régime fiscal CFC

Outsourcing services to morocco

Morocco is increasingly popular destination for outsourcing services companies due to several advantages. Indeed, Morocco is positioned as a competitive and attractive destination for offshoring.

Morocco has several advantages for the outsourcing of services including:

  • Firstly, its strategic geographical location;
  • Second, its cultural and linguistic assets;
  • Third, the availability and quality of its human resources;
  • Fourth, the quality and competitive cost of its hosting and telecommunication infrastructure
  • Finally, the continuous improvement of the business environment, which is more and more in line with international standards.

Nevertheless, one of the major assets of attraction for offshoring companies remains the incentive tax system.

Indeed, the outsourcing of services (offshoring) in Morocco benefits from an advantageous tax regime. This special regime continues to attract foreign companies to settle in Morocco.

Under the provisions of Article 6 of the General Tax Code, companies operating in the field of outsourcing services benefit :

  • Firstly, a total exemption from corporate tax for 5 years;
  • Secondly, a reduced tax rate beyond that (20%)

In addition, the State offers considerable advantages in terms of exemption from social charges for employees.

This article deals with the regime of outsourcing services, the conditions for obtaining the exemption, and the various advantages of Morocco as a destination.

What is offshoring in Morocco / Outsourcing service to Morocco ?

Offshoring is a concept that is quite similar to subcontracting. In both cases, the client delegates to an external specialized service provider the responsibility of carrying out its activity. However, “offshoring” involves the transfer of activities to another country.

It is the transfer to another country (Morocco in our case), of all or part of the production circuit. The goal is to :

  • to re-import on the domestic territory the produced services;
  • benefit from services at lower cost through the intermediary of the company established in the said country.

Morocco was elected best offshoring destination for the year 2012 by the European Outsourcing Association (EOA).

By 2020, the objective defined by the Industrial Acceleration Plan (PAI) is to achieve a GDP of 16 billion dirhams and 100,000 jobs.

Morocco has put in place attractive incentives, including :

  • training and improving competitiveness ;
  • Mobilization of integrated industrial platforms dedicated to offshoring activities (P2I Offshoring).

Tax incentives for outsourcing services (offshoring in Morocco)

Corporate tax

The companies which intervene in the field of outsourcing (offshoring) of services benefit from :

  • Exemption from corporate tax for a period of 5 years;
  • Reduced rate of 20% beyond the exemption period.

This rate has been maintained by the finance bill 2023.

This measure benefits both companies operating inside or outside the dedicated P2i zones. The conditions to benefit from this exemption relate to:

  • First, the nature of the activity;
  • Second, the effectiveness of the latter (the company must actually carry out an activity in Morocco and have employees).

Example: A customer relations center that serves abroad with teleoperators in Morocco, a computer development center,…

The activities eligible for the specific tax regime are companies operating in the activities of off shoring.

These activities are broken down, in virtue of the circular 5/2016, into five channels:

  • CRM : Customer Relationship Management
  • BPO : Outsourcing of business processes
  • ITO : Outsourcing of information technology processes
  • ESO : Outsourcing of engineering and R&D activities.
  • KPO : Outsourcing of strategic activities with a “knowledge” content and requiring specific expertise and knowledge.

As a reminder: Corporate tax (I.S) in Morocco is a tax that applies to the profits made by companies. It applies in particular to limited liability companies and corporations. It is a tax established on a declarative basis.

The corporate tax is based on the taxable profit which corresponds to the difference between the products (receipts) and the deductible expenses (costs related to the exploitation).

Read also: Corporate tax in Morocco (I.S)

Value added tax

In Morocco, value added tax is an indirect ad valorem tax that applies to all sales of goods and services.

However, for services used abroad (notably outsourcing of services: offshoring), this tax does not apply. In fact, it benefits from an exemption with the right to deduct the VAT on purchases.

The companies operating in the sector of outsourcing of services can benefit from a refund of the VAT credit.

In general, when a company is exempt with the right to deduct, it is entitled to claim the VAT credit refund. A refund file containing, among other things, proof of the exempted turnover and proof of the tax paid to suppliers must be submitted.

In addition, newly established companies have the right to apply for the VAT-exempt acquisition of their capital goods. This application is subject to certain formalities.

Exporters as well as companies operating in the outsourcing of services (offshoring) can apply for the exempt purchase of inputs for their activities (subject to formalities).

Read also: VAT in Morocco, What you need to know

 

Taxation of distributed dividends

When a Moroccan-based company distributes dividends to a Moroccan or foreign shareholder, it is subject to a withholding tax at a rate of 15%.

However, the provisions of tax treaties apply and may lead to a reduction of this rate.

Read also: Withholding tax: What products are subject to withholding tax?

Please note that finance bill 2023 has decided that this rate will be progressively reduced to 10% (this rate will be effective in 2026).

 

Read in french : Offshoring de service au Maroc