Casablanca – Morocco is considering a broader increase in corporate taxation for some of its largest and most profitable companies as part of the 2027 Finance Bill, with parliamentary amendments proposing a 40% tax rate for major fuel distributors, cement manufacturers and telecommunications operators.

The proposal forms part of a wider debate over tax fairness, the distribution of corporate profits and the contribution of large businesses to public finances. It would extend a higher tax rate already applied to several financial institutions and insurance companies to other sectors whose activities are considered highly profitable and, in some cases, concentrated among a limited number of operators.

Under the initial proposal, fuel importers and distributors with annual net profits of at least $10.3 million would be subject to a corporate income tax rate of 40%, up from the standard rate of 35%. Parliamentary amendments seek to extend the same treatment to cement manufacturers and telecommunications service providers meeting the same profit threshold.

The threshold is an important element of the proposed measure. It means the higher rate would not automatically apply to every company operating in these sectors. Smaller businesses and companies below the specified profit level would remain outside the proposed category, subject to the applicable corporate tax rules.

The measure reflects growing attention to the relationship between company profitability and taxation in Morocco. Lawmakers supporting the amendments argue that businesses operating in sectors with substantial earnings and relatively limited competition should make a greater contribution to government revenue. They also consider the extension of the higher rate a way to reduce differences in tax treatment between large companies in different parts of the economy.

At present, the 40% corporate income tax rate applies to credit institutions, insurance and reinsurance companies, the Caisse de Dépôt et de Gestion and Bank Al-Maghrib. Extending it to fuel distribution, cement production and telecommunications would broaden the number of sectors subject to the higher rate.

The proposed changes come as Morocco seeks to increase tax revenue while financing public investment, social programmes and infrastructure projects. Corporate income tax receipts are forecast to reach approximately $13 billion in 2027, compared with around $9.85 billion in 2026. This represents an expected increase of about 31.8%, although the projected rise covers corporate taxation as a whole and cannot be attributed exclusively to the proposed higher rate.

Fuel distribution has become one of the main areas of debate surrounding the measure. The sector recorded substantial financial activity in 2024, when nine major diesel and gasoline distributors generated combined revenue of approximately $8 billion and net profits of around $236 million. Their net profit margin reached about 2.9%, compared with a negative margin of 0.5% in 2023.

These figures have strengthened arguments in favour of higher taxation for the largest operators. However, the relatively narrow margin between revenue and net profit also illustrates the importance of distinguishing between sales turnover and the amount of earnings remaining after operating expenses.

The proposed tax would be calculated on net profits rather than on the volume of fuel sold or its retail price. This distinction is central to the debate over whether the measure could affect consumers. Corporate income tax is imposed after a company has generated taxable profits, whereas taxes on fuel consumption and value-added tax directly affect the cost structure of products and services.

A higher corporate tax rate would therefore not automatically require distributors to increase pump prices. Nevertheless, companies operating in a concentrated market could attempt to protect their after-tax earnings by adjusting commercial margins or other elements of their pricing policies.

This possibility has raised concerns among lawmakers, who have called for closer monitoring of fuel prices and greater transparency regarding import costs, storage expenses, distribution charges and commercial margins. They argue that additional taxation should not become an indirect burden on households and businesses through higher prices at service stations.

The government has rejected proposals to impose direct price caps or return to a system of broad fuel subsidies. Its position is that the priority should be to strengthen competition, limit speculative practices and improve the functioning of the distribution market. The tax proposal is presented as a measure targeting company profits rather than an instrument intended to reduce or regulate retail fuel prices.

International energy market conditions add another dimension to the discussion. During the parliamentary debate, figures were cited showing movements in the prices of crude oil, butane and diesel on international markets. Crude oil prices reportedly declined from around $110 to $106 per barrel, while butane prices fell from approximately $1,152 to $1,075. Diesel prices also decreased from around $1,509 to $1,436, although both products remained significantly more expensive than their respective averages in the previous year.

These fluctuations demonstrate the exposure of Morocco’s fuel market to external developments. The country relies heavily on imported energy products, making domestic prices sensitive to international quotations, exchange rates, transport costs and supply conditions.

The proposed tax increase does not directly address this structural dependence. Instead, it focuses on the distribution of profits generated by large companies operating in the domestic market. Its potential impact on consumers will therefore depend partly on how operators respond and whether competition and regulatory oversight prevent the additional tax burden from being transferred through commercial pricing.

The cement sector is another major target of the proposed amendments. Moroccan cement producers have benefited from sustained demand linked to housing, public works, transport infrastructure and large-scale construction programmes. Preparations for the 2030 FIFA World Cup are also expected to support demand for building materials through investments in stadiums, roads, railways, airports and other facilities.

