Investments and Trade
Resident or non-resident foreign nationals are entitled to invest freely in Morocco and no investment operation in Morocco requires any prior authorization from the Control Exchange Office. Prior to 1996, Morocco offered foreign investors a package of investment incentives contained in various investment codes in different areas of business such as exports, tourism, industrial, mining, maritime, handicraft and real estate investments. Those codes have been replaced by a new Investment Charter, promulgated by Decree No.1-95-213 of November 8, 1995. Effective as of January 1996, the new Charter set up as a framework the main objectives regarding the promotion and development of investments in Morocco within the next ten years. It also codified several existing regulations, some of which have been implemented through their inclusion in the Corporate Tax Law in 1996. Further, the Charter establishes that benefits for investors under previously existing laws will be maintained until expiration of their term and of the conditions for which they had been granted.
The Charter gives the same preference to all sectors except for agriculture. The top five sectors Morocco is trying to develop are: banking, industry, holdings, real estate and trade. Special incentives have been made available to attract these industries, these incentives differentiate between the installation phase and the operational phase of a company.
Incentives offered for the Installation Phase are:
* Exemption from formalities for land acquisition;
* Application of a registration fee of 2.5 percent for acquisition formalities for land;
* Application of 0.5 percent registration fee for inputs in capital formation of companies or increases in capital;
* Reduced import dues (between 2.5 percent and 10 percent maximum ad valorem);
* Exemption from import tax levy (PFI);
* Patent tax: suppression of the variable tax and exemption during first five years of operation;
* Exemption of urban tax for first five years after the completion or installation of new buildings;
* Exemption of reimbursement of VAT for equipment, material and tools acquired locally or imported.
Incentives for the Operational Phase are:
* Profits and income liable to corporate tax are not subject to the National Solidarity Contribution (PSN);
* Profits and income completely exonerated from corporate tax pay a contribution at a rate of 25 percent of the normal corporate tax;
* Exemption from corporate tax for exporting enterprises for five years;
* 50 percent reduction in corporate tax or income tax during the first five years thereafter;
* Enterprises are allowed to create an annual investment reserve free of tax;
* Application of sliding scale amortization for equipment;
* Exemption from real estate profits tax when premises are first ceded for use as accommodation.
In addition, special incentives are available to encourage companies to comply with environment protection laws or to install environment protection equipment.
Apart from serving as an outline for various changes in tax law, the Charter also promotes facilitation and reduction of administrative procedures involving the carrying out of investments. To that end, a special administrative body for the promotion of investments was instituted and charged with assisting investors. In addition, in all cases where approval of an administrative authorization for the granting of advantages proves to be necessary, this authorization is deemed to be granted when the administration has kept silent regarding the result of the request during a period of sixty days after the date the request has been filed.
Public Sector Investment Contracts
The Charter also offers special contracts with the state to enterprises whose investment programs are important due to their size, the number of stable jobs created, the region in which they will be carried out, the technology they transfer or their level of environmental protection. Under these contracts, the state can grant a partial exemption from the following expenses:
* Costs of purchasing the land necessary for carrying out the investment;
* Costs of external infrastructure;
* Costs of professional training.
The Charter explicitly mentions that these contracts can include provisions, stipulating that the method regarding the settlement of disputes arising between a foreign investor and the Moroccan state will be in accordance with international agreements ratified by Morocco with respect to international arbitration.
Investment Promotion Fund
The Charter creates an Investment Promotion Fund, a special appropriation account designed to be used for the operations relating to the responsibility of the state for the cost of advantages granted to investors under the framework of the investment contract regime. The Charter, however, does not stipulate how the fund will be financed.
As a member of GATT, Morocco has gradually removed most restrictions for imports originating from other member countries. According to the law of November 9, 1993 relating to foreign businesses, all goods and services can be imported without a licensing requirement. In the event that imports are deemed to have a negative impact on national production, however, an import license may be required. In addition, the following duties can be imposed:
* Compensatory duties, in the event that the product imported benefits from manufacturing or export bonuses or subsidies in its country of origin;
* An anti-dumping duty, in the event that the import value is lower that the normal value of the item.
In order to import into Morocco, some documentation procedures are required. A person or entity must be registered in a register of importers and must obtain the authority to import from the Ministry of Commerce and Industry. An import registration form (engagement d'importation) should be obtained from a Moroccan Schedule A Bank for all imports into Morocco. This form facilitates both custom formalities and the payments of the invoice.
In recent years, export regulations have undergone a substantial amount of liberalization. Export licenses are not required, and export sales are not subject to export tax. The sole obligation on the part of the exporter is the repatriation of export benefits. The repatriation should be performed in a 120 day period, however, the deadline can be extended in case the trade obligations require do so. Settlements relating to exports can now be made in foreign currency, and the exporter is no longer required to produce the customs declarations justifying the import of foreign currency. Similarly, the financial regulations pertaining to investment operations are now directly handled at the level of the banking institutions.
