Ahead of next year’s national budget, the Moroccan government has passed a tax reform aimed at large corporations with the aim of “recording higher returns for cope with adverse conditions” and ” increase the contribution of these companies development and social protection“, reports Al Arab.
Through what Rabat called “solidarity mechanisms”, large enterprises will gradually increase their contribution rate in order to stimulate the national economy. According to the Arab newspaper, companies exceeding 100 million dirhams ($9.2 million) should increase their contribution rate by 35%while those who earn less than this amount will be taxed at 20%.
Moroccan Prime Minister Aziz Akhannouch said he thought it was “fair” for companies that earn more to pay more tax, noting the country is in an “exceptional” situation. “It is necessary that we all contribute to the achievement of social justice”, he said. Regarding companies, Akhannouch stressed that they have “a key role in consolidating social cohesion and in protecting state projects”.
For her part, the Minister of Economy and Finance, Nadia Fattah Al-Alawi, recalled that the current context obliges “everyone to contribute to the expenses”. Like Akhnnouch, she referred to “social justice” and stressed that, despite this measure, the government is committed to boosting investment in the public and private sectors.
“Investment is a key mechanism to lay the foundations for sustainable growth that provides employment opportunities and funding resources for various social and development programs in accordance with the directives of King Mohammed VI,” explained Fattah Al- Alawi.
The Finance and Economic Development Committee has listed some of the industries that will be affected by this measure, such as oil and gas companies and the financial and banking sector. In this regard, Hakim Marrakchi, Chairman of the Tax and Customs Commission of the General Confederation of Moroccan Enterprises, underlined Al Sharq that the increase in the tax on banks will not result in an increase in interest rates on loans. However, he warned that in the absence of central bank action, “falling bank profits could lead to a slowdown in growth of their assets and thus reduce the volume of loans”.
According to data collected by Al Arab, the profits of seven leading companies in the fuel distribution sector amounted to 1.68 billion dirhams (93 million dollars) a year. These revenues came from the sale of gasoline over the past four years.
In this respect, the economist Rashid Sari – quoted by the Arab media – believes that the time has come to impose a tax on entities working in the hydrocarbons sector.
On the other hand, economic analyst Muhammad Sharqi points out that this measure is a way for the state to “support and encourage investment”. He also underlines the need for large companies that have made large profits in times of crisis to “show solidarity with social needs in the face of international and national challenges”like the consequences of the droughts that have affected the Kingdom.
Sharqi says the social protection program needs some 51 billion dirhams ($4.6 billion) in funding after announcing health coverage for some 11 million citizens.
In addition to covering social expenditure, this measure will accelerate investments, more job opportunities for young people and reduce the unemployment rate by 11%, explains Sharqi. It will also reduce reliance on external financing and borrowing.