Mr BENCHAABOUN presents the 2020 Draft Finance Law as part of a day-debate organized by AMIF in collaboration with ENSA : 04/12/2019

Mr BENCHAABOUN presents the 2020 Draft Finance Law as part of a day-debate organized by AMIF in collaboration with ENSA

The Moroccan Association of Financial Inspectors and the National School of Administration organize, Wednesday, December 4, 2019 in Rabat, a day-debate on the 2020 Draft Finance Law, for the benefit of researchers, academics and public players. In his speech, Mr. Mohamed BENCHAABOUN, Minister of Economy, Finance and Administration Reform, stated that the 2020 Draft Finance Law reflects the Government's strong commitment to implementing the priorities set by His Majesty the King, may God assist him in His Speeches on the Occasion of the 20th Anniversary of the Throne Day, the 66th Anniversary of the King and People's Revolution Day and the opening of the legislative session.

To this end, he said that the 2020 Draft Finance Law focuses on supporting social policies and reducing social and territorial disparities, with a view to finding appropriate solutions to the problems of citizens and meeting their expectations. It was also stressed that in addition to the interest in the social aspect, the 2020 Draft Finance Law also highlights the priorities deriving from the Royal guidelines calling to re-establish a sense of trust among companies and investors, in order to help lay the foundations for a robust, inclusive and job-creating growth, mainly for the benefit of young people.

Attention was also drawn to the undeniable progress made by Morocco, the political stability enjoyed by the Kingdom, the resilience of its macroeconomic framework, which is confirmed by the Investment Grade rating it maintains for more than a decade, as well as the scope of structural and progressive changes in the national economy. Once again, all of this confirms the level of trust placed in Morocco by major international financial institutions and rating agencies.

Within this framework, Morocco’s issuance of a EUR 1 billion bond on the international financial market was recalled; which marked the successful return of Morocco to the international financial market after a 5-year absence.

Furthermore, while mentioning the measures that will strengthen the relationship of trust between the administration and the taxpayer and start over within the context of fiscal compliance, the following were particularly stressed; the voluntary adjustment of the tax situation for companies, the extension of the scope of requests for prior tax consultation, as well as the obligation to conduct hearings after the tax audits of a company before receiving the tax adjustment.

In terms of taxation, it was mentioned that the 2020 Draft Finance Law is the first step towards implementing the recommendations of the National Tax Conference, which constitute the subject of the draft framework law already prepared and which will be adopted soon. To this end, it was indicated that the tax provisions contained in the 2020 Draft Finance Law, in application of these recommendations, are important levers for tax fairness and maximizing its impact in terms of boosting private investment. These include measures proposed in terms of a gradual reduction of the marginal corporate tax rate (from 31 to 28) for industrial companies that will, over a 5-year horizon, reach a tax rate of 20% , as well as the gradual decline in the minimum contribution rate (from 0.75% to 0.50%).

In this context, it was noted that the tax reform cannot be reduced to a mere exercise of lower taxation. Rather, the right conditions for investment and accompanying measures need to be created so that companies can access financing more easily. As for the accompanying measures put in place to financially support the SMEs, the new generation of financing programs, which is being finalized under the Entrepreneurship Support Fund created by the 2020 Draft Finance Law, has been suggested, in accordance with the guidelines of His Majesty the King contained in his parliament opening speech. With 6 billion dirhams, this fund will be financed at the rate of 2 billion dirhams per year, divided equally between the State and the banking system, to facilitate the access of the young graduates to bank loans for the purpose of financing their business projects. It will also serve to support Small and Medium Enterprises in their exporting activities, particularly to African markets. It will also help facilitate access to banking services and job opportunities, especially for informal sector workers. While having all these measures to support private initiative, it was reported that the Government will continue its policy of supporting public investment, which will result in an increase in the loans allocated to it for the year 2020 of 3 billion dirhams compared to the year before, to reach 198 billion dirhams. To this end, a new approach, based on institutional partnership is currently implemented, for the financing of these investments.

Thus, and after recalling these key points of the 2020 Draft Finance Law, it was stated that the set of objectives assigned by this project could not, however, be achieved, in the absence of a budgetary policy that makes the objective of socio-economic development consistent with the need to preserve financial balances, avoiding a dysfunction in the management of the accounts of the State, public institutions and local authorities. And it is in this context that Article 9 of the 2020 Draft Finance Law was proposed, which has been the subject of much debate. Therefore, it was indicated that the provisions of this article are intended to strengthen the trust of citizens in the institutions of our country, while ensuring the continuity of their access to public services and to face to any constraint that could compromise the fulfillment of the State's commitments, particularly in terms of services provided to users or hinder the implementation of projects likely to have a positive impact on the lives of citizens and on social peace. The Minister also made it clear that through this article, the Government does not intend to undermine the principles of the Constitution or to remove the substance and obligatory nature of judicial decisions, but to put forward, as is the case in several countries, the need to resort to means which preserve the appropriations intended for the sustainability of public services, while providing the necessary guarantees to ensure the execution of the judgments rendered against the State.