INVESTMENT CHARTER

First Heading : Objectives of the Investment Charter
Second Heading : Tax Provisions
Third Heading: Financial and Administrative Measures as well as Measures Applicable to Immovable Assets
Fourth Heading : Agriculture
Fifth Heading : Enforcement Measures

Blueprint Law No 18-95

CONSTITUTING INVESTMENT CHARTER

First Heading : Objectives of the Investment Charter

Article One:

The fundamental objectives of the action of the State over the ten coming years shall be fixed, in compliance with the provisions of the second paragraph of Article 45 of the Constitution, with a view to favoring the development and promotion of investments by improving the general climate and conditions for investment, reviewing the scope of encouragement related to taxation and by implementing investment stimulation measures.

Article Two:

The measures provided for in the present Charter aim at stimulating investment by:

- alleviating the tax burden relevant to acquisitions of material, tools, equipment goods and land plots which are necessary for the realization of the investment;

- reducing the rates of the taxes levied on revenues and benefits;

- granting benefit from a fiscal system with preferential treatment to the advantage of regional development;

- increasing the guarantees given to investors by defining the means of appeal against national and local tax system;

- promoting financial offshore zones, duty-free export zones and the duty-free industrial warehouse system;

- ensuring a better assignment of the tax burden and a more effective application of free competition rule; namely by modifying the scope of application of the tax exemptions granted.

These measures also aim at :

- encouraging exports;

- promoting employment;

- reducing investment costs;

- reducing production cost;

- streamlining water and power consumption;

- protecting the environment.


Second Heading : Tax Provisions

Article Three:

The customs duties, including the importation duties and taxes payable upon importation, are worked out as follows :

- The importation duties may not be less than 2.5% ad valorem;

- equipment goods, material and tools, as well as their constituent parts, spare parts and accessories, considered as necessary to the promotion and development of the investment, shall be liable for importation duties at a minimum ad valorem rate of 2.5% or at a maximum ad valorem rate of 10%;

- equipment goods, material, tools and parts thereof, spare parts and accessories specified above, shall be exempt from tax imposition upon importation in consideration of the interests of national economy.

Article Four:

Shall be exempted from value added tax inside the country and upon importation, the equipment goods, material and tools which are to be recorded in an immobilization account and which cause a right of deduction in accordance with the legislation regulating value added tax.

The companies liable for VAT which have paid tax upon importation or local acquisition of the above mentioned goods shall benefit from the reimbursement of the said tax.

Article Five:

Shall be exempted from registration fees the deeds of purchase of land plots earmarked for the realization of an investment project, excluding the acts specified in paragraph a) of the second section hereinafter, subject to the realization of the project within a maximum deadline of 24 months as of the date of the deed.

Shall be subjected to a registration fee at a rate of 2.5%:

the deeds of purchase of land plots intended for a housing development and building construction;

the first purchase of the constructions specified above by individuals or legal entities other than credit institutions and insurance companies.

Shall be subjected to a registration fee at a maximum rate of 0.50%, the interests in companies upon their formation or their increase in capital.

Article Six:

Contribution to the national solidarity fund linked to corporate tax is suppressed.

However, the profits and returns totally exempted from corporate tax by virtue of the present and future legislation which set down investment-stimulating measures shall be liable for the payment, at their time and place, of a contribution to the national solidarity fund that is equivalent to 25% of the amount of corporate tax which would have been normally payable in the absence of exemption.

Article Seven:

A- The rate of Corporate Tax is 35%.

B- Companies exporting products or services shall benefit, in proportion with the amount of their turnover on exports, from special advantages which may include total exemption from corporate tax over five years and from a reduction of 50% of corporate tax after that period.

C- Companies which are set up in prefectures or provinces in which economic activity requires a preferential tax treatment shall benefit from a reduction of 50% of corporate tax during the first five fiscal years following their date of operation excluding stable establishments of companies having their head offices abroad which perform contracts of public works, of supplies or of services, credit institutions, insurance companies and real estate agencies.

D- Handicrafts businesses, whose production is the result of essentially manual work, shall benefit from a 50% reduction of corporate tax during the first five fiscal years following their date of operation regardless of their geographical location.

Article Eight :

A- The rates of the general income tax scale are readjusted. The maximum imposition rate shall be 44% (Finance Law 1996).

B- Companies exporting products or services shall benefit, in proportion with the amount of their turnover on exports, from special advantages which may go as far as total exemption from the general income tax during five fiscal years and of a reduction of 50% after that period.

However, as far as service exporting companies are concerned, the aforesaid exemptions and reductions shall apply only to the turnover made on exports in hard currencies.

C- Companies which are set up in prefectures or provinces in which economic activity requires a preferential tax treatment shall benefit from a reduction of 50% of the general income tax during the first five fiscal years following their date of operation excluding permanently established companies having their head offices abroad which perform contracts of public works, of supplies or of services, as well as real estate agencies.

D- Handicrafts businesses, whose production is the result of essentially manual work, shall benefit from a 50% reduction of general income tax during the first five fiscal years following their date of operation regardless of their geographical location.

E- Benefiting from the aforesaid advantages shall be subject to regular book-keeping in accordance with the legislation in force.

Article Nine:

Shall be maintained for equipment goods, and during the period specified in Article One here above, the measures provided for by the legislation regulating corporate tax and general income tax in the matter of sliding scale amortization.

