Morocco's 2025 Cigarette Tax: Budget Brands Face Steep Price Jump

Morocco is set to implement significant price increases on cigarettes in 2025, with entry-level brands bearing the brunt of the adjustment as part of the government's broader tax reform strategy. The move aims to create a more balanced tobacco market by reducing the price disparity between budget and premium cigarette brands.

The price modifications will see some cigarette packs increase by up to MAD 2 ($0.20), primarily affecting lower-cost options. Among the entry-level segment, several major tobacco companies have announced price adjustments. Société Marocaine des Tabacs has raised Gauloises and Marquise prices by MAD 1 ($0.10), while Philip Morris International has increased L&M and Chesterfield prices by MAD 2 ($0.20). Japan Tobacco International has followed suit, implementing a MAD 2 ($0.20) increase for Monte Carlo and MAD 1 ($0.10) for LD.

Premium brands have largely remained unaffected by the price hikes, with notable exceptions like Camel seeing a modest increase of MAD 0.5 ($0.05) per pack. Marlboro and Winston prices will remain stable.

These adjustments are part of Morocco's comprehensive tax reform outlined in the 2022 Finance Law, which continues through 2026. The reform addresses the growing disparities in taxation across different cigarette categories that have emerged over time.

The government's financial projections for 2024 anticipated revenue of MAD 16.4 billion ($1.58 billion) from combined alcohol and tobacco taxation. Looking ahead to 2025, the finance bill introduces measures to increase tax revenues while expanding public spending and investment, targeting a reduced budget deficit of 3.5% of GDP.

The reform includes significant changes to the Domestic Consumption Tax (TIC). By 2026, the specific quota will increase more than fivefold, from MAD 100 ($9.70) to MAD 550 ($53.40). Additionally, the minimum tax per 1,000 cigarettes will rise from MAD 710.2 ($69) to MAD 953 ($92.50).

As part of broader fiscal measures, the government plans to raise domestic consumption taxes on various products, including hard alcohol and beer, projecting total revenue of MAD 657.8 billion ($63.47 billion) - a 14.49% increase. Specific revenue targets include MAD 1.19 billion from hard alcohol, MAD 1.55 billion from beer, and MAD 13.7 billion from cigarettes.

These reforms reflect Morocco's dual objectives of increasing state revenue while potentially influencing consumer behavior through pricing strategies. While the changes may promote more consistent pricing across cigarette categories, consumers, particularly those who prefer entry-level brands, will face higher costs in the coming year.