MOROCCO

ABOUT MOROCCO

Morocco at a Glance

Morocco is in a strategic location for access to Europe. It is also well located as a platform for reaching other international markets, especially North and West Africa. With Africa increasingly seen as a future engine of global growth, Morocco is a potential gateway to the continent for like a UK companies.

Strengths of the Moroccan market include:

good communication network and global transport connections, strategic geographic location and gateway to Africa, open Skies Agreement with the European Union (EU) and low cost flights from the UK, strong banking and finance sector, ‘advanced status’ with the EU since 2008, competitive labour costs, tax incentives, no restrictions to capital and ease of repatriation for profits and dividends.

Morocco has several free trade agreements currently in place with various countries, including the EU, the USA, Turkey, Jordan, Tunisia, Egypt and across Africa.

Free Zones in Morocco:

Export Processing Zone of Tangier
Free Zones at Tanger Med Ksar el Majaz Mellousa 1 and 2
Free Zone in Dakhla and Laayoune:
Free Storage Zone of hydrocarbons: Kebdana and Nador
Export Processing Zone in Kenitra

Population:	33.84 million
Form of government:	Unitary parliamentary constitutional monarchy
Official & spoken languages:	French
Currency:	Moroccan dirham
Time zone:	CET (UTC) summer CEST (UTC+1)
GDP (PPP):	$281.79 billion
GDP (PPP)/per capita:	$8,330
Average salary:	450,00 euro
Unemployment:	10%
Major trading partners:	Spain, France, Italy, Netherlands, United Kingdom, Germany, Turkey, India

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Doing Business in Morocco

Advantages of doing business in Morocco

Morocco business formation only requires a minimum capital of US$1000 of which only 25% must be paid-up before incorporation. The company can be formed by two shareholders, who can be a foreign and with no needed for a resident director.
Registering a company in Morocco is easy for foreigner because:

Contrary to many other African and Middle Eastern countries including 1) Algeria 2) Libya 3) Saudi Arabia and 4) the United Arab Emirates, foreigners are not required to form a joint venture in order to do business in Morocco
Foreigners are not subject to higher capital requirements than locals in most industries
While business registration with the Moroccan Business Register is slow compared to developed countries like New Zealand, France, Singapore or Hong Kong, it is still much faster than other North African countries.
For the reasons listed above, Morocco is currently ranked by the world Bank as the 43rd best place in the world for the ease of starting a business

While the standard corporate income tax is high (30%), foreigners starting a business in Morocco can benefit from the following tax benefits

Companies operating in a free trade zone Morocco benefit from a tax holiday of five years. Thereafter, they enjoy a reduced tax rate of 8.75% for the following twenty years.
Foreigners starting a local company in Morocco can also secure Casablanca Finance City status, which allow them to benefit to up to five years of corporate tax holidays and a permanently reduced CIT rate of 10%. Eligible activities include, investment holding, financial services and HR, legal, audit and other professional services
Morocco has entered into a least 50 double taxation avoidance treaties with different countries including; Singapore, Switzerland, United States, United Kingdom, Canada, United Arab Emirates, among many other jurisdictions
Many other industries benefit from tax benefits, including ´; agriculture, which can be permanently tax exempt and accommodation and tourism, which benefit from a five-years tax holidays followed by a permanently reduced rate of 17.5%.

Morocco is great place to start a call center, a farm and other business requiring manpower because:

The average salary of a Moroccan worker is only 450€ per month in the private sector. The minimum salary is only 225€ on a monthly basis.
It is easy to find workers Morocco, due to an unemployment rate officially at 10% and reality much higher due to chronic unemployment, notably amongst the younger urban generations.
The vast majority oh the urban educated workforce is fluent French and often also speak English
Employers in need of reducing payroll costs are often allowed to do so. Morocco is needed ranked as the 38th best place in the world the flexibility of wages by the World Economic Forum.

Disadvantages of doing business in Morocco

While there are many ways to legally minimize corporate tax, the standard rate is high 30%. Companies subject to CIT are furthermore subject to a minimum tax corresponding to 0.5% of their turnover. Morocco also implements withholding tax on dividends distributions and branch remittances, at a standard rate of 15%
It is nearly impossible to open a corporate bank account in Morocco without registering a permanent establishment like a branch or a subsidiary

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The World Bank “Ease of doing Business -ranking”

Overall rank 2016:	rank 69h
– Starting a business:	rank 35
– Dealing with construction permits:	rank 17
– Getting electricity:	rank 72
– Registering property:	rank 86
– Getting credit:	rank 105
– Protecting minority investors:	rank 62
– Paying taxes:	rank 25
– Trading across borders	rank 65
– Enforcing contract:	rank 57
– Resolving Insolvency:	rank 134

READ MORE: MOROCCAN COMPANY FORMATION SERVICES & FEES

Residency and Moving to Morocco

Have you made plans to move to Morocco? This North African country is a lively and vibrant expat destination.