Free Trade Agreements
In 1995 Morocco entered into a Free Trade Agreement with the European Union which gives preferential treatment to Moroccan goods exported to the EU. Under the agreement, industrial products can be exported to the EU duty-free without quantitative restrictions. Only for agricultural products, some quotas and restrictions remain.
Recently, the country has signed an additional trade agreement with Ministers from four EFTA States (Switzerland, Norway, Iceland and Liechtenstein). Whereas the EFTA members will eliminate all restrictions on imports of industrial products, processed agricultural goods, fish and other marine products, Morocco has agreed to phase out tariffs and quotas over twelve years, while retaining the right to introduce restrictions to protect nascent or restructuring industries.
Morocco has also signed free trade arrangements with members of the Maghreb Arab Union (UMA). For all practical purposes, however, the UMA is dormant, and regional economic integration has been stalled. Another bilateral free trade arrangement has been established with Saudi Arabia.
Free Trade Zone
There is a Free Trade Zone in Tangier which is open to both Moroccan and foreign companies. The sixty-five companies located in the zone may import goods duty-free and are exempt from other takes. The only requirement is that all local workers be paid directly in foreign exchange, which they are then obliged to exchange for MD at Moroccan commercial banks operating in the zone.
The employment contract binding the employer to each of his employees is governed by the Royal Decree dated August 13, 1913, which lays down a code of obligations and contracts. Such contract may be written or oral.
A decree of October 23, 1948 sets out a specimen contract applicable to all industrial and commercial establishments. It defines the reciprocal rights and duties of employer and employees. An employer, however, can make more favorable arrangements in his establishment, subject to agreement with the Minister of Labor.
Workers have the right to join together in unions for the protection of their rights and to strike in defense for their collective interests. Nevertheless, the Inspectorate of Labor endeavors to settle disputes by mediation. At the same time, if both parties agree, arbitration may avoid recourse to strike action or legal action before the Tribunal of First Instance.
There is no legal requirement for employees to be involved in the management of companies or to be represented on the board of directors. Although there is no legislation requiring participation by labor in the profits of a business, a number of companies have implemented profit sharing plans.
The work week is limited to forty-eight hours, with no more than ten hours worked per day. Every employee is entitled to a weekly day of rest and a number of statutory paid holidays.
Salaries and Wages
There are no legislated wage controls in Morocco other than the minimum wage. Therefore, wages and salaries can be freely contracted between employees and employers. Apart from agreed pay increases, an indexing system enables the government to raise by decree all wages and salaries effectively paid when the Central Commission for Prices and Wages records an increase of at least 5 percent in the cost of living.
Wages, whatever the method of remuneration (time rates, piece rates or job rates) must be paid at least twice a month, at a maximum of sixteen days' interval. Salaries must be paid at least once a month.
Health and Safety
The provision of medical services is compulsory in every firm employing more than fifty persons. Employers must provide the services of a doctor; alternatively, they may set up a joint service with other firms, supervised by a chairman. The operation of such health service is subject to inspection.
Every firm must observe standard safety regulations. Certain forms of work considered as dangerous are covered by special regulations, including, inter alia, employment of women and children. The Inspectorate of Labor ensures that these regulations are observed.
Termination of Employment
Dismissal of personnel may take place for a number of reasons, such as reduction of jobs in the particular branch, incapacity owing to age or insufficient aptitude or as a disciplinary measure owing to a serious offense. Except in the case of a serious offense, the worker is entitled to notice, which varies according to his seniority in the firm and the nature of his work. Such a dismissed worker is also entitled, after a year's service, to compensation proportionate to the length of his service with the firm.
Membership in the social security system (Caisse nationale de Securite Sociale or CNSS) is compulsory for all employers, and they are required to register all their workers. CNSS pays industrial and commercial workers family allowances and daily allowances in cases of illness, accident or occupational diseases not covered by workers compensation, allowances in case of death, disability pensions, old-age pensions and survivors' pensions.
All employers and employees are covered by the social security system. Foreign workers coming to take up employment in Morocco participate on the same basis as Moroccan nationals.
Morocco faces various environmental problems, including several arising from natural hazards. The main difficulties arise from Morocco's dependency on water and the economy's vulnerability to climatic change. Morocco is now defined as a "water-stressed" country. Per capita supplies and water quality are declining, rural areas are poorly served with water, and there are substantial losses in both irrigation (which currently accounts for 85 percent of water use) and drinking water systems in urban areas. In addition, the country suffers from oil pollution of its coastal waters.
In attempting to solve these difficulties, Morocco has made some progress toward defining a national environmental action plan, but overall institutional awareness and coordination are weak. Morocco is, however, a party to various international agreements regarding environmental protection issues such as biodiversity, climate change, endangered species, marine dumping, marine life conservation, nuclear test ban, ozone layer protection, protection of world cultural and natural heritage and the protection of the wetlands. It has also signed agreements for the establishment of a General Fisheries Council for the Mediterranean and of a Commission for Controlling the Desert Locust in the Near East. In addition, Morocco has signed but not ratified further agreements on desertification, environmental modification and the law of the sea.
Some exemption from taxes and other duties have been made available for persons and entities promoting or implementing environmental protection.
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