Morocco’s voluntary tax settlement spurs interest in bank savings

Morocco’s recent voluntary tax settlement initiative, aimed at regularizing the tax status of individuals regarding their income and profits, has boosted demand for bank savings products.

The initiative, which concluded on Dec. 31, 2024, generated over MAD 6 billion ($584 million) from declared assets totaling MAD 127 billion ($12.3 billion). However, concerns have arisen about potential misuse of savings accounts for money laundering activities.

Banks have reported an increased interest in savings products in the first weeks of January, particularly those related to education, retirement, and healthcare. Financial advisors have been fielding numerous inquiries about previously overlooked options, such as retirement savings plans. These plans now offer enhanced tax benefits, including reduced minimum age requirements for tax deductions (from 50 to 45 years) and increased tax exemptions for withdrawals under specific conditions.

Another popular choice has been equity savings plans (PEA), which allow individuals to invest periodically or freely in stocks or mutual funds. Life insurance and supplemental retirement plans, offering tax deductions on contributions, have also gained traction.

Experts warn that certain savings products may be vulnerable to money laundering due to their flexibility and ease of use. Omar Ismaili, a credit and financial risk management specialist, told Hespress AR that the recent surge in savings activity may attract illicit actors. “Savings accounts are attractive to money launderers because they require minimal documentation on fund origins,” Ismaili said.

He highlighted suspicious patterns such as repeated large deposits followed by rapid withdrawals or transfers. Fixed-term accounts, he added, are particularly susceptible, as they allow large sums to be deposited under the guise of investments and later withdrawn with seemingly legitimate returns.

The issue of tax evasion through savings products also poses a significant challenge to Morocco’s tax authorities. Despite the success of the voluntary settlement program, gaps remain. Tax consultant Salim Chahabi emphasized the need for a comprehensive approach to curb evasion, including improved transparency, stricter regulations, and automated reporting systems for taxable income from savings.

“The lack of coordination between banks and tax authorities enables some individuals to underreport their savings income, such as interest and capital gains,” Chahabi said. He called for legal reforms to close loopholes, strengthen enforcement measures, and foster voluntary compliance.

Both Ismaili and Chahabi stressed the importance of building public trust in the tax system through education and transparency. “Citizens need to see how their taxes contribute to public services and infrastructure,” Chahabi said, suggesting campaigns to highlight the developmental role of taxes.

They also urged enhanced cooperation between banks and tax authorities, advocating for the adoption of global financial information exchange standards to ensure fair and efficient tax collection. Combining enforcement with incentives, they noted, would promote compliance and financial sustainability while supporting Morocco’s economic development.