Many expats don’t need an entry visa for Morocco, but all foreign nationals have to apply for a residence permit within the first 90 days.

Internet and networking are generally sufficient to find a good accommodation in major cities. Just in case, you can still use the services of a local real estate agent (samsar).
If you want the best education for your children, international schools are your best bet. However, they tend to come at a high price.

VISAS

If you are a citizen of Iran, Sudan, Egypt, or Syria, you must obtain an entry visa to visit Morocco. On the contrary, if you are from the United States or any of the countries that are part of the European Union, you do not require one. An entry visa is the only type of temporary visa available, and it is usually valid for three months. If you need a visa to enter Morocco, you should start the process well in advance of your trip or move to Morocco.

For a tourist visa, you will need to bring the following documents with you to your nearest Moroccan Embassy or Consulate:

a completed application form
your passport, which should be valid for at least six months after your arrival in Morocco
a copy of the first three pages of your passport
two passport photos
a copy of your round-trip plane reservation
a copy of your hotel reservation or a notarized letter of invitation from your host in Morocco (or, if you are married to a Moroccan citizen, a copy of his/her passport or national ID card and a copy of the marriage certificate)
proof of valid health insurance for the duration of your stay
proof of sufficient finances for your stay, e.g. bank statement, pay slips, employment contract
For a business visa, you will require the documents listed above, plus a copy of the invitation letter issued by the company you are planning to visit in Morocco, or a copy of your employment contract if you are planning on starting a new job there.

Requirements for obtaining a visa may differ slightly based on your nationality. You should therefore verify the visa information with your nearest embassy or consulate.

RESIDENCE PERMITS

After moving to Morocco, you will need to obtain a residence permit (carte de séjour) if you are planning on staying for longer than 90 days. You can obtain this permit from the immigration authorities (Bureau des Étrangers) at the central police station in your district. Navigating Moroccan bureaucracy can be a slow and nerve-wracking process, which requires patience and persistence, so you should apply as soon as possible after moving to Morocco.

When moving to Morocco, you should make sure to get an entry stamp in your passport at your port of entry. In addition to your entry stamp, you will need the following items in order to apply for your residence permit:

two completed application forms (available at the immigration office)
ten passport photos (with your face taking up three-quarters of the photo)
a work permit (attestation de travail) — see our Working in Morocco article for information
a criminal record check from your previous home country (which can take up to 40 days to process)
a statement from your Moroccan bank as proof of your local bank balance
a medical certificate completed by a local doctor, certifying that you have no contagious diseases
Each of these documents needs to be legalized at your nearest local district office (Muqata’a) and presented in duplicate. Once you have successfully submitted your application, you will receive a receipt and be told when to pick up your temporary residence permit. The latter is valid for the first three months of your move to Morocco. During this time your official one will be prepared.

RESIDENCE PERMIT RENEWALS

You need to renew your residence permit one year after your move to Morocco. The permit may be renewed an indefinite amount of times and is valid for one or two years. As of 2013, new rules are in effect, which require you to present your birth certificate when applying for a new permit. You might also need to present your rental contract. In addition, you need a copy of your passport and your current residence permit, a medical certificate, and a criminal record check (Casier Judiciaire) from the Ministry of Justice in Rabat. You also have to pay a fee of 100 MAD.

If your family is moving to Morocco with you, they must independently inquire for residency and work permits. If you have children, they do not need student visas to attend school.

For more information on obtaining visas and permits for your move to Morocco, please consult the website of the Ministry of Foreign Affairs (in Arabic and French) or contact Novasigma immigration consultant.

Taxation in Morocco

Corporate Taxes in Morocco

Residence: A company is resident in Morocco if it is incorporated in Morocco or if its place effective management is in Morocco

Basis: Morocco operates a territorial tax system. Companies (both resident and nonresident) generally are subject to corporate tax only on income generated from activities carried on in Morocco. Foreign corporations are subject to taxation on income arising in Morocco if they have, or are deemed to have, a permanent establishment in Morocco.

Taxable income: Companies are taxed on the difference between their trading income and expenditure. Business expenses incurred in the operation of the business generally are deductible, unless specifically excluded. Expenses not allowed include interest on shareholder loans where the stocks is not fully paid up, interest on shareholder loans in excess of the official annual interest rate and penalties and fines.

