Offshoring of services in Morocco: all about companies, offshore companies

Offshoring of services in Morocco: all about companies, offshore companies

Finance Law 2023

“A significant potential is offered to the offshoring sector in Morocco, particularly in a context marked by the growth of the world market and the existence of favorable structural trends in Morocco, including the diversification of the sectors of activity covered”Moulay Hafid Elalamy, Minister of Industry, Trade, Investment and Digital Economy

Offshore companies are companies that have chosen to relocate thetheir production in order to benefit from a simplification of the constitution of their structure and tax advantages in a foreign country.

IMorocco is one of the host countries for these companies because it has put in place a legal framework that favors this type of investment.

Offshoring: what is it?

The term "Offshoring" is a designation used to designate the relocation of the production of certain services from the territory of one country to the territory of another, which generally has lower production costs. Offshoring more specifically concerns services for which physical proximity to customers is not essential.

Our firm sheds light on the activities of Offshoring services in Morocco

Offshoring categories:

1° -The first category concerns activities related to customer relationship management(cusrelationship management: CRM)which generally includes all call center activities (customer support, sales, advertising, etc.).

2° - The second category is related to business process management activities(Business Process Outsourcing: BPO)and includes general administrative activities such as; accounting, payroll management, human resources management, in addition to general back-office activities (data entry, document indexing, etc.).

3° - The third category includes all professions that fall within the field of information and communication technologies.(Information Technology outsourcing: ITO). These include the development of computer systems, application maintenance, game development and remote management of computer infrastructures (administration of servers, databases, computer networks, etc.).

4° - The fourth category includes activities with a high content in terms of knowledge and having a demanding character in terms of expertise.(Knowledge Process Outsourcing: KPO). We are talking about engineering, conception, Design and Research & Development activities.

Good to know : In order to comply with the legislation in force, it is important to consult the General Tax Code. The chartered accountant is the best ally to advise you on this subject. A chartered accountant is a liberal professional whose activity is regulated by law (15-89). To exercise his activity, a chartered accountant must beregistered on the board of the Order of Chartered Accountants.

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Why and who can set up an offshore company?

In the case of companies that pay too many charges and are unable to adequately remunerate their employees, offshore companies represent the ideal alternative. Indeed, the heaviness of social charges can even in some cases prevent companies from recruiting new employees essential to their development or from developing their activities.

Companies that can create offshore entities must mainly be in the field of communication or business development, liberal professions, import or export, real estate investment and advice or consulting.

Morocco has several advantages for the outsourcing of services, in particular:

strategic geographic location;
an incentive tax regime;
the reception infrastructure;
the telecommunications infrastructure;
the business environment aligned with international standards;
linguistic and cultural assets;
the availability and quality of human resources.

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Offshoring companies:metax incentives to the outsourcing of services in Morocco

1- Corporation tax (IS):

Under the provisions of Article 6 of the General Tax Code, companies operating in the field of service outsourcing benefit from:

a total exemption from corporation tax (IS) for 5 years;
a reduced tax rate beyond (20%).

The conditions for benefiting from this exemption:

the nature of the activity;
the effectiveness of the activity, that is to say that the company must actually exercise an activity in Morocco and have employees.

2- Dividends distributed:

- The dividends distributed to a Moroccan or foreign partner are subject to withholding tax at the rate of 15%.

- The provisions of the 2023 Finance Law made it possible to reduce the withholding tax rate to 10%.

This reduction will be applied gradually and the 10% rate will be effective from 2026.

3- Value Added Tax (VAT):

- Companies operating in the service outsourcing sector benefit from an exemption with the right to deduct VAT on purchases. They can benefit from a reimbursement of the VAT credit.

A reimbursement file containing, in particular, proof of exempted turnover and proof of tax paid to suppliers must be submitted.

- Newly established companies can request the acquisition of their investment goods exempt from VAT.

This request is subject to certain formalities.

- Companies operating in the outsourcing of services may request the exemption of the purchase of inputs for their activities.

This request is subject to certain formalities.

Other tax and social contribution incentives

Companies that set up in Morocco can benefit from several tax and social benefits, including:

1- The “TAHFIZ” program:

Within the limit of 10 employees and for a period of 24 months, this program grants the following benefits:

exemption from income tax on the gross monthly salary capped at 10,000 DH
payment by the State of the employer's share in respect of the contribution due to the CNSS and the vocational training tax.

2- The ANAPEC training program:

The National Agency for the Promotion of Employment and Skills (ANAPEC) has set up a training financing program that allows companies to benefit from a multidimensional training program and partial financing of up to 70% .

3- The professional integration contract:

The professional integration contract provides for the granting of a bonus of 25,000 DH to companies recruiting university graduates on a permanent contract. Recruitment must take place at the end of an integration training course of 6 to 9 months within the framework of the system of integration contracts.

4- The training aid device:

Companies set up in P2I offshoring benefit from a contribution to the cost of recruitment training and continuing education for each new recruit for a period of 3 years.

5- The integration contract:

The integration training course contract presents the following incentive measures:

Payment by the State for the benefit of trainees of employers' and employees' contributions due to the CNSS under the Basic Compulsory Health Insurance (AMO);
Payment by the State of the employer's share of social security cover and the Professional Training Tax (TFP) in the event of the recruitment of beneficiaries of integration contracts on an employment contract under common law and this, for a period of 12 month period;
Exemption up to 6000 DH /month from charges under the CNSS, Professional Training Tax (TFP) and Income Tax (IR) for a duration of internship 24 months non renewable.

Whether you are a business manager, a liberal professional or an association manager, alone or at the head of a team, whatever your field of activity,LEC.ma is on hand to identify and respond to your needs.

From the creation to the transmission of your company, we are your partner in all situations, whether it concerns daily management, moments of difficulty or the most ambitious projects.