Investment CharterResident 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 Those codes have been replaced by a new Investment Charter, promulgated by Decree No.1-95-213 of November 8, 1995.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.
Investment IncentivesThe 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.
Administrative ProceedingsApart 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 ContractsThe 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 FundThe 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.
Foreign TradeAs 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 AgreementsIn 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 ZoneThere 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.
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