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Oxfam is launching soon a study on tax incentives in Morocco

Oxfam is preparing to launch an analytical study on the relevance and incentive value of tax expenditures that annually benefit three key sectors of the Moroccan economy: real estate, agriculture and private education.

The objective of Oxfam Morocco, by launching this study soon, is to “contribute constructively to nourish the national debate on good governance of public finances”, indicates the NGO which intends to “evaluate the results and the objectives” which justify the tax incentives of these three sectors where the shortfall in the state budget is significant.

Oxfam Morocco’s study is part of a comprehensive overhaul of the national tax system to make it more fair and equitable. “The review of all tax expenditures, on the basis of a cost-benefit analysis, is a first step that Morocco must consider when preparing the 2022 finance law”, recommends the NGO, which adds that this review must take into account the added value and the incentive value in the economy of these tax expenditures, without forgetting their impact on investment.

According to figures from the tax expenditure report tabled in parliament with the 2021 finance bill, 81% (246/302) of the 2020 derogatory measures are “qualified as tax expenditure”. By evaluating this data, Oxfam realized that the overall amount of tax expenditure corresponding to these measures is around MAD 29.91 billion. “This great shortfall is greater than the total sum of all expenses actually incurred during the same year via the Covid-19 special allocation account (MAD 29.32 billion)”, observes the NGO, which also emphasizes that “financing these initiatives remains a major challenge”, despite the efforts of the State to reduce the socioeconomic effects of Covid-19.

“Being a State whose ordinary general budget revenues depend largely on tax revenues (LF2021: 88.37%) without even being able to cover operating expenses and debt service (ordinary deficit / LF2021: −25, 83 billion dirhams), efficiency and effectiveness in the management of public finances has become a sine qua non for the success of the three priorities that Morocco has set for the post-Covid-19 period”, further notes Oxfam which recalls that during the preparation and adoption of the 2021 finance law, three priorities were defined on the basis of the royal guidelines, namely: economic recovery, generalization of social protection and reform of the public sector.

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