Taxation of dividends: Dividends received by corporate shareholders from taxable Moroccan-resident entities must be included in business profits, but the dividends are 100% deductible in calculating taxable income.

Capital gains: Capital gains are treated as non-current income and taxed at the normal corporate tax rate.

Losses: Tax losses may be carried forward for four years from the end of the loss-making accounting period. However, the portion of a loss that relates to depreciation may be carried forward indefinitely. Losses may not be carried back.

Foreign tax credit: Foreign tax credits are available if so provided in an applicable tax treaty.

Participation exemption: See Taxation of dividends

Taxable income:	15%
Taxation of dividends:	–
VAT registration:	All persons subject to VAT must make a declaration of existence within 30 days of the start of their operations, in order to register for VAT purposes.
– VAT Rates:	The standard rate of VAT is 20%, with reduced rates 7%, 10% and 14% applying to certain transactions.
Surtax:	No
Alternative minimum tax:	There is no Alternative minimum tax, but the tax payable by a company must be at a rate of at least 0.5%, regardless of the amount of taxable profit, calculated on turnover, financial and noncurrent income.
Withholding tax (general):	–
– From Dividends	Dividends paid to a nonresident are subject to a 15% withholding tax, unless the rate is reduced under an applicable tax treaty.
– From Royalties	Royalties paid to a non resident are subject to a 10% withholding tax, unless the rate is reduced under a tax treaty.
– From Interests	Interest paid on a loan from a nonresident is subject to a 10% withholding tax, unless the rate is reduced under a tax treaty. A loan granted for 10 years or more is exempt from withholding tax

Transfer tax:	Registration duty at rates ranging from 4% to 6% and a 1% real estate tax are levied on the acquisition of real property.
Capital gains tax:	Capital gains are taxable as business income at the regular corporate income tax rate.
Real property tax:	The transfer of property is subject to the 20% tax on capital gains, but the tax payable cannot be less than 3% of the transfer price. Undeveloped land can be subject to higher rates of taxation ranging from 25% to 30%, depending on the period of ownership.
Social security:	An employer is required to register its employees with the social fund and pay social security contributions based on the employee’s salary. Both the employer and employee are required to contribute , and the employee’s contribution is withheld by the employer.
Payroll tax:	Payroll tax (called professional training tax) is imposed on the gross monthly remuneration of employees subject to social security contributions, at a rate of 1.6%
Stamp duty:	Legal documents subject to registration duty also are subject to stamp duty at a flat rate of MAD 20 per shee
Capital duty:	No, but capital increases are subject to a 1% registration duty
Tax treaties:	Morocco has signed approximately 50 treaties, of which around 40 are in effect.
Anti-avoidance rules:
– Transfer pricing	There is no formal transfer pricing legislation in Morocco, but transactions between related parties must be on arm’s length terms. Two methodologies are used by the tax authorities: the comparable uncontrolled price method and direct assessment based on available information.
– Thin capitalization rule	There is no formal thin capitalization legislation, but the deduction of interest on shareholder loans is subject to some conditions and limitations. Interest is deductible if the shareholder’s stock is fully paid up, the interest rate does not exceed the official annual rate and the debt-to-equity ratios does not exceed 1:1
– Disclosure requirements	No, but information on transactions involving dependent entities should be maintained by the Moroccan resident entity

Compliance for corporation:

Tax year: The calendar year normally is the fiscal year, although a company may opt for a different fiscal year.

Consolidated returns: Consolidated returns are not permitted; each company must file its own individual return.

Filling requirements: Accounts for income tax purposes must be filed within three months of the end of the relevant accounting period. Corporate tax is payable in four equal installments, based on the previous year’s assessments. The actual amount payable is adjusted in the three months following the end of the accounting period. Foreign companies that have elected for the 8% default taxation must submit a declaration of their turnover before 1 April following each calendar year.

Penalties: Interest and penalties apply for late filing, failure to file or filing an incorrect return

Rulings: An optional advance pricing agreement ruling procedure has been introduced.

Tax authorities: General Tax Administration

Incentives- A variety of incentives are offered to encourage Moroccan and foreign investors. Incentives include an exemption from business tax for the first five years of operations for newly incorporated companies, and a corporate income tax exemption for companies exporting goods and services or operating tourist establishments (subject to certain conditions) for the first five years of operations, followed by a reduced rate on export sales.

