesses to recover their trapped cash from the tax administration.