Outsourcing services to Morocco: Up to date with the provisions of the 2024 finance law
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.
Service offshoring, or outsourcing services, has become a key strategy in today’s globalized world. Morocco, with its unique advantages, positions itself as a privileged center for service offshoring. Indeed, Morocco offers a favorable framework for international businesses.
This North African country, with its easy access to European and African markets, offers an attractive business environment, particularly for companies interested in setting up offshore companies.
The tax advantages offered by Morocco, such as tax exemptions and reduced rates, play a key role in this attractiveness.
In addition to tax incentives, Morocco offers a qualified and multilingual workforce, modern infrastructure, and a regulatory environment conducive to the development of service outsourcing activities.
This article explores the mechanisms and benefits of creating an offshore company in Morocco, with particular emphasis on the significant tax advantages offered by the country. These advantages, combined with a skilled workforce and a strategic geographic location, make Morocco attractive to companies looking to outsource their services.
Outsourcing services to Morocco
The services offshoring sector in Morocco is experiencing significant growth. Indeed, this sector is attracting more and more foreign companies which aim to invest in the outsourcing of their services.
Morocco offers attractive tax advantages for companies investing in the service offshoring sector. In fact, these companies benefit from:
- Exemption from corporate tax for the first five (5) years of activity;
- A corporate tax rate capped at 20% at the end of this period;
- An exemption from VAT on export turnover made in foreign currencies;
These tax advantages, in addition to the other advantages that we present in this article, make the Morocco destination increasingly popular.
In fact, every year hundreds of companies (especially French) set up in Morocco. The most popular sectors are:
- Call centers
- IT development
- Communication and social media management agency
- Insurance brokers
Indeed, Morocco positions itself as a competitive and attractive destination for services offshoring.
Offshoring of services in Morocco: The advantages
Morocco has several advantages for outsourcing services, including:
- First, 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 reception and telecommunications infrastructure
- Finally, the continued improvement of the business environment, increasingly harmonious with international standards.
However, one of the major attractions for offshoring companies remains the tax incentive regime.
Offshoring of services in Morocco: Tax regime
Offshoring service companies in Morocco benefit from an advantageous tax regime. This special regime continues to attract foreign companies to set up in Morocco.
Indeed, according to the provisions of article 6 of the General Tax Code , companies operating in the field of service offshoring (service outsourcing) benefit from:
- Firstly, a total exemption from corporate tax for 5 years;
- Second, a reduced tax rate beyond (20%)
In addition, the State offers considerable advantages in terms of VAT exemption (with right of deduction). In addition, special regimes for exemption from social charges for employees for newly established companies.
This article deals with the regime of offshoring of services in Morocco, the conditions for obtaining the exemption, and the various advantages of the Morocco destination.
What is service offshoring?
Outsourcing, also known as “Offshoring,” shares many similarities with subcontracting. In both cases, a company entrusts a specialized external supplier with the task of carrying out part of its operations. However, offshoring is distinguished by the fact that it involves moving certain activities to a foreign country.
This process involves relocating part or all of the production process to another country, such as Morocco in this example. The main objectives are to re-import produced services to the country of origin and benefit from reduced service costs thanks to companies established in the host country.
In 2012, Morocco was recognized as the most favorable destination for offshoring by the European Outsourcing Association (EOA).
To attract more service offshoring activities, Morocco has implemented incentive policies, particularly in terms of:
- Training and improving competitiveness
- Integrated industrial platforms specially designed for offshoring activities, known as P2I Offshoring.
Tax incentives for the offshoring of services in Morocco (outsourcing of services)
As we highlighted above, companies operating in the field of service offshoring benefit from:
- A total exemption from corporate tax for a period of 5 years;
- A reduced rate of 20% beyond the exemption period.
This regime was maintained by the 2024 finance law without modification.
This measure benefits both companies operating inside or outside dedicated P2I zones. The conditions to benefit from this exemption relate to:
- First, to the nature of the activity;
- Secondly, the effectiveness of the latter (the company must actually carry out an activity in Morocco and have employees there).
Example: A customer relations center that serves abroad with teleoperators in Morocco, an IT development center, etc.
The activities eligible for the specific tax regime are companies operating in offshoring activities.
These activities are broken down, under circular 5/2016 , into five sectors:
- CRM (Customer Relationship Management): Customer relationship management
- BPO (Business Process Outsourcing): Outsourcing of business processes
- ITO (Information Technology Outsourcing): Outsourcing of information technology processes
- ESO (Engineering Service Outsourcing): Outsourcing of engineering and R&D activities.
- KPO ( Knowledge Process Outsourcing or outsourcing of strategic business processes): Outsourcing relating to strategic activities with “knowledge” content and requiring specific expertise and knowledge.
As a reminder: Corporate tax (IS) in Morocco is a tax that applies to profits made by companies. It applies in particular to SARLs and SAs. This is a tax established on a declarative basis.
Corporate tax is based on the tax profit which corresponds to the difference between products (revenues) and deductible expenses (costs linked to operations).
Read also: Corporate Tax in Morocco (IS)
Value added tax
In Morocco, the value added tax is an indirect ad valorem tax that applies to all sales of goods and services.