There are several export and industrial free zones in the main cities, Tangiers, Kenitra, Rabat, Nador, Fes and Layoune that are open for various activities. Authorized companies located in the export and industrial free zones benefit from a business tax exemption for the first 15 years, together with an exemption from corporate income tax for the first five years of operations, followed by a reduced rate of 8.75% for the following 20 years.

An offshore financial center in Tangier is open to all international banks and financial institutions that have obtained prior authorization from the ministry of finance. Banks operating in the offshore financial center are entitled to an exemption from registration fees and stamp duty on initial share capital and subsequent increases, and on the acquisition of premises for setting up a head office and branches, provided the premises are retained for at least 10 years: an exemption from VAT; an exemption from the trading license tax and urban tax on buildings occupied by the head office or agency; an annual corporation tax of 10% or USD 25 000 for the first 15 years, an exemption from tax in respect of dividend distributions and transfer of share proceeds, and customs duty exemptions.

Companies with the status of Casablanca Finance City are entitled to a corporate tax exemption on sales turnover generated in foreign currency and on capital gains arising from the transfer of foreign securities for five years from the start of the tax year in which the company obtained this status. After the expiration of this period, an 8.75% corporate tax rate applies.

Tax-neutral treatment may be available for corporate income tax purposes for a restructuring group.

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Personal Taxation in Morocco 2017

Personal taxation basis:

Residents individuals are taxed on their worldwide income: nonresidents are taxed only on Moroccan-source income.

Tax Residence:

The following individuals are resident in Morocco for tax purposes: 1. individuals who are habitually resident in Morocco 2. Individuals who are present in Morocco for at leas 183 days in a given year, whether or not continuously and 3. Individuals whose professional activities or center of economic interest are located in Morocco.

Filling status:

Joint filing is not permitted, each individual must file a separate return

Income tax rates in Morocco:

Rates are progressive from 0% to 38%

Social security payments in Morocco:

An employer is required to register its employees with the social fund and pay social security contributions based on the employee’s salary. Both the employer and employee are required to contribute, and the employee’s contributions is withheld by the employer.

Inheritance/estate tax in Morocco:

There is no inheritance tax, but a gift tax is levied at a flat rate of 20%

Net wealth/net worth tax in Morocco:

Tax year:

Calendar year

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OUR OFFERS IN MOROCCO

BUSINESS CONSULTING FROM 125€/h
Morocco - Company Formation Services from 3.200€
TAX PLANNING FOR PRIVATE PERSONS FROM 850€
TAX CONSULTING FOR CORPORATIONS FROM 2.490€

NOVASIGMA IN MOROCCO

Consulting & advisory services for Moroccan entities

Due diligence process
Foreign Market entry & Supplier search
Business Plans & Descriptions
Development & Capital Advisory
International Tax Planning
Funding & Investor Search
Business Restructuring via Offshore entities
Exit Strategy & IPO
Problem solving in Morocco | by Novasigma Accounting & Law partner office

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Incorporation, administration & business services in Morocco

Incorporation services in Morocco

New company formations in Morocco
Ready-Made Moroccan companies
Company Closures and liquidations in Morocco

Company administration in Morocco

Legal registration address service for a Moroccan company
Company secretarial service for a Moroccan company
Nominee director services
Nominee shareholder services

READ MORE: MOROCCAN COMPANY FORMATION SERVICES & FEES

Additional business services in Morocco (by Novasigma Certified Partners)

Virtual office services in Morocco
Hosting services
Real estate in Morocco (offices, trade facilities, industrial)

Accounting, bookkeeping & audit for a Moroccan entity

Some of the common domestic accounting services we provide in Morocco include

Bookkeeping and accounting
Invoicing and payments
Annual accounts
Monthly Reconciliation
Monthly financial statements (including balance sheet and income statement)
Payroll services
Income and tax return
Management accounts

Value Added Tax (VAT)

VAT registration
Advice on VAT scheme options
VAT returns and declarations

Audit

Annual accounts in view of an annual audit and attend accounting audits

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Legal services for Moroccan companies and business owners

Legal services in Morocco for all Novasigma Clients including companies and their owners and directors

Novasigma has built in Morocco a team of lawyers, associates and legal advisers to assist our clients with a business and tax planning, overseas business operations, risk management and other legal matters. Primarily focused on business transactions, Novasigma Accounting & Law corporate attorneys are a great asset to a small and large businesses. With a background on corporate law, our corporate lawyers and legal advisers have an in depth knowledge on the transactions that may put your business at risk of litigation. These include contracts and negotiations, taxation laws, business structuring, buy/sell agreements, and intellectual property, among others.

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