Morocco

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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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Advantages of doing business in Morocco

  1.  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.
  2. 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
  1. 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%.
  1. 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

  1. 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%
  2. 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

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.

LossesTax 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 creditForeign tax credits are available if so provided in an applicable tax treaty.

Participation exemptionSee 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:

No

Tax year:

Calendar year

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Our Services 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

READ MORE: ACCOUNTING AND BOOKKEEPING SERVICES & FEES IN MOROCCO

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.

PLEASE CONTACT US FOR MORE INFORMATION ABOUT LEGAL SERVICES IN MOROCCO

Banking, financial and insurance services in Morocco

Banking services in Morocco

  • Business bank accounts
  • Personal bank account opening for business owners
  • Payment service providers
  • Investment solutions
  • Alternative banking solutions

Financial services in Morocco

  • Debt collection services
  • Invoice funding & cash flow solutions
  • Factoring
  • Leasing
  • Wealth management

Insurance services in Morocco

  • Insurances for corporations
  • Insurances for business owners and their families

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Tax residencies & Immigration services

  • Meeting with Novasigma before applying Moroccan residency
  • Assistance in applying a tax residency from Morocco
  • Personal bank account in Morocco
  • Address service available for Novasigma business clients

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News and business opportunities in Morocco

  • Doing business in Morocco
    Morocco

Interested in Morocco? Please leave us a message and we will get back to you shortly.

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News and business opportunities

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Invest in your future In today’s increasingly global and fast emerging yet uncertain world, investing for second residency and citizenship has seen a surge in demand. We at Novasigma have developed a Golden Visa program that gives clarity on the route and potential and is an essential requirement for many high net worth families. Novasigma…

United Kingdom – Company Formation Services

United Kingdom – Company Formation Services

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