Morocco’s 2021 Finance Bill — the legal text defining the country’s state budget — has put in place a new measure to promote youth employment.
The Finance Bill exempts employers from deducting income tax (IR) on the revenue of young employees in their first 24 months of employment.
Income tax is a deductible employers pay to Morocco’s tax administration for every salary they give their employees. The tax ranges from 0% to 38% of the employee’s revenue. It scales with the worker’s annual income.
Minister of Economy Mohamed Benchaaboun announced the new measure on Monday during a joint parliamentary session.
The tax exemption seeks to encourage employers to recruit young employees and to help fresh graduates quickly integrate into the professional world.
The exemption, however, has several requirements. The employee must be less than 30 years old at the time of recruitment and the job must be his or her first formal full-time position. The employer must also hire the young recruit under a permanent contract (CDI) to benefit from the tax exemption.
The new measure is expected to reduce the initial recruitment costs for employers, encouraging them to create new jobs.
Read also: Africa Loses $79 Billion Annually Due to Youth Unemployment
The tax exemption is the latest in a series of measures that Morocco launched in recent years to promote youth employment, such as integration contracts (CI).
The Moroccan Agency for Job and Skill Promotion (ANAPEC) launched integration contracts in 2015 to provide several advantages for employers.
Under integration contracts, employers are exonerated from paying income taxes and social contributions for their new employees, for up to 24 months.
Meanwhile, employees can benefit from state-provided medical insurance and social security.
While integration contracts have been relatively successful in promoting employment and helping Morocco’s youth to begin their careers, it remains to be seen whether the new tax exemption measure will achieve similar results.