The sector is characterised by a relatively small number of major producers and substantial barriers to entry. Establishing cement production facilities requires considerable investment in industrial equipment, energy supply, raw materials and distribution networks. These conditions have contributed to a market structure in which established operators hold significant positions.

Supporters of the proposed tax argue that companies generating annual net profits above $10.3 million should contribute at the same rate as large financial institutions. They consider the measure particularly relevant at a time when public investment is expected to remain high and demand for construction materials is supported by major national projects.

For cement manufacturers, however, the impact would depend on their individual financial results. Companies with profits below the threshold would not be covered by the proposed 40% rate, while those exceeding it would face a higher tax charge on their taxable earnings. The measure could also influence investment decisions, particularly if companies consider expanding production capacity to meet future demand.

Telecommunications operators have also been included in the amendments. The sector provides essential services to households, businesses and public institutions, while demand for mobile connectivity, broadband access and digital services continues to expand. Its inclusion reflects lawmakers’ view that large operators with substantial profits should face a tax treatment comparable to other highly profitable companies.

The proposal could nevertheless raise questions about the relationship between taxation, investment and the development of digital infrastructure. Telecommunications companies require continuous spending on networks, equipment, spectrum-related obligations and technological upgrades. Any assessment of the tax’s effects would therefore need to distinguish between current profitability and the investment required to maintain and expand services.

Beyond the proposed 40% rate, parliamentary amendments to the 2027 Finance Bill cover several other areas of taxation and public policy. The majority groups have submitted 42 amendments, reflecting a broader effort to adjust the government’s initial proposals before the bill moves through the legislative process.

One proposal seeks to provide additional relief for small businesses and self-employed professionals by raising the annual turnover threshold for transactions involving the same customer before withholding tax applies. The threshold would increase from approximately $8,240 to $10,300.

The amendments also propose a gradual reduction in the withholding tax rate, from 30% to 20% over five years. Under the proposed schedule, the rate would fall to 28% in 2027, 26% in 2028, 24% in 2029, 22% in 2030 and 20% in 2031.

The objective is to reduce the tax burden on smaller economic operators and make formal business activity more attractive. The proposed changes are particularly relevant to self-employed professionals and small service providers, for whom withholding requirements can affect cash flow and the ability to finance daily operations.

Another amendment seeks to extend tax incentives designed to encourage informal businesses to enter the formal economy until the end of 2028, rather than allowing them to expire in 2027. The extension is intended to give businesses more time to register, comply with tax obligations and gain access to the legal and financial benefits associated with formal activity.

The amendments also address customs arrangements for imports of cattle, sheep and meat. They propose requiring imported products benefiting from customs exemptions to comply with specific standards and procedures. The aim is to ensure that tax and customs advantages translate into lower prices for consumers rather than being absorbed entirely by importers or intermediaries.

Tobacco and electronic cigarettes are also covered by proposed tax increases. The specific domestic consumption tax on cigars would rise from approximately $77 to $116 per 1,000 units, while the ad valorem component would increase to 50%. Taxes on electronic cigarette liquids would double, with the rate for nicotine-free products rising from approximately $0.51 to $1.03 per 10 millilitres and the rate for nicotine-containing liquids increasing from approximately $1.03 to $2.06.

Other proposed provisions concern public employees and pensioners. The amendments seek to exempt state and local authority employees, as well as pensioners, from a 6% late-payment charge when the administration recovers amounts that were paid without entitlement. The measure concerns situations involving the repayment of sums received through salaries or pensions.

The parliamentary proposals also include the allocation of 500 public-sector positions under the authority of the head of government, with recruitment guided by territorial equity. Priority would be given to provinces facing shortages of personnel in essential services, particularly health, education and justice.

These provisions reflect the range of priorities being discussed alongside the proposed increase in corporate taxation. While the higher rate targets large companies, other amendments seek to ease obligations for small businesses, strengthen consumer protection and address regional differences in access to public services.

The debate over the 40% corporate tax rate is likely to remain one of the most closely followed aspects of the 2027 Finance Bill. Its final scope will depend on the legislative process and the decisions taken on the amendments submitted by parliamentary groups.

If approved, the extension would represent a significant change in the tax treatment of several major economic sectors. Its effects would depend on the number of companies exceeding the profit threshold, their investment strategies and the extent to which market competition limits the transfer of additional costs to customers.

For the government, the challenge will be to increase revenue and reinforce the principle of tax fairness without weakening investment or creating new pressures on consumer prices. For companies, the measure would raise the importance of profitability, cost management and investment planning as Morocco prepares for a period of substantial infrastructure spending and continued expansion in construction, energy and digital services.