Despite the difficult global economic environment, sub-Saharan Africa achieved strong growth of more than 5% in 2014, mainly supported by private and public investments of more than 23% of global GDP. This was accompanied by the expansion of trade, communications and other services. Morocco could not remain unmoved by the strong economic growth potential of the continent. Over the last decade, Moroccan investments in Africa were mainly made up of direct investments into sub-Saharan Africa, which represent 85% of total outward flows of foreign direct investment (FDI) to the continent and 51% of total Moroccan FDI. Morocco is present in sub-Saharan Africa through direct investments in 14 countries, of which more than half (54%) is in the banking sector, followed by the telecoms sector (34%) and holdings (8%). This growing interest has also materialised in the facilities Moroccan authorities grant for investors to seize opportunities.

Reforms pursued in this context have led to two major changes. The first is the liberalisation of investments abroad of up to Dh30m (€3.2m) a year for companies with at least three years of activity, provided that the company’s accounts are certified by an external auditor and that the intended investment is directly related to its activity. The second change is an increase in the maximum transferable amount for investments abroad to Dh100m (€10.8m) for Africa and Dh50m (€5.4m) for other continents. A fund of Dh200m (€21.8m) was also created to strengthen the presence of private Moroccan firms on the African market.

As part of strengthening these economic relations, Morocco has developed a wide array of more than 500 bilateral and regional cooperation agreements, split between trade agreements, investment promotion and protection agreements, double taxation treaties, and establishment agreements. Morocco has signed more than 11 double taxation treaties with African countries. The main provisions of these treaties state that all dividends, interest and royalties paid by a company that is resident in one contracting state to a resident of another contracting state are taxable in this other state. However, these incomes are also taxable in the contracting state of the resident company, which pays them according to the laws of that state.

Given the above, Moroccan investment in sub-Saharan Africa is hampered by delays in the implementation of agreements; the only convention in effect is the one with Senegal. It is therefore important to activate the double taxation agreements with other countries, particularly with Mali and Congo, respectively the first and second Moroccan FDI destinations in the region.

Seeking to attract more foreign investors by becoming an indispensible investment gateway to Africa, Morocco is committed to supporting companies in launching investment projects on the African continent by relying on the platform of Casablanca Finance City (CFC) as a single entry-point for investors in Africa.

Through the CFC platform, companies have access to a wide range of tax incentives. Services companies are offered a corporate tax exemption for a period of five years starting from the first year of CFC status, with a reduced tax rate of 8.75% thereafter. Regional and international headquarters and representative offices are offered a reduced corporate tax rate of 10% from the first year of CFC status, subject to a minimum contribution as set out in the provisions of Article 144 of the Moroccan Tax Code. In addition, there are exchange control facilities and other benefits for doing business.

The incentives packages offered by CFC status are changing constantly in order to adapt to the needs of business operations. The economic strategy that Morocco has developed towards its African partners aims to transform it into a regional hub serving co-development in many areas, using the know-how and expertise of its companies in these fields. However, efforts must be maintained on many fronts, which may lend greater attractiveness to Moroccan investment in Africa by improving bilateral trades and exchanges, and by the conclusion of double taxation agreements, which remain too few given the country’s potential for development.