In order to attract foreign direct investment, the Kingdom of Morocco created several Free Zones where investors can implement their businesses or plants and benefit from tax, customs and foreign exchange incentives.
Free Zones are areas dedicated to exporting industrial or commercial activities such as aeronautics, automotive and textile industries. In general, each Free Zone is specialized in a specific industry.
Corporate Income Tax
· A total exemption during the 5 first consecutive years starting from the date of beginning of the operations;
· A reduced rate of CIT of 8,75% applicable during the following consecutive 20 years.
Withholding Tax on dividend
· Dividend distributed to non-resident shareholders and derived from activities undertaken by the companies established in Free Zones is exempt from Withholding Tax on dividend.
Value Added Tax
· Goods and services exported by the Free Zones are exempt from VAT;
· Goods delivered and services rendered to companies established in Free Zones are exempt from VAT;
· Transactions undertaken within or between Free Zones are exempt from VAT.
· Incorporation and capital increase of companies established in Free Zones are exempt from registration duties;
· Acquisition by companies established in Free Zones of land necessary to the implementation of their investment.
· An exemption during the first consecutive 15 years of operations.
Free Zones are considered under Moroccan Customs and Indirect Taxes Code as an out of scope territory.
As such, all flows between Free Zones and the foreign territories are not subject to customs duties and indirect taxes applicable to the transactions undertaken with foreign territories.
Foreign exchange regulation incentives
Foreign exchange regulation is not applicable to transactions undertaken in the Free Zones. Also, all payments should be made in foreign currency.
The use of Moroccan Dirhams (MAD) is authorized for:
· The payment of wages due to the employees,
· The payment for some services and furniture provided by persons established in the rest of the Moroccan territory within a limit of 5000 MAD per transaction and a cap of 150 000 MAD per year and per supplier.