A major new financial city and investment regime, Casablanca Finance City (CFC) is in the process of being developed in Morocco’s economic capital, with the aim of transforming it into a major regional investment and finance centre.
New Regime
The CFC regime effectively came into being in 2011, when a decree enforcing the law creating it – which had been passed the previous year – was issued, allowing companies to be designated as having CFC status, entitling them to a range of benefits. CFC status is available to four types of firms, namely financial institutions, professional services companies (primarily those providing services to financial institutions), holding firms and the regional headquarters of multinationals. Companies must do business mainly abroad to receive the status.
The CFC Authority initially prioritised work on the investment regime itself rather than the development of a physical location, and companies with CFC status can currently base themselves anywhere in Casablanca. However, an office complex for the CFC is being built by a unit of state investment fund, Caisse de Dépôt et de Gestion, on a 50-ha site several kilometres to the west of the city centre, to which it is connected by the Casablanca tram line. Once the first phase is completed – scheduled for 2018 – firms with CFC status will be obliged to be located there.
Benefits
Companies with CFC status (excluding regional headquarters and representative offices, which benefit from a different regime) are exempted from corporate tax for five years and then move to a tax rate of 8.75% on export-related revenues, compared to the standard Moroccan tax rate of 17.5% for export-derived revenues and up to 31% for non-export revenues. Employees of CFC firms can also choose a flat payroll tax rate of 20% for four years, compared to up to 38% for other firms. “Companies with CFC status benefit from an attractive but not an aggressive tax rate, as we want to bring in real tax receipts for the country and create value and employment, rather than serve as a tax haven,” Mohammed Rachid, head of financial sector and business climate affairs at the CFC Authority, told OBG, adding that the tax framework for the city was also continually being updated. “The international environment is constantly evolving, so we are always looking out for changes that need to be made.”
CFC firms also benefit from a more liberal foreign exchange regime than is available to most Moroccan companies, including the freedom to open foreign currency and convertible dirham accounts and to credit them with up to 100% of export revenues, compared to 70% for firms outside of the regime. The city aims to help companies do business and avoid getting caught up in red tape, including assisting them to establish a company within 48 hours and with obtaining visas and residency permits for employees.
“Companies have found the CFC Authority to do good work when it comes to dealing with applications and to be very responsive to their needs in general,” said Asma Charki, partner at Mazars Morocco.
Progress
As of May 2016 there were 107 companies with CFC status, which Charki described as a good performance given that the zone has only been in existence for five years. “In general firms find the conditions at CFC attractive,” she told OBG. Some 69 companies with CFC status conducted business transactions under the framework of the city in 2015, up from 43 in 2014. More businesses are likely to be attracted by CFC’s rankings of first place in Africa and 33rd overall in the Global Financial Centre Index.
Changes being made to the financial sector, in particular capital markets, such as moves to demutualise the stock exchange (in which the CFC itself has taken a stake) and allow for activities such as short-selling and futures trading (see Capital Markets chapter), should boost the attractiveness of the city as a financial centre, and help to bring in more companies.
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