Morocco’s tax exemptions waste public money and exacerbate inequalities, says Oxfam Morocco

Tax exemptions granted to agricultural, real estate, and private education sectors are unjustified and cost Morocco a large financial waste, said Oxfam Morocco, an international NGO dedicated to eradicating poverty worldwide.

The British confederation analyzed in its new report, “Tax Exemptions, Lost Revenues: Agriculture, Real Estate and Private Education,” the effects of Morocco’s Tax policy followed since the late 60s on the state’s revenues.
At the end of the 60s, Morocco started granting tax benefits as part of its economic policy to influence investments in the country’s main sectors: agricultural, industrial, and real estate.

The value of the current tax exemptions in Morocco is estimated at about MAD 29 billion.

However, the newly issued report said tax exemptions do not have a significant impact on companies’ decisions to invest or hire, as 81% of the tax exemptions were granted without studying their feasibility and usefulness, said the report.

For example, the growth rate of the value-added tax to real estate increased from 4% between 2007 and 2013 to more than 5.5 % between 2013 and 2019, despite the decrease in exemptions by about 40% between the two periods.
Oxfam said real estate cannot be considered a sector that should benefit from a positive discrimination policy, since it represents about 47% of the raw components of fixed capital from the Moroccan economy.

As for education, the private sector is limited to major cities and includes only 16% of Moroccan children.

Despite benefiting from tax exemptions, Moroccan agriculture records insufficient coverage rates for some basic materials, such as sugar by 47% and oils by 1%.

As a developing country that relies almost exclusively on its tax system to finance public policies, the human rights and democracy organization, said Morocco needs to take urgent decisions to rationalize public spending and allocate it to social sectors in order to reduce social and regional gender-based inequalities.

In the same context, the report underlined Akhannouch’s cabinet new approved Finance Law failure in respecting all the requirements of Framework Law No. 16-69 related to tax reform, thus once again postponing the tax reform recommended by the national competition for levies.

“Morocco needs to move towards abandoning tax concessions that enhance the rent-based economy and adopting an assessment of the social and economic consequences of the exemptions granted,” said Abdeljalil Laaroussi, Advocacy and Campaigns Officer at Oxfam Morocco, in a statement attached to the report.

Meanwhile, the organization recommended the adoption of direct contractual support instead of unconditional tax exemptions, by strengthening direct support measures for agricultural mechanization instead of applying a low rate of value-added tax.