Government Approves Temporary Tax Exemption for Defense Sector

The government has approved a temporary exemption from corporate tax (IS) for companies involved in the production of defense equipment, weapons, and ammunition. This decision comes as part of an effort to further develop the sector and encourage greater investment throughout Morocco.

Rabat – The government has approved a temporary exemption from corporate tax (IS) for companies involved in the production of defense equipment, weapons, and ammunition. This decision comes as part of an effort to further develop the sector and encourage greater investment throughout Morocco.

The Council of Government, presided over by Aziz Akhannouch, met today to review and approve a draft decree amending the one issued on June 19, 2018.

The amendment specifically extends tax relief to industries involved in the manufacturing of defense-related materials, in line with Article 6 of the General Tax Code.

Abdelatif Loudiyi, the Minister Delegate to the Head of Government who is incharge of National Defense Administration, presented the decree on behalf of Fouzi Lekjaâ, the Minister Delegate to the Minister of Economy and Finance, who oversees the budget.

The primary aim of the new decree is to allow companies in the defense, security, and weapons sectors to benefit from the corporate tax exemption, according to a statement from government spokesperson Mustapha Baitas.

The move is expected to give a boost to the local industry and make Morocco a more attractive destination for defense-related investments.

With the approval of this decree, the defense sector will now join a growing list of industries eligible for the temporary tax exemption, marking a step forward in Morocco’s ongoing efforts to strengthen its national defense capabilities and stimulate economic growth.

Morocco is poised to boost its defense budget for 2025 to over MAD 133 billion (around $13 billion) as part of a strategy to strengthen its military capabilities amid growing regional tensions.

This budget increase highlights the country’s commitment to enhancing national security and staying competitive in the ongoing regional arms race.

The proposed defense budget, outlined in the 2025 draft finance law (PLF-2025), was presented on October 21 by Minister of Economy and Finance, Nadia Fettah Alaoui, during a joint session of Parliament.