Francisco A. Laguna & Annapurna Nandyal
The Kingdom of Morocco is one of the most thriving in the African continent and is a popular tourist destination. Morocco is in a strategic location that places it at the crossroads of the main international trade routes linking Europe, the Americas, Africa and the Middle East. Due to its political stability, economic openness and tolerance, Morocco has attracted a relatively constant flow of foreign capital, despite the global recession, the euro zone crisis and political revolutions in the Arab world. According to United Nations Conference on Trade and Development (UNCTAD), Morocco led the African region in foreign direct investment (FDI) in 2012.
In the recent years, the Moroccan government has adopted various measures to enhance its attractiveness to foreign investors. In 1995, the country passed “The Investment Charter” which liberalized foreign investment laws and which applies to both foreign and Moroccan investors. Virtually, all sectors of the economy are open to FDI. Equally important, capital investments and investment returns, whether through capital gains, dividends, interest or sales, can be freely repatriated.
The Investment Charter replaced the old code and mainly provides for:
- Reduction in the tax on the capital goods required for investment;
- Reduction in investment costs;
- Exemption from value added tax and income taxes for up to 5 years;
- Protection for industrial and intellectual property;
- Promotion of employment;
- Generous incentives for FDI, joint ventures, production contracts and licensing agreements;
- A one-stop investment agency to assist investors; and
- Promotion of money markets
The Moroccan State has focused specifically on 8 sectors: automotive; aerospace; offshoring; textile and leather; agribusiness; electronics; pharmaceuticals; and chemicals. To promote these sectors, the State has created three types of investment zones – Integrated Industrial Platforms, Industrial Zones and Free Zones. Each zone offers investors incentives such as specific financial, tax and customs advantages, provided that they meet required criteria under Moroccan law.
Relaxed investment regulations allow FDI to be made in the following ways:
- Acquisition of shares in the capital of an existing or start-up company;
- Subscription to the increased capital of an existing company;
- Establishment of a subsidiary or a liaison office;
- Acquisition of Moroccan securities;
- Acquisition of real estate or rights of use attached thereto;
- Establishment or acquisition of an individual business; and
- Contributions in-kind (land, buildings, and securities) originally financed in foreign currency.
The Morocco Investment Development Agency (MIDA) is responsible for guiding investors at the national level. The agency is a one-stop shop for investors looking for wide range of services to set up business in Morocco. At the regional level, the Regional Investment Centre (CRI) is responsible for assisting investors establish businesses, obtaining necessary permits and complying with regulatory formalities.
Morocco is signatory to many free trade agreements with several countries including the United States and the European Union. Among the prominent trade agreements are the U.S.-Moroccan Free Trade Agreement (FTA) which is considered as one of the most comprehensive free trade agreements that the U.S. has ever negotiated. Recently, European Union has conferred “Advanced Status” on Morocco, a two-fold plan which includes free access to the European market and help to bring Moroccan Government and Institutional standards up to those of the EU.
TransLegal can assist clients with your questions of doing business in Morocco.