However, for services used abroad (in particular the offshoring of services), this tax does not apply. It benefits, in fact, from an exemption with the right to deduct the VAT charged on purchases.
Companies operating in the service outsourcing sector can benefit from a VAT credit refund.
Generally speaking, when a company is exempt with the right to deduct, it has the right to request reimbursement of the VAT credit. A reimbursement file containing, in particular, proof of the exempt turnover and proof of the tax paid to suppliers must be submitted.
In addition, newly established companies have the right to request the VAT-exempt acquisition of their investment properties. This request is subject to certain formalities.
Exporters as well as companies operating in the outsourcing of services (offshoring) can request the exempt purchase of inputs for their activities (subject to formalities).
Also read: VAT in Morocco, What you need to know
Taxation of distributed dividends
When the company established in Morocco distributes dividends to a Moroccan or foreign partner, the latter is subject to withholding tax at the rate of 12.5%.
However, the provisions of tax treaties apply and may lead to the reduction of this rate.
The 2024 finance law maintained the gradual reduction of this rate. In fact, the withholding tax rate will be reduced to 10%. This reduction will be applied gradually and the rate of 10% will be effective from 2026.
Offshoring integrated industrial and service platforms
The Integrated Idustrial Offshoring Services Platform (P2I Offshoring) is a dedicated space with the following characteristics:
- Firstly, they are exclusively reserved for service offshoring activities;
- Secondly, they are located near large urban centers;
- Thirdly, they include a flexible and diversified real estate offer;
- Fourth, they offer a one-stop administrative window;
- Finally, they have a full range of support services and infrastructure:
- to the best international standards
- at a competitive cost, meeting the needs of investors and their employees.
Requests for establishments in offshoring P2Is in order to carry out an offshoring activity must be submitted to the managers of the offshoring P2Is, accompanied by a complete file relating to the planned investment program.
Companies eligible for installation in P2I are companies operating in offshoring activities (specified above).
Other tax and social contribution incentives
Companies setting up in Morocco can benefit from several tax and social advantages, including:
The National Agency for the Promotion of Employment and Skills ANAPEC has set up a training financing program. Indeed, companies can set up a multidimensional training program and benefit from partial financing (up to 70%).
Training support system
Companies established in P2I offshoring benefit from a contribution to the costs of recruitment training and continuing training for each new recruit for a period of 3 years.
The integration training course contract presents the following incentive measures:
- Exemption of up to 6,000 DH per month from CNSS charges, professional training tax and Income Tax for an internship duration of twenty-four months maximum, non-renewable.
- State coverage, for the benefit of trainees, of employer and employee contributions due to the CNSS for basic compulsory health insurance.
- Coverage by the State, for a period of 12 months, of the employer’s share of social security coverage and the vocational training tax in the event of recruitment of beneficiaries of integration contracts under a common law employment contract .
Professional integration contract
The professional integration contract provides for the granting of a bonus of 25,000 DH to companies recruiting university graduates on a permanent contract. Recruitment must take place at the end of a 6 to 9 month integration training course as part of the integration contract system.
The “TAHFIZ” program grants, within the limit of 10 (ten) employees and for a period of 24 months, the following benefits:
- First, the exemption from income tax of the gross monthly salary capped at 10,000 DH
- Secondly, State coverage of the employer’s share in respect of:
- the contribution due to the CNSS
- the Professional Training tax.
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How to create an offshore company in Morocco?
Setting up a company in Morocco is a structured process, which offers considerable advantages for international businesses.
Strictly speaking, there is no Offshore company in Morocco (extraterritorial companies not subject to local law). However, service outsourcing companies benefit from an advantageous tax framework including tax exemptions and state aid.
The essential steps for establishing a company in Morocco include selecting a suitable legal form, officially registering the company, and obtaining the necessary licenses. Morocco has put in place a legal framework that simplifies these procedures while ensuring compliance with international standards.
Businesses should also familiarize themselves with local laws, including the General Tax Code, to ensure successful integration into the Moroccan economic ecosystem. Support from local experts, such as lawyers or accountants, is often recommended to effectively navigate this process.
Tax benefits for service outsourcing companies
One of Morocco’s main attractions for offshore companies is its advantageous tax regime.
Companies that invest in service offshoring benefit from a total exemption from corporate tax for the first five years of activity. At the end of this period, a tax rate reduced to 20% is applied. These tax incentives make Morocco particularly attractive for international companies, allowing them to make significant savings and invest more in the development of their activities and in local resources.
FAQ on service outsourcing and offshoring in Morocco
Q1: What types of services are often outsourced in Morocco?
A : IT services, business process management (BPO), customer support, and software development services are frequently outsourced to Morocco.
Q2: What are the advantages of outsourcing services in Morocco?
A : In addition to tax benefits, outsourcing to Morocco offers competitive labor costs, a skilled and multilingual workforce, and modern telecommunications infrastructure.
Q3: How to choose an outsourcing partner in Morocco?
A : It is crucial to consider the partner’s technical expertise, regulatory compliance, and ability to align with the company’s strategic objectives.
Read in french : Offshoring de service au Maroc