Morocco has positioned itself as an emerging power in the world and as a key economic player on the African continent. Benefiting from its strategic position, proximity to Europe, Morocco is now considered an investment bridge connecting the European continent with Africa. This position is the result of the county’s intense and constant efforts to develop its international trade by optimising its logistics chain and signing numerous international agreements and conventions with a large number of countries. This has helped the country become a regional production and export hub for international companies. Morocco actively encourages and facilitates foreign investment, especially in export sectors such as manufacturing, through positive macroeconomic policies, trade liberalisation, investment incentives and structural reforms.
To enhance its attractiveness and meet current and future international demand, Morocco continues to make significant efforts to encourage and facilitate investment. Indeed, the Kingdom continues to introduce new industrial acceleration zones (formerly called free zones) to provide a flexible environment for investors. The most recent of these zones was inaugurated in Agadir earlier this month. The country is also continuously developing mechanisms to participate in the financing of industrial projects, a number of investment benefits are offered in this context. According to the United Nations Conference on Trade and Development’s (UNCTAD) World Investment Report 2020 , Morocco attracted the eighth-most foreign direct investment (FDI) in Africa.
In this article, we present you with the most important indicators about the Kingdom of Morocco. We also cover the benefits of setting up in the Tangier free zone and the company formation procedure and why you should consider investing in Morocco.
Morocco enjoys a stable economic and political climate, as confirmed by the 2021 edition of the risk maps produced by risk assessment firm Control Risks, which considers Morocco one of the safest countries in North Africa from a political perspective. The security risk in Morocco is rated as low by Control Risks, putting the country in line with very developed countries such as the United States and the United Kingdom. Control Risks also certifies that the maritime risks of piracy, crime, conflict, territorial disputes, terrorism, and militancy on the Moroccan coast are very low.
Morocco now has a modern infrastructure thanks to the heavy investments the country has made to bring its highway, railway and port infrastructure up to international standards. In fact, the Kingdom ranked 22nd in terms of maritime connectivity in 2019 and is connected to 186 ports worldwide. In terms of air links, the country has 19 international airports. It is also important to note that Morocco has direct ferries to Gibraltar (UK) and Spain, making travel extremely easy.
Availability of several trade agreements
Morocco has free trade agreements with more than 100 countries, giving its products access to a large market. For example, the Kingdom has signed bilateral agreements with countries such as the United States and Turkey. Morocco has also signed an association agreement with the European Union and a multilateral agreement with Arab-Mediterranean countries (Agadir Agreement). Did you know that Morocco is UK’s fourth-largest trading partner in Africa and the EU’s largest trading partner in the Southern neighbourhood?
Tangier Free Zone
Part of Morocco’s strategy to attract foreign investors is the establishment of free zones. So far, six integrated industrial zones have been established, all in the Tangier region, each dedicated to a different sector of the economy, including automotive, aeronautics and sports. The Free Trade Zone, became operational in 1999, and is currently over 400 hectares.
Below are the incentives offered by the Free Trade Zone;
- Exemption from Corporate Income Tax during the first five years. Afterwards a taxation at the specific rate of 15%
- Exemption from withholding tax of dividends originating from activities carried out in industrial acceleration zones, which are paid to non-residents.
- Exemption from VAT with right of deduction for operations carried out inside or between industrial acceleration zones;
- Exemption from professional tax for the first 15 years consecutive to their operation;
- Facilitate the transfer of foreign currency abroad for income from foreign investments in Morocco, such as dividends and interest from shareholder loans.
- A special customs regime enabling companies located in the industrial acceleration zones to benefit from various advantages, notably the exemption of goods entering or leaving the export processing zones, as well as goods extracted or remaining there, from all duties, taxes or charges on import, traffic, consumption, production or export.
In addition to strong national incentives, the Tangier Free Zone combines significant advantages: geographical location adapted marketing model (sale of land and rental of equipped warehouses) and service offerings. In terms of economic sectors, the automotive industry, aerospace, textiles and services have strongly contributed to the growth of the zone, which currently includes over 600 companies.
Creating a company in Morocco is simple. Interested investors must follow these steps:
- Requesting a Negative Certificate (to secure their business name);
- Drafting the Articles of Association;
- Registration of Deeds;
- Create and register deeds;
- Registering for business taxes and obtaining the tax identifier, registration in the trade register, affiliation with the CNSS ;
- Publication in the official bulletin and in the legal announcement journal.
We have seen throughout this article several reasons to invest in Morocco. Morocco provides several tax incentives while also the infrastructure to attract foreign investors. Its location, trade links and relationships with European and African nations provide a good economic opportunity, both for taxation and for transport costs. If you wish to know more about setting up a company or how to invest in Morocco contact us at Blue Consulting.