Less taxation and more public supply, the CGEM's proposal in Morocco for 2025
With a view to the coming year, the General Confederation of Moroccan Enterprises (CGEM) has presented its new proposal for the draft 2025 Finance Law, which includes many changes of great interest to Moroccan businessmen. From tax reduction to the promotion of new startups, the CGEM aims to take a giant leap forward with the implementation of 26 new regulations.
The main points of the new regulations are: reducing labour taxes, changing the method of calculating business tax, implementing appropriate green and carbon taxes, improving the tax neutrality of group restructurings, boosting the development of startups, encouraging public offerings, promoting the valorisation of waste and encouraging the energy transition. The organisation headed by Chakib Alj has focused the reform on the welfare of employers and employees.
The first measure is the reduction of the Income Tax (IR) scale over a period of 3 years with a target rate of 35% in 2027, i.e. one point per year. This means that the rate will be progressively reduced over the next 3 years, with the idea being to reach a maximum of 35% taxation for marginal (top) incomes. The effect of the measure will save large amounts of money for the wealthy, so that investment will progressively increase.
Extending the exemption limit for severance payments to 2 million dirhams from the age of 50. This measure aims to ensure that tax is only paid on the amount exceeding 2 million dirhams. For example, if you receive 3.5 million dirhams in severance pay, only 1.5 million dirhams would be taxed. The first two million dirhams would be exempted.
Increase the exemption threshold for the ‘basket bonus’. This means that extras provided by the boss (basket allowance) for any work-related reason will be taxed as long as they do not exceed 50 dirhams.
Maintain the 5-year exemption for new businesses. This incentive aims to ensure that anyone setting up a business in Morocco will be tax-free for the first 5 years in order to increase investment and encourage work.
Modify the tax bases to equalise civil servants in the same sector using the EBE as a reference. The aim is that, under the Gross Operating Surplus (GOS), which measures the profits of the company before deducting taxes, a common tax is imposed on all businesses of a similar nature, ignoring reasons such as whether the premises are rented.
Harmonise the method of assessment. Reducing the calculation process is crucial for businesses as it will avoid errors in terms of the amount of tax to be paid and will also reduce the number of fines imposed by the Moroccan tax authorities.
Implementation of the ‘polluter pays’ tax. Aware of climate change, the CGEM wants companies to move towards a green sustainability in which only those that do not adapt to the new times will have to pay more, thus avoiding that an activity does not pay taxes twice.
This measure will be implemented in the short and long term, starting first with the application to companies in 5 sectors as a substitute for their current taxes, in order to avoid the tax burden on companies. In the long term, it will seek to establish a tax system that includes all sectors, establishing an ETS (Emissions Trading System) where companies that pollute less than the minimum will be able to sell their permits to those that need them.
Improve mergers of groups of companies. This means that if companies merge, they will pay less tax by avoiding those taxes that are necessary. In this way, the aim is to neutralise taxes that can be doubled, tripled... depending on the number of companies merging. Not only will mergers be improved, but spin-offs will be extended so that the companies that merge can continue to benefit from favourable tax treatment.
To avoid complications in tax returns, all assets will be allowed to be valued under the same parameter in order to unify and avoid discrepancies. These assets may include property and technical equipment. In addition, it will facilitate the contribution of third parties to companies in a more efficient way and with less tax burdens.
Tax and customs proposals
With a focus on attracting foreign investment, the CGEM proposes to reduce tax contributions and customs payments. As a first measure, the Confederation proposes the unification of quotas to simplify, streamline and facilitate the tax payment process for companies. Similarly, it is proposed to increase the deductibility threshold for the purchase of company vehicles.
With regard to Value Added Tax, the CGEM proposes changes that favour neutrality, i.e. equalising tax rates downwards so that large companies can maintain investments and SMEs can access the market more competitively. To this end, the Confederation proposes redefining the concept of small and medium-sized enterprises in order to be able to apply tax benefits that are adapted to their sector.
What impact does this have on the worker? A better definition of the SME concept will provide these companies with free training courses that can be requested from the Ministry of Labour. These courses will be tax-free for companies, so employers will be able to increase the cognitive and practical skills of their employees at zero cost; while the employee acquires more knowledge.
Like SMEs, startups are the new project that the CGEM wants to promote. Greater tax benefits, exemptions and investors are some of the points on which the organisation wants to focus so that those who invest in these new start-ups receive great benefits.
In terms of VAT on products, they have focused on plastic, one of the biggest enemies of the fight against climate change. Two rates of taxation will apply depending on the percentage of recycled plastic in the waste. If this does not exceed 95%, the tax rates will be maintained; otherwise, there will be a considerable reduction in the tax paid on plastic waste.
In this respect, the main beneficiaries will be companies in the agri-food sector who will see reductions from 20% to 10%. This new rate will apply to processed products. Together with the elimination of the taxation imposed by intermediaries, we would be talking about a reduction of VAT on processed products of more than 150%.
Companies in the metallurgical sector will also receive the same rebates. These companies will first have to formalise the origin of the materials purchased and carry out a prior self-assessment in order to be able to take advantage of the new tax benefits.
However, in customs matters, the organisation proposes a better review of imported products coming from abroad, adjusting them to the ICT (Internal Consumption Tax) in order to equalise payments and speed up the process. In reference to the purchase of products, the CGEM wanted to highlight the reduction of customs duties on frozen tuna for the benefit of the companies that process it; and energy accumulators which will be reduced from the current 40% tax to a symbolic 2.5%.
With this package of 26 measures, the General Confederation of Moroccan Enterprises intends to extend the already positive effects of the New Investment Charter at least until 2027. In line with the government's actions, the Confederation has taken a major step towards tax harmonisation for entrepreneurs operating on national territory.
Pending approval, Moroccan business associations have given their approval to the packages, which they hope will be implemented as soon as possible.