OXFAM Criticizes ‘Unjustified’ Tax Exemptions in Morocco

Rabat- Tax exemptions granted to agricultural, real estate, and private education sectors are “unjustified” and cost Morocco a “large financial waste,” said Oxfam Morocco.

As part of Morocco’s economic policy to enhance and encourage investments in the country’s main sectors - agricultural, industrial, and real estate - Morocco started granting tax benefits.

In its latest report titled “Tax Exemptions, Lost Revenues: Agriculture, Real Estate and Private Education,” Oxfam Morocco dissected the effects of Morocco’s tax policies since the late 60s.

“Tax exemptions in 2018 constituted about 3% of Morocco’s GDP (29 billion dirhams ($2.8 billion), which is almost double the budget allocated to education and health," the report highlighted.

“These exemptions do not have a significant impact on companies’ decisions to invest or hire, as 81% of them were granted without studying their usefulness,” said the report.

Amid a shrinking mortgage market and a sharp decrease in transactions, real estate prices in Morocco continue to drop in the third quarter of 2021.

In this regard, Oxfam Morocco said real estate cannot be an eligible sector to benefit from a positive discrimination policy since “it represents about 47% of the raw components of fixed capital from the Moroccan economy.”

As for the agriculture sector, the report added that despite benefiting from tax exemptions, agriculture records “insufficient coverage rates for some basic materials, such as sugar by 47% and oils by 1%.”

Additionally, the report sheds light on Akhannouch’s cabinet new approved Finance Bill “failure” in respecting all the requirements of Framework Law No. 16-69 related to tax reforms. “Morocco needs to move towards abandoning tax concessions that enhance the rent-based economy,” said Abdeljalil Laaroussi, Campaigns Officer at Oxfam Morocco, in a statement attached to the report.

Oxfam Morocco concluded its report by recommending the adoption of direct contractual support instead of unconditional tax exemptions, through “strengthening direct support measures for agricultural mechanization instead of applying a low rate of value-added tax.”

Source: Morocco World News by Amal El Attaq