Morocco: Tax attractiveness of the Casablanca Finance City

Casablanca finance City (CFC)

Launched in 2010, by the promulgation of the Act number 44-10, the Casablanca Finance City’s purpose is to set up a strategic financial area to made investments in Africa. This objective is being achieved. It is demonstrated by its early success. The Casablanca Finance City has been recognized, for the second year in a row, as the first financial center of Africa (In the Global Financial Index, Casablanca was ranked 33th in the world in 2016, and30th in 2017).

The attractiveness of the CFC is based on the granting of a status that confers legal facilitations, tax incentives and exchange facilities.

Who can enjoy the CFC status?

The Act number 44-10, as amended by the Act No 68-12, defines four kinds of companies which can enjoy the CFC status:

• Financial institutions mentioned in articles 6 to 8;
• Professional providers of services mentioned by articles 8bis and 9;
• Holding companies (cf. article 10 bis);
• Regional headquarters of multinational companies (cf. article 10).

One of the main conditions to get this status is that the abovementioned companies have to carry out part of their activity with non-Moroccan natural and/or legal persons.

Depending on the companies’ category, there are some specific conditions to be met. Then, such companies will have to apply for the “CFC commission” which will take a decision on their application.

Tax incentives of the CFC status

In addition to the business and tax advantages of Morocco for investments in Africa (various free-trade and double taxation agreements), the CFC status allows companies to benefit from some advantages and a really attractive tax stability.

• Corporate Income Tax (CIT) incentives
  Financial institutions, professional providers of services, holding companies enjoying the CFC status are exempted of CIT as regards with their export turnover during a period of five Financial Years beginning on the year the status was awarded. Furthermore, such companies will benefit from an exemption of the capital gains from the sales of securities.

  After this period, these companies, as regards with the same incomes and capital gains, will be taxed at the reduced rate of 8,75%.

  Regional and international headquarters enjoying the CFC status are taxed at the reduced rate of 10%. Assessment of their taxable bases is specific. Indeed, should there be a profit, the tax base is equal to the higher amount between the income tax assessed in ordinary conditions, and 5% of the headquarter’ s operating costs and expenses. However, should there be a tax loss, the taxable base corresponds to 5% of the operating expenses. Regional and international headquarters are nevertheless subject to the minimum contribution of CIT (i.e. article 144 of the tax code).
  

• Income tax incentives
  Employees of companies enjoying CFC status may choose, whichever is the most advantageous one, between taxation under ordinary law or a flat and definitive rate of 20% for a period of five years as from the beginning of the employment relationship.
• Registration duties incentives
  Acts relating to the setting up of a company and capital increase are exempted of registration duties.