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The 2018 Finance Bill Big Picture: Boosting Employment and Investment Through Corporate Tax Cuts

Minister of Economy and Finance Mohammed Boussaid

Rabat – The government council adopted on October 16 the 2018 Finance Bill (PLF) which according to Mohamed Boussaid, consents to an unprecedented social effort and includes a package of fiscal measures in favor of companies, with a reduction in the tax burden.   

Presenting the bill during the meeting of the council, Mohamed Boussaid, Minister of Economy and Finance, stated that the adoption of the 2018 PLF comes at a time when the national economy witnessed a significant improvement reaching a 4.3 percent growth rate in 2017, boosted by a boom in agricultural production and a notable growth in the tertiary sector.

For the minister, the 2018 PLF’s main focus is to boost investment, employment, and entrepreneurship in Morocco, with a dedicated effort in hoisting up the social sector in different fields such as education, health, and the fight against territorial disparities.   

Employment

During his presentation, Boussaid stressed that the 2018 PLF is of a “clear and concrete” social character, with a special focus on the employment sector. Through the adoption of this bill, the minister expects the creation of 19,000 jobs, plus 20,000 other posts per contract which will soon be implemented in the education sector.

The minister also noted that during the 2018-2019 period, contractual teaching will border on 55,000 posts, adding that the budget allocated to this sector will amount to MAD 59.2 billion, up by MAD 5 billion from 2017. As for the health sector, its budget will increase by MAD 14.79 billion, with the mobilization of an additional 4,000 jobs.

With respect to the program of the fight against territorial disparities for rural areas, payment appropriations will be in the order of MAD 3.54 billion, while commitment appropriations will amount to MAD 4 billion, according to Boussaid.

Budget and Public Investment

Boussaid also indicated that the 2018 PLF is based on current budget revenue of MAD 236.81 billion, up by 10.25 billion, while current expenditure will reach MAD 215.83 billion, including 108.85 billion reserved for officials, in addition to compensation expenses up to a maximum of MAD 13.72 billion.

Total public investment will reach in 2018 nearly MAD 195 billion, up by 5 billion compared to 2017, he added. Boussaid further stressed the need to raise the pace of work, take advantage of investment opportunities, and meet the aspirations and expectations of the Moroccan people.

In the same vein, he stressed the importance of strengthening the budgetary effort in support of regionalization, pursuing major reforms in the education and justice sectors, and implementing the law of the Finance Act.

The minister also drew attention to the main axes of the draft law on finance adopted at the last Council of Ministers, based on four essential elements: support to the social sectors and industrialization, support public and private investment and SMEs, the implementation of regionalization and the reform of administration and governance, and the acceleration of the reform process.

Tax System

At the same time, the minister underlined the specific measures for the promotion of private investment and employment.

In this sense, Boussaid presented a number of tax measures for companies. These include taking the first step in the progressive taxation of companies (SI), which will help fuel the monetary capacity of SMEs. In addition to implementing taxation measures relating to seawater desalination buildings and the raising of marine living beings, other measures intervene at the level of value added tax (VAT), such as the recognition of the tax neutrality of participatory products, or the promotion of youth employment up to a maximum of MAD 10,000 for every 10 employees instead of five employees currently, in addition to their exemption from income tax (IR).

The 2018 budget bill calls for the extension of the beneficiary base of the family cohesion fund and their children even in the event of the mother’s death, in addition to measures to protect the environment and promote sustainable development.

Boussaid also discussed regionalization measures, as the government will increase the SI and regions RI from 3 to 4 percent, in addition to the General Budget appropriations, bringing the total support to MAD 7 billion.

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