Kamal Mokdad, Managing Partner; and Asma Charki, Partner, Mazars Morocco, on Casablanca Finance City (CFC): Viewpoint

Driven by the goal of becoming an economic and financial centre for investors and international institutions, Morocco is today proud of the achievements of CFC. It even exceeded Johannesburg on the Global Financial Centers Index (GFCI) in 2016. CFC ranked 33rd out of 86 cities worldwide, against 44th in 2015, ahead of Johannesburg at 51st. Nearly six years after its creation, CFC is considered the third-most-promising financial centre in the world after Singapore and Shanghai, according to the GFCI. This ranking is not a fortunate coincidence but a result of a strategic vision that aims to make Morocco a global platform for actors operating in the financial market.

CFC as an offer has been well prepared and follows the benchmarks of several emerging financial centres worldwide, leading to a business environment in line with international best practices, tax incentives and a wide range of training and professional certifications in financial services. Moroccan ambitions to make CFC a major financial hub in Africa are well supported by an attractive package of incentives offered by CFC status. These advantages include tax incentives, foreign exchange control facilities and other strategies.

Recently, the government enacted Decree No. 2-15-603, completing the previous Decree No. 2-11-323 promulgated in 2011. These decrees define the eligibility criteria for obtaining CFC status. According to these decrees, companies are considered to be eligible for CFC status if they belong to one of the following categories of enterprises:

• Financial institutions, such as credit institutions, insurance and reinsurance companies, brokerage companies, asset management companies and investment services providers;
• Regional headquarters of multinational companies;
• Professional services providers, such as credit rating, research, financial reporting, audit, legal and fiscal consultancy, strategic, actuarial and human resources consultancy companies, etc.;
• Holding companies; and
• Branches of non-resident companies.

In addition, these firms must do business with non-resident legal entities and/or non-resident individuals. The legal shares of such export turnover are defined by the aforementioned decrees.

Regarding tax measures, it should be noted that CFC status grants service companies and holding companies the following incentives with respect to their export revenues and net capital gains from the sale of foreign securities:

• Exemption from corporate income tax (CIT) for a period of five consecutive years, starting from the first year of CFC status; and
• Reduced tax rate of 8.75% beyond the initial period;

Concerning the regional headquarters and representative offices of multinational companies, firms may benefit from a reduced CIT rate of 10% starting from the first year of CFC status. The taxable base for regional headquarters is calculated as follows:

• The higher taxable income and 5% of operating expenses of the aforementioned headquarters, in case of tax profit; and
• 5% of operating expenses, if the headquarters makes a tax loss.

However, in spite of the advantages of CFC status, this label remains restrictive, as other fields of business are excluded. Nevertheless, CFC will not miss a chance to enhance its connectivity across the world. Indeed, this Moroccan financial centre is beginning to have an influence via a number of strategic partnerships with other financial centres in London, Paris, Singapore and Montreal. In order to honour its commitments to the development of South-South cooperation, partnering in Africa is also a priority for CFC. The place has indeed signed partnerships with Mauritius, Côte d’Ivoire and Senegal, providing support for companies having CFC status in terms of their investment projects in the aforementioned countries.