Big Story 10

Morocco’s finance hub to change tax regime after EU criticism

CASABLANCA (Reuters) - Morocco’s finance and business hub Casablanca Finance City (CFC) will from 2020 tax companies’ export activities the same as their local ones after pressure from the European Union to adjust its tax incentives, its CEO said.

The EU, which wants Morocco to reform tax incentives to the CFC and other free trade zones, kept the North African country on a so-called grey list of non-cooperative tax jurisdictions in March after Morocco scrapped tax exemptions for offshore banks and holdings. The EU could have downgraded it to its blacklist.

The CFC tax regime will be adjusted to make no difference between activities undertaken locally and those aimed at exports, CFC CEO Said Ibrahimi told Reuters, downplaying the impact on the hub’s competitiveness.

A flat-rate tax based on functioning expenses will be reviewed as well, he said.

Morocco’s government began developing CFC in 2010 as a banking center for Africa. The hub, which unseated Johannesburg as Africa’s most attractive financial center in the 2019 Global Financial Centres Index ranking, aspires to become a financial hub catering for companies that want to do business in Africa.

EU pressure for Morocco to align its preferential tax regimes with EU standards comes amid fierce competition over the African market with other centers in Europe, he said.

The 180 companies that have acquired CFC status so far are not in Morocco because of tax incentives but rather due to the

Country’s political stability, infrastructure, regulatory framework and connectivity to Africa, Ibrahimi said.

“Investors can access 32 cities in Africa from Casablanca through direct flights,” he said.

Reporting by Ahmed Eljechtimi; editing by Emelia Sithole-Matarise