Article Ten:

Shall be considered as deductible charges the funds constituted, within the limit of 20% of the pre-tax benefit, by companies with a view to investing in equipment goods, material and tools within the limit of 30% of the said investment excluding purchases of land or buildings not intended for professional use or private cars.

Shall be maintained as deductible charges the funds constituted by mining companies for the reconstitution of mining deposits in conformity with the legislation relevant to corporate tax or to general income tax.

The funds referred to above, which are used in accordance with the object for which they were constituted, shall be recorded in a provisional account called  Investment Funds .

The amounts written under  Investment Funds  shall not be used unless by incorporation into capital or in deduction of the deficits registered in previous fiscal years.

Article Eleven:

With the aim of encouraging the building of economical housing developments, shall be exonerated from tax on real-estate profits the profit made by individuals upon the first transfer of housing premises provided that the transfer may not be based on speculation and that the house be qualified as economical.

Article Twelve:

The variable tax on the principal of trading dues shall be suppressed.

Shall be exonerated from trading dues any individual or legal entity practicing in Morocco a professional, industrial or trading activity during a period of five fiscal years which begins as of the date of commencement of the activity.

Shall be excluded from this exemption the stable companies and firms having their head offices abroad which perform contracts of public works, supplies or services, credit institutions, insurance companies and real-estate agencies.

Article Thirteen:

Shall be exonerated from urban tax new buildings, or additions to old buildings as well as the devices making part and parcel of establishments producing goods or services. This shall remain effective during the first five years as of the date of their completion or installation.

Shall be excluded from this exemption the establishments, companies and agencies referred to in the last paragraph of Article Twelve except leasing companies concerning the equipment they purchase on behalf of their clients.

Local Tax

Article Fourteen:

As far as local tax is concerned, the maximum rates and the tax base shall be simplified, harmonized and adapted to the requirements of development and investment.


Heading III : Financial, Real-Estate, Administrative and Other Provisions

Article Fifteen:

The object of these various measures is:

- the freedom to transfer the benefits and capital of the persons who make investments in hard currencies;

- the constitution of a real-estate fund aimed at realizing investment projects and the delimitation of State contribution to the acquisition and equipment of land plots necessary for investment;

- the advising and assistance provided to investors for the realization of their projects by setting up a unified national organ;

- the simplification and alleviation of the administrative procedure relevant to investments.

Article Sixteen:

Foreign individuals or legal entities, be they resident or non-resident, as well as Moroccan nationals settled abroad who make investments in hard currency in Morocco shall benefit from a convertibility system on the plane of exchange regulation for the said investments which will guarantee them total freedom:

- to transfer post-tax benefits without limitation of amount or duration;

- to transfer the produce of the investment or of the total or partial liquidation thereof, including appreciation.

Article Seventeen:

Companies with an investment program considered important on the grounds of its amount, the number of stable jobs to be created, the region in which it will be realized, the technology that it will transfer or its contribution to the protection of the environment, may conclude special contracts with the State granting them, in addition to the advantages provided for in the present Blue-Print Law and the texts relevant to its enforcement, a partial exemption of the following expenses.

- expenses incurred for the purchase of the land necessary for the realization of the Project;

- expenses related to external infrastructures;

- vocational training expenses.

The contracts referred to above may include clauses stipulating that the settlement of any contention related to investment, which may arise between the State and the foreign investor, shall be in conformity with international conventions relevant to international arbitration ratified by Morocco.

Article Eighteen:

A special assignment account called "Investment Promotion Fund" shall be created. It shall be assigned to posting the operations related to the State assuming the cost of the advantages granted to foreign investors within the context of the system of investment contracts referred to in the previous Article as well as the expenses incurred due to the promotion of investment.

Article Nineteen :

In the provinces or prefectures whose economic activity justifies a special aid from the State, the State shall assume a part of the cost of lay-out of the industrial zones that will be established there.

Article Twenty :

Each industrial zone, with an important surface, shall have a management committee composed of the users and the public or private promoter of the zone. The said committee shall be in charge of the management and maintenance of the whole zone, of the keeping and security inside that zone as well as of the implementation of the clauses of the schedule of conditions binding the promoter and the users.

Article Twenty One:

An administrative organ in charge of welcoming, advising, informing and assisting investors as well as promoting investments shall be set up.

Article Twenty Two:

The administrative procedures relative to the realization of investments shall be alleviated and simplified.

In any event where an administrative authority granting the advantages provided for in the present blue-print law must be maintained, this authorization is supposed to be granted if the administration forwards no reply to the application relevant thereto within sixty days as from the date of registration of the said application.

Article Twenty Three:

Investors shall continue to enjoy the rights they have acquired related to the advantages granted to them by virtue of the legislation providing for investment-inciting measures. These advantages shall remain in force until expiration of their duration, subjected to the conditions under which they were granted.


Heading IV : Agriculture

Article Twenty Four:

The provisions of the present blue-print law shall not apply to the sector of agriculture whose taxation system, namely applicable to investments, shall make the object of a special legislation.

 


Heading V : Implementation Measures

Article Twenty Five:

The present blue-print law shall be applied in accordance with the legislative and regulating texts set down for its implementation.

The government shall proceed with the presentation of legislative and regulating texts required for the attainment of the objectives set in the present blue-print law as from the Finance Law for the year 1996.

(Source: Official Gazette No 4336 issue of Dec. 6th, 1